China 3G Hit by Further Delays

Chinese local media are reporting that mobile handset makers hoping to sell 3G phones in China will have to wait until 2008. A recent survey estimates that 80 million of China's 455 million mobile phone users are ready to go 3G. Unfortunately, China's government is preventing the move, which is affecting Nokia, Motorola and Sony-Ericsson's plans. Carriers have already set up test networks and claim they can offer full 3G service.

They cannot plunge in, however, until they receive 3G licenses from the government. 3G introduction is being delayed by the government as it awaits China's home-grown TD-SCDMA 3G standard to be finalised. Analysts believe the delay, although previously related to technical problems, is politically-driven this time.

"We believe that the delay is likely due to politics, not technology. However, we believe this is a complex political issue where carriers are lobbying for their own respective interest. Senior management members of the carriers are considered highly ranked government officials and it is therefore a very delicate issue for the Chinese government," wrote W R Hambrecht analysts in a recent report to clients.

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