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Mobile Wireless Users in China Still Mostly Tied to 2G Technology

27 June 2013

The more than 1 billion mobile wireless users in China remained connected for the most part via 2G technologies no longer being used in the developed world, even as efforts continue among the country's three main telecom operators to expand a rapidly growing 3G base, according to a China Research market tracker report from information and analytics provider IHS.

Of the 1.15 billion users in China that had mobile subscriptions at the end of the first quarter, 864.8 million-or 75 percent-used 2G technologies for wireless access. In comparison, subscribers to the newer 3G technologies numbered 280.3 million, a clear minority at 25 percent.

Despite the lopsided share between the two technologies, 3G continues to post impressive growth, with sequential expansion in the first quarter alone reaching 24.0 percent. Meanwhile, 2G subscriber growth declined during the latest period, down 1.4 percent.

To be sure, China is not unique in its preponderant use of a technology long superseded by newer 3G and even 4G technologies in markets such as the U.S., Europe and Japan, because 2G networks are still the only method of wireless access in many parts of the world. What the numbers show, however, is the colossal potential for 3G use that remains in China-unequalled anywhere else except in India, which also has a population exceeding 1 billion and likewise remains extensively 2G-connected.

The push toward increasing 3G use in China is expected to continue, with this year's 3G mobile user base expanding 67 percent to 375.6 million, out of a year-end wireless subscriber total forecast to reach 1.22 billion. By 2015, 3G users will become the majority at 55 percent of the wireless user market, finally relegating 2G to minority position. 

Also projected to increase quickly is the mobile user base for 4G. From a mere 1.0 million this year, the number of 4G subscribers in China will hit an estimated 439.9 million by 2017, larger than even 2G by then.

The Big Three: China's big-budgeted operators

All of China's telecommunications and wireless services are controlled by the country's three state-owned carriers-China Mobile, China Unicom and China Telecom.

China Mobile, with 55 percent of the country's 2G base stations, plans to aggressively expand its 3G network this year after falling behind in the initiative. More than 725 million users were signed up to China Mobile at the end of the first quarter, and the operator's mobile capital expenditure for 2013 is budgeted at $33.6 billion.

No. 2 China Unicom claimed 250 million subscribers in comparison. It had 29 percent of the country's 2G base stations, but has more 3G base stations than China Mobile. China Unicom's 2013 budget for capital expenditures is the smallest among the Big Three, however, at $13.6 billion. And unlike its other two rivals, China Unicom has not set aside any money to develop 4G infrastructure.

Third-ranked China Telecom counted 168 million subscribers in the first quarter and controls 16 percent of the country's 2G base stations. It has a budget this year of $14.4 billion, and is employing a strategy to maintain stable growth in 3G, where it owns 24 percent of the country's base stations under that technology.

Read more >> Chinese Mobile Operators Prep for LTE



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