Monday, March 23, 2009

[Wireless] Three kingdoms in China mobile market

If you recently watched the movie "Red Cliff" directed by John Woo, you would know it is a story about a battle of the Three Kingdoms period in the history of China. Although this period is relatively short, it has been greatly romanticised in the cultures of China. Any Chinese people knows a bunch of legends of those three kingdoms (Cao Wei, Shu Han, and Dong Wu). By coincidence, currently there are three big mobile communication companies in China, they are China Mobile, China Unicom and China Telcom. Those three companies compete one another for the China mobile market, which is very similar to those three kingdoms combated for the territory.

Previously, only China Mobile and China Unicom own the operating license for 2G mobile systems in China. At that time, although China Unicom was considered as a competitor of China Mobile, it was still too weak to jeopardize China Mobile's dictatorial control of the mobile market. And China Telecom only has the largest wiring system and has been wishing for the mobile license for a very long time. In order to expediate the development of 3G systems, and to change the unbalanced competition pattern as well, in Jan 2009 China's Ministry of Industry and Information Technology issued 3G licenses to those three companies. China Mobile got TD-SCDMA, China Unicom will develop WCDMA and China Telecom has the grant for CDMA2000.

Technically, China Unicom benefits a lot from 3G license since WCDMA is the most mature system; China Telecom also got they desired - the mobile license; and China Mobile will face a fiercer competition from the other two companies since TD-SCDMA is still "weaker" in the view of development.

However, you have to take good with bad. China Unicom needs to spend a longer time and more efforts to integrate the WCDMA system into its own development. China Telecom lacks of mobile operating experience and cdma2000 has a dim future in 3G long term evolution. Although TD-SCDMA has no technology advantage, China Mobile has the largest 2G system in the world and has accumulated abundant operating experiences over years.

It seems that 3 licenses for 3G is a good choice for competition pattern change. However, my question is, why 3? From the view of history, three kingdoms period is one of the most "bloody" period in China. In the pointview of market, competition of two is the most stable pattern. Because when you have two opponents, you may select one as your ally to combat the strongest. However, this confederation may be variant along with time. When the strongest becomes weak, it may ally with another opponent to conterwork you. This will fluctuate the market and may not be good for the whole industry's developing. Just my two cents. :-)