China Telecom one of the world's largest fixed line phone operators will begin offering a mobile phone service from October 1, the company has announced.

The company moved into the mobile market by purchasing the existing CDMA network of local firm China Unicom for $16.1bn in June. The transfer was part of a government-orchestrated reshuffle of China's telecoms market, which has doubled the number of mobile network operators as the country slowly begins to introduce 3G services.

China Telecom plans to upgrade the CDMA network to offer full 3G capabilities next year. The company plans to spend $11.7bn on this and improvements to 2G operations.

“China Telecom will have [a] relatively stronger position to offer fixed mobile and multiple play bundled services (ie voice, broadband, IPTV and mobile) given its leading position in the fixed and broadband market; the relatively lower cost and faster to market to upgrade CDMA networks for 3G services, in comparison with China Mobile’s TD network; relative stronger brand, marketing and customer field service in the potential multiple play bundled services market,” said Hong Kong-based industry observers CW Cheung and Charice Wang of telecoms consultancy, Ovum.

However, they warn that the CDMA network has poorer coverage and revenue per user compared to dominant local mobile firm, China Mobile. They predict China Telecom will face challenges in product development and service offerings, customer segmentation and market positioning, and “customer service transformation (shift from fixed location to on-the-move customer care)”.

China could have more than 64 million subscribers using 3G CDMA technology by 2012, according to forecasts from the Ministry of Industry and Information Technology. The ministry estimates that a similar number will be using WCDMA and approximately half that number will be using the locally-developed TD-SCDMA. China Telecom's own predictions are more optimistic, with the company hoping for 100 million CDMA subscribers within three years, according to Ovum.

Source:vnunet.com