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New competition in 3G era

By Tong Hao and Wang Xing (China Daily US Edition)
Updated: 2009-03-04 17:34

China Mobile is trying hard to attract 3G users but the Chinese public's lack of enthusiasm for TD-SCDMA terminals may force world's largest cellphone operator from its dominating market position, with poor terminal quality and week network coverage sending its customers to rivals.

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"The quality of my phone is terrible," said Cui Guangxing, an experimental TD-SCDMA user in Beijing. "I use my phone to watch TV and surf the internet almost every day but none of the three cellphone batteries lasts a full day, so I have to charge them constantly."

Haier, a domestic vendor, produces the handset Cui tried. Users such as Cui have few options because major mobile phone makers such as Nokia and Motorola have been slow releasing TD-SCDMA handsets. "The TD phone models are not enough compared to 2G models," said Cui.

The government mandated China Mobile, the country's largest cellphone operator, to adopt China’s home-grown 3G standard TD-SCDMA, which analysts say is less mature than rivals standards CDMA2000 and WCDMA, used by China Telecom and China Unicom respectively.

TD-SCDMA has never been commercially deployed outside China, unlike the other two 3G standards, so major multinational mobile phone makers took a wait-and-see strategy to avoid investment risks.

China Mobile kicked off a TD-SCDMA test run to attract users on April 1, 2008 with generous offers including discounted charges, free cell phones and free calls. The company invested a lot in network construction and plans to expand network coverage to 95 percent of Chinese cities in the next three years but TD-SCDMA coverage is still poor in major Chinese cities.

"I often can't use my phone because there is no signal," said another TD user surnamed Yuan, in Beijing. "Sometimes, when the call does go through, there is an echo."

3G networks should provide faster data transmission speed and enable new services such as Mobile TV and video calls. Telecom operators hope these data-heavy services could become new money generators to counter declining revenue from traditional voice-based services.

But many current TD-SCDMA users are more interested in making subsidized calls than in new services.

"I have never make video calls, surf the internet or watch mobile TV. The reason I keep my phone is the 800-yuan worth of free calls," said a woman in Shanghai who declined to give her name. "I will not use my TD phone after the test run, because I don't want to pay such high charges."

TD-SCDMA service is now available in 11 major cities such as Beijing, Shanghai and Guangzhou and has 337,000 users, according to China Mobile.

But experts estimate that as China Unicom and China Telecom launch their 3G services, they will garner wider support from handset makers and service providers and China Mobile's TD-SCDMA service will be seriously challenged. They expect China Mobile will try to take advantage of its dominating position in the 2G era to fend off the new competition.

"I've been using China Mobile for years," said Cui. "If the defects are improved in future, I will continue to use TD-SCDMA phones after the test run."