Pyramid Points - China Leads AP in 3G While LTE Looms
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China Leads AP in 3G While LTE Looms

March 1, 2012

As we report in Pyramid Research’s new Insider, “3G in China: Operator Strategies Are Key to Adoption,” the Chinese telecom industry’s restructuring back in 2008 was the catalyst that has propelled the market through tremendous development over the past four years. Not only did the reshuffle consolidate six players into three major integrated operators, accelerating market progression with increased competition, but it also set the stage for the long-anticipated 3G licensing in early 2009.

Despite each individual operator supporting a different 3G technology (China Unicom with WCDMA, China Telecom with CDMA2000 and China Mobile with homegrown TD-SCDMA), China has quickly become the largest 3G+ market in the region, surpassing Japan after three years of 3G+ becoming available (see Exhibit).

Exhibit: AP 3G+ subscribers by country, 2011

Sources: Operators, Pyramid Research

Some might argue China evolved as the largest 3G market in Asia-Pacific within such a short period of time because of its incomparably massive market size. However, when looking at the growth rate of 3G subscriber ratios to total subscriber base in the first three years of service commercialization, China still ranks ahead of most emerging markets and even developed markets such as Taiwan and Japan, illustrating the market’s robust growth momentum in 3G adoption.

There are several factors for the 3G demand surge in China: improved purchasing power from sturdy economy growth for more than a decade, the reach of fixed broadband access through government initiatives during the first decade of the 21st century (bringing familiarity with the Internet to the general public), and users’ attachment to the Internet as services and information available online in the local language become more and more extensive and sophisticated.

The demand itself won’t drive the adoption. We believe the keys to the rapid 3G adoption in China are the operators’ strategies and initiatives to:

  • deepen device penetration by leveraging declining handset costs, providing handset subsidies and extending partnerships with retail channels,
  • improve user experience with 3G services through value-added services enhancement, proprietary app store launches and Wi-Fi build-outs to improve service quality, and
  • integrate internal operations within the value chain in order to broaden synergy along different verticals.

While 3G becomes more established, LTE trials are gaining momentum as well, with possible pre-commercial service available as early as end of this year. Nevertheless, a significant number of obstacles in the Chinese market need to be cleared before full LTE commercialization is possible.

Join us at 4G World Asia in Singapore in May, where will uncover the secret behind a successful launch of LTE services across China and the rest of the Asia-Pacific region.

— Daniel Yu, Associate Manager

Related resources:

3G in China: Operator Strategies Are Key to Adoption
Telecom Insider published February 2012
In this report, we examine the role Chinese operators play in extending the reach of 3G devices, how the operators drive 3G services with new and innovative value-added services and their involvements in different levels of the value chain to enhance products and services.

Asia-Pacific Mobile Demand Forecast
Forecasts published quarterly
Our Mobile Demand Forecast products provide complete pictures of demand trends for 15 geographical markets in Asia Pacific. The Excel output includes five years of historical data and five years of market projections for metrics such as GDP, mobile penetration, subscriptions (by operator, type of package, technology), ARPS and total mobile service revenue (data and voice). The Forecasts are based on extensive field research and use a consistent methodology across all markets, aiming to capture the total spending, from an end-user perspective, on mobile communication services in each market. Data from these Forecasts is available online for subscribers to our DataTracker service.


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