3G migration strategies in China

In order to continue the strong mobile revenue growth seen in China, operators are driving 2G to 3G migration in saturating urban markets. In the medium term, 3G mobile data and value-added services are the path to urban revenue growth. However, operators will need to rethink their 3G data pricing to achieve their ambitions.


Report Highlights

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Executive summary
In a nutshell
Ovum view
Key messages
External environment facilitates growth
Lack of 3G differentiation makes migration expensive
Mobile broadband is a key revenue growth driver
The three operators should differentiate their growth strategies
Invest in value-added services
External environment facilitates growth
Regulation
Mobile number portability
LTE licenses
Economic environment
User behavior
Growth differs in rural and urban markets
Connections moving to 3G in urban regions, leaving 2G to rural areas
Data revenues drive growth in urban regions
Operators’ 2G to 3G migration strategies
Consistent voice pricing and 3G service subsidies
Consistency in 2G and 3G voice pricing strategies
3G subsidy policies used to differentiate from 2G
Strong reliance on subsidies to drive 3G growth
China Mobile TD-SCDMA handsets focus on low- to mid-spending users
China Telecom CDMA2000 handset prices range from the mid to high end
China Unicom WCDMA handsets at reasonable prices
Heavy subsidies for 3G handsets
Data pricing facilitates dramatic growth of mobile broadband
Keep it simple
Volume-based versus time-based data pricing
Low-priced data plans are a key driver of 3G growth
Loyalty plans help to retain existing users
Recommendations for operators in China
China Mobile
China Telecom
China Unicom
Value-added services opportunities
Application stores
Advertising services
E-commerce




List of Tables
Table 1: Comparison of the three operators’ 3G subsidy policies
Table 2: Operators’ data costs






List of Figures
Figure 1: China 2G/3G connections and penetrations forecast: 2009–14
Figure 2: China mobile voice and data service revenues forecast: 2009–14


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