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By MAE KOWALKE
TMCnet Associate Editor for Channels

 

Last month, China established its own 3G standard, TD-SCDMA, to be used for Universal Mobile Telecommunications System (UMTS) networks in the country. That move may further complicate an already confusing situation for China’s telecom industry, ABI says in a new research study.

 

“Due to the high population of PHS service users among low-end subscribers and the decreasing price of both GSM terminals and service prices, it will be challenging for TD-SCDMA to attract voice service subscribers,” Junmei He, ABI Research's Hong Kong-based industry analyst, writes in a statement about the study.

 

Junmei He adds that, “it appears unlikely that TD-SCDMA can achieve quick success by offering high speed data services, because demand for such services will remain low in the short term.”

 

Competition from WCDMA and CDMA 2000, two well-established standards, could further slow adoption of the government-sanctioned TD-SCDMA, the study says.

 

“As a result, TD-SCDMA operators – potentially including China Telecom and China Netcom – need to adopt a more flexible business model to compete with existing mobile operators,” Junmei He writes.

The Chinese Government’s establishment of a new, national 3G standard may create a head-to-head battle between established standards and TD-SCDMA, the report predicts. GSM is the dominant mobile technology in China now, ABI says, and that’s not likely to change during the next five to eight years.

 

“It is not inconceivable that we see a billion SIM card subscriptions in the market by 2015. Multiply that by a forecasted ARPU of about US$300 per annum, and you can understand the interest not just from domestic but also international players,” Jake Saunders, Director of Global Forecasting at ABI, writes in a statement about the study.

 

Saunders adds that “Vodafone, Telefonica, Hutchison, Deutsche Telekom and Telstra, all have equity or strategic relationships in China.”

 

With the stakes so high, it seems likely that competition between the standards will continue to heat up.

 

The ABI study predicts that China will end up with two standards: “an independent TD-SCDMA network will be set up, complemented by a GSM network to ensure national coverage.”