No surprises

26 May 2008
00:00

In the end, the only surprise was the timing.

The reform plan unwrapped by the MII, the SDRC and MoF on Friday had been widely telegraphed for months.

While it should have been carried out years ago, many observers predicted it would have been delayed until after the Olympics. The restructure goes ahead place now, to be followed by the 3G licensing.

The driver is the overwhelming dominance of China Mobile, a GSM operator who last year posted 87 billion out of the 137.5 billion yuan in profits earned by the industry last year.

Its only mobile competitor, Unicom, has been crippled by having to operate a CDMA as well as a GSM system.

Attempts at reform over the past three years have repeatedly stalled as the MII, SDRC, SASAC and the carriers have been unable to come to agreement.

What finally drove them to action has been the near-collapse of the fixed-line voice market. Following price cuts by the mobile operators in the middle of last year, Netcom and Telecom for the first time began bleeding customers - some 2 million in six months.

Now the decision has been done, the industry and consumers will await the start of 3G. We can expect China Mobile will be given the franchise for TD-SCDMA/HSDPA, China Telecom cdma-1x EV-DO and China Unicom W-CDMA/HSDPA. That decision may come before the August Olympics. In any event, China will see live 3G services in 2009.

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