Is the end of GSM era nigh?

China's locally developed high-speed network for mobile phones will have the capacity to serve 50 million customers in 10 cities of the world's biggest wireless telephone market by users, according to an industry group. The so-called third-generation mobile-phone network may be introduced for commercial tests by users at the end of the first quarter, Jing Wang, secretary general of TD-SCDMA Forum said. The network's capacity will exceed South Korea's population of 49 million.

"The network is already big enough for commercial deployment and the government may expand it to other cities if the commercial tests produce positive results,'' said Steven Liu, a Hong Kong- based telecommunications analyst at DBS Vickers. "The technology is quite reliable as it has already undergone a lot of testing since 2005.''

China Mobile Communications may invest as much as 26 billion yuan ($3.5 billion) on infrastructure and handsets for the network, Wang said. The government hasn't set a timetable for issuing 3G licenses or said how many it will grant. The high-speed standard allows users to video conference and offers quicker downloads from the Internet.

China Mobile Communications, which owns 74 percent of Hong Kong-listed China Mobile, is building the network based on the time-division synchronous code division multiple access technology in eight of the cities including Beijing and Guangzhou. TD-SCDMA is one of three standards chosen for 3G mobile-phone services in the country. The parent companies of fixed-line operators China Telecom and China Netcom Group are also building TD-SCDMA networks. High-speed licenses will be issued by the government if testing of the TD-SCDMA network is successful, Wang said.

The mobile operators may face increased competition, with China Telecom and China Netcom also seeking 3G licenses. At present the fixed-line carriers are losing customers to the wireless companies, which are offering reduced rates and are targeting smaller towns and villages to win users.

China gained a record 8.1 million mobile-phone subscribers in October, raising the total to 531.4 million at the end of the month, according to government data. The number of fixed-line subscribers fell by 977,000 to 370.7 million, the government said. China Mobile Communications may this month seek bids for mobile phones to be used on the TD-SCDMA network, Wang said.

ZTE said in June it won orders from China Mobile Communications for equipment worth 2.37 billion yuan ($320 million) to build the TD-SCDMA network. The Shenzhen, south China-based company will also submit bids to supply TD-SCDMA handsets to the mobile-phone company, President Yin Yimin said in April. TD-SCDMA Forum, a group promoting the technology, counts China Mobile Communications and handset providers such as Huawei Technologies as members. Apart from TD-SCDMA, the government is endorsing the wideband CDMA and CDMA2000 standards for 3G services in the country.

Will China dominate the world's 3G mobile market in the near future?