China Telecom starts unlicensed (cdma) mobile trial
By James Kynge in Beijing
Published: December 2 2001 18:33 | Last Updated: December 2 2001 21:13
China Telecom, the dominant fixed line carrier in China's booming telecoms market, has started a mobile telephone service in a southern city - even though it has yet to be given a mobile licence by the ministry for the information industry.
The service, shi hua tong, has attracted 70,000 subscribers in Shenzhen in the few months since it quietly started business. Although users cannot call outside Shenzhen, the service has become popular because calls cost the same as fixed line calls - less than half the rates for China Mobile and China Unicom, the two existing mobile operators.
The creation of shi hua tong means China Telecom appears to have jumped the gun on ministry for information industry (MII) plans to withhold a mobile licence at this stage - a surprising development since the MII is also China Telecom's owner.
"Who gave them a frequency? How could they do this without a licence?" asked one MII official when told of China Telecom's operations in Shenzhen, a boomtown neighbouring Hong Kong.
"They can't do this business," said a second official at the ministry which also owns China Mobile, the country's leading mobile company.
China Telecom has been keen to secure a mobile licence for well over a year but the MII has refused its entreaties to enter the most lucrative branch of the telecoms market. But the success of its service in Shenzhen, which uses the CDMA standard developed by Qualcomm of the US, suggests that a mobile licence for China Telecom is not far off, analysts said.
Industry analysts said that although the MII officials appeared ignorant of China Telecom's mobile operations in Shenzhen, it was inconceivable that the company had not reached some kind of an accommodation with the ministry. Ties between the former telecoms monopoly and its owner/regulator remain close.
A China Telecom executive in Shenzhen said the company hoped to win a nationwide mobile licence next year, allowing it to roll out its CDMA service across China. Such a development would not only imply a significant boost in revenues for Qualcomm but also raise the competitive pressures faced by China Mobile and Unicom.
The network access equipment supporting the shi hua tong service was made by ZTE, a local manufacturer that has developed its CDMA equipment in co-operation with Qualcomm. The US company earns royalties from ZTE sales.
China had 136m mobile users at the end of October and subscribers are increasing at a rate of 5m a month nationwide.
China Netcom, a fixed line operator, has also expressed its desire to own a mobile licence. The timing of MII's expected permission is unknown.
news.ft.com
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