China 3G hit by further delays

Mobile handset makers hoping to sell 3G phones to China's 455 million mobile phone users may be forced to wait until 2008, according to local media reports.

One recent survey showed that almost 80 million mobile users in China are ready to switch to 3G, but that the government is preventing 3G network operators from rolling out services.

Local and foreign firms including Nokia, Motorola and Sony-Ericsson could be affected by changes to China's 3G schedule.

Nokia, the world's largest mobile phone maker, holds more than 30 per cent of the Chinese handset market, and generates huge revenues from network infrastructure sales.

China's 3G introduction has been delayed for more than a year while the government waits for the country's home-grown TD-SCDMA 3G standard to be finalised.

Although carriers have set up test networks in several urban areas, and claim that they are ready to offer full 3G services, they cannot move forward until the government gives them 3G licences.

While past delays have been caused by technical problems with the new TD-SCDMA standard, observers believe this may no longer be the main problem holding up 3G in China.

"We believe that the delay is likely due to politics, not technology," wrote W R Hambrecht analysts in a recent report to clients.

Many had speculated that the number of carriers will increase to four, with China Telecom and China Netcom joining incumbent operators China Mobile and China Unicom.

"However, we believe this is a complex political issue where carriers are lobbying for their own respective interest," explained the analysts.

"Senior management members of the carriers are considered highly ranked government officials and it is therefore a very delicate issue for the Chinese government."

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