BEIJING, May 30 -- China has again delayed the issue of licenses for third generation, or 3G, phones until late 2006 or 2007.

    Since 2002, the telecommunications industry has lost count of the number of times China has delayed the issue of 3G licenses. The industry had thought the nation's first 3G licenses might be issued May 17, World Telecommunications Day, but nothing happened.

    "The licenses will be issued at the end of 2006 if everything goes well. Considering the additional time needed to draft 3G fee policy and design related software, the final timetable will be delayed to next year,"said Li Yanfeng, a 3G analyst at Beijing-based CCID Consulting, a research firm under the Ministry of Information Industry.

    The 3G licenses will be issued between the end of October and the beginning of November or later, Beijing-based Norson Telecom Consulting said in a statement to the Shanghai Daily.

    Investment bank UBS had said in its recent report that China will delay the issuance of 3G licenses to 2007.

    MII officials, who said in public previously that China will issue 3G licenses this year, declined to comment on the timetable now.

    There are three available 3G technologies, which provide high transfer data speed and allow users to download movies and hold video conferences on cell phones. They are the U.S.-developed CDMA2000 (Code Division Multiple Access 2000), European-developed WCDMA (Wideband CDMA) and China's TD-SCDMA (Time Division-Synchronous CDMA).

    TD-SCDMA Forum

    Analysts said China will issue a national TD-SCDMA license first, then issue two other licenses later to support the homegrown standard. China's standard is not fully ready for commercial use, which forced the government to delay issuing the licenses.

    "The 3G licenses will be issued later. The (government-supported) TD-SCDMA Forum said recently the TD-SCDMA test is expected to complete in the third quarter compared to an earlier timetable of June 30,"Dong Xiaoyang, Norson's analyst, said in the statement.

    The TD-SCDMA network still faces some problems over transferring data when users move at a fast speed, such as on the Metro and buses, Li said.

    Currently, the TD-SCDMA technology is being tested in Qingdao in Shandong Province, Baoding in Hebei Province, and Xiamen in Fujian Province. By the end of this year, the annual production capacity of TD-SCDMA phones will hit 1 million units, according to the TD-SCDMA Forum.

    China Telecom, the country's biggest fixed-line phone operator, said it can provide services on the TD-SCDMA network in eight months.

    By comparison, WCDMA and CDMA are used in more than 200 3G networks globally and their technologies and services are mature.

    Video-on-demand and wireless music will probably become the 3G services' killer applications but time is needed to grow the market, Dong said.

    In general, the lack of killer applications is an obstacle to boosting 3G in China, which means that the 3G networks can't yield operators strong returns over the short period, industry insiders said.

    Until 2008, the Chinese 3G user base is expected to hit 84.2 million, less than 20 percent of the total number of mobile users at that time, Norson said.

    Fortunately, mobile carriers and fixed-line operators have launched various services like mobile-based TV, mobile e-mail services and searches on mobile phones. New services, like mobile blog and cartoon, are emerging.

    Wireless download

    Shanghai Mobile and Shanghai Media Group have launched mobile TV services, which cost only 30 to 50 yuan a month. Nokia has joined domestic service providers to offer wireless music download services.

    "It is a test for the market and such services will bring users better experiences on 3G networks in the future,"said Peter Zhang, director of In-Stat, a U.S.-based consulting firm.

    Foreign companies, which can't afford to neglect the big potential in the Chinese 3G market, have become an important force driving the development of China's 3G sector.

    Finnish-based Nokia, the world's top handset maker, said that it plans to produce 3G base stations in its Suzhou plant in the third quarter of 2006. It has already formed a joint venture with China Putian to develop TD-SCDMA.

    And it is not the only one. TD-SCDMA tieups have already been set up by Datang with Alcatel and Huawei with Siemens.

    In 2006, equipment investment on 3G alone will reach 30.6 billion yuan (US$3.7 billion) in China, said Analysys International, a Beijing-based consulting firm.

    China can't afford to delay the issuance much longer as senior officials have told the world that the country will provide 3G services during the 2008 Beijing Olympic Games.

    Normally, it takes about one year for operators to test and upgrade the network before it is fully commercial, industry insiders said.

    (Source: Shenzhen Daily/Agencies)