Criticism Of Chinas Telecoms Policy

A senior representative of China’s telecoms industry has slammed the government’s introduction of new mobile phone services as slow, opaque and ineffective. See original Article

Such direct and trenchant criticism of China’s powerful policymakers is rare, and reflects rising frustration over the delay in introducing “third generation” wireless services to the world’s biggest mobile market.

It also highlights the challenges to Chinese industrial development posed by hazy demarcation of corporate and bureaucratic interest – even in sectors such as telecoms where international investors have multi-billion-dollar stakes.

In an interview with the Financial Times Thursday, Shi Jixing, vice-chairman of the China Mobile Communications Association, said officials had failed to set a unified policy on 3G, while routinely interfering in operators’ strategic choices.

Beijing was missing an opportunity for 3G networks – which allow the use of data-intensive services such as video on mobile handsets – to become a telecoms powerhouse, said Mr Shi, who is also a member of China’s National People’s Congress.

Policy, he said, was deadlocked between the Ministry of Information Industry, the
Nat­ional Development and Reform Commission (NDRC), a state assets commission, and the State Council’s “informatisation” office.

“There are unclear responsibilities and low efficiency,” he said. “This means the excellent strategic opportunity presented by 3G is not being grasped in time.”

Chinese regulators have for years refused to discuss how, or when, they may issue 3G licences, decisions affecting billions of dollars in telecoms infrastructure spending and the fortunes of the country’s four big internationally listed operators.

Telecoms analysts say officials now appear to favour TD-SCDMA, a Beijing-backed wireless standard, by approving large-scale construction of “trial” networks before even setting a date for 3G licence issuance. Regulators are also expected to force China Mobile, the dominant wireless operator, to adopt TD-SCDMA – which will upset European backers of the WCDMA standard and supporters of its US rival, CDMA2000.

A desire to give TD-SCDMA’s Chinese developers more time to make it work is seen as the main reason for delaying the introduction of 3G in China, which already has more than 400m mobile phone subscribers and adds millions more each month.

However, Mr Shi, the former head of a big telecoms equipment manufacturer, criticised such interference in the business of state-owned operators that did not want TD-SCDMA.

“The government is mishandling its own business by failing to issue licences in a timely way,” he said, “and now it is pouring time and energy into meddling in enterprises’ affairs.”

Mr Shi’s communications association represents local telecoms operators and equipment
manufacturers, and inter­national companies with operations in China. The association has a TD-SCDMA forum, but Mr Shi warned that Beijing’s fav­oured standard could end up marginalised. The best way to help it find an appropriate role would be to open the market to private and foreign operators.