CDMA2000 is Bringing 3G Services to China on a Massive Scale

(Top News, 4 Jun 2009)

At the inaugural CDMA World Forum, the CDMA Development Group (CDG) commented that new 3G wireless voice and mobile broadband service offerings in China are poised to rapidly replace fixed-line solutions, exemplified by subscriber adoption of China Telecom's CDMA2000 1X and EV-DO Revision A (Rev. A) mobile broadband services. China Telecom is now offering fixed and mobile broadband data services under its "e-surfing" brand, in addition to its existing CDMA2000 1X voice and data services. The operator has already launched 3G CDMA mobile broadband services in more than 120 cities, with plans to cover 324 cities nationwide by July 2009. By catering to its long-standing enterprise relationships, leveraging its large existing fixed-line customer base and focusing on offering mobile Internet services, China Telecom added 6.8 million CDMA2000 customers in the first four months of 2009 to reach a total of
34.71 million CDMA subscribers.

"China Telecom is showing market leadership through its commitment to bringing 3G CDMA services to China and communicating the value of CDMA2000 voice and mobile broadband services to the Chinese consumer," said Perry LaForge, executive director of the CDG. "A wide selection of affordable 3G CDMA devices is helping China Telecom realize phenomenal subscriber growth, as it leverages the CDMA2000 network to offer wireless voice and broadband data services to both new and existing customers."

Since the restructuring of China's telecom industry in 2008, the country's three wireless operators have been investing heavily in 3G networks across three technologies. China Mobile plans to invest $8.6 billion to expand its TD-SCDMA network in 2009, while China Unicom plans to put $5.6 billion into its recently-launched WCDMA network this year. China Telecom has announced it plans to spend more than $11.7 billion on CDMA network expansion and optimization over the next three years, while procuring 55 million CDMA2000 handsets in 2009 to support this rapid growth.

The China Ministry of Industry and Information Technology (MIIT) expects 3G wireless subscribers in the country to exceed 500 million within the next 3 years, as affordable mobile broadband services replace fixed-line Internet services and expand to rural areas.

Furthermore, an MIIT report predicts that Chinese CDMA subscribers will experience a 30.6 percent compound annual growth rate over the next four years, and that EV-DO subscribers will account for 41.1 percent of China's 3G subscriber base by 2012. EV-DO Rev. A delivers average download speeds of 600-1,400Kbps with bursts up to 3.1 Mbps and average upload speeds of 500-800Kbps with bursts up to 1.8Mbps.

According to the China Internet Network Information Center (CNNIC), China's Internet penetration rate at the end of 2008 was at 22.6 percent, surpassing the global rate of 21.9 percent. China's Internet user base was at 298 million users with 279 million broadband users, while the mobile Internet user base doubled in 2008 to surpass 117 million users. As 90 percent of all Internet users in China are also mobile users, there is enormous growth potential for EV-DO services in the mobile Internet market. This bodes well for China Telecom since its 3G network will be optimized for economical, high-speed broadband performance, and the operator will be able to offer mobile broadband data services to China's large and underserved population at attractive prices.