December 30, 2008

China Poised To Launch 3G Services

China is set to begin introducing 3G mobile phone service, which may add up to 100 million new 3G subscribers over the next 3 years as estimated by state media.

But demand for the new service will rely on whether regulators try to boost China's high-tech industry by ordering wireless carriers to buy domestic products. Beijing has tried to use such restrictions to nurture other fields, prompting complaints by the United States and other trading partners.

This means that are likely to get less than half of China's 3G orders, said Duncan Clark, chairman of BDA China Ltd., a Beijing consulting firm.

"It's basically an intensely political process," Clark said.

Huawei Technologies Ltd. and ZTE Ltd. are the primary domestic competitors. Both firms have received backing from the government and already sell low-cost gear in Africa and Asia.

China's selection process is under scrutiny from the EU and the US, both of which want China to follow equal treatment regulations put in place by the World Trade Organization.

Even though the wireless carriers are state-owned, Chinese companies sometimes resist regulators' orders to do things that hurt profits.


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