My 3G Nephew

16 Jun
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By Ren Fang | Tuesday, June 16, 2009

January 2009 marked a momentous moment in China – 3G licenses were issued to just 3 mobile companies in China. It was a long-time waiting, with rumors of 3G in China since the middle of 2004, the global mobile industry waits in anticipation to see how it will play out in China. Although The Economist suggested in 2001 that the sizable investment in the 3G infrastructure is one “the biggest gamble in the economic history of mankind”, the sheer size of China’s market makes this a very interesting market for content providers with huge risks and huge rewards.

To put China’s mobile market in perspective – China has the largest ‘pure mobile population’ – 670 million subscribers, 400 million of whom does not own a personal computer (MIIT 2009). China is also the largest mobile entertainment population – with 35% of the mobile subscribers in China who use their phones to listen to music, compared to 6% in the US (M:Metrics 2008). China also happens to be the largest mobile Internet population – with 117 million mobile subscribers who have accessed Internet through mobile in China (CNNIC 2009). Lastly, China is the largest mobile operator – feeding the 3G network with $6.2 billion in 2009.

Even the deep-frozen tundras of venture capitals investments are thawing and more dollars are flowing to Chinese 3G start-ups despite this cold economic winter. And, the global media companies, who have been scared off for years from this ‘pirate land’, are also eyeing the China market with new 3G strategies. It seems that with all this buzz about the 3G network in China, everyone is packing (and packing well) for a ride on the ‘3G train.”

As Mr. Tomi Ahonen, the former Global Head of Business Consulting at Nokia, pointed out:

“We can now say, with great confidence, that any 3G investment in an Industrialized World country, that has been reasonably well managed, should turn a profit.”

Let me stop right there before I claim my ticket on the 3G bandwagon. Yes, all roads seem to point very positively for an unprecedented growth for China’s mobile industry. Yes, content providers and mobile operators all herald and praise the beginning of the 3G network. However, in a country where free content is king and consumers behave with their wallets, you have to wonder will China be the exception to the rule?

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