China's plan to provide wireless services in 10 cities may affect local broadband operators, according to a research report released on Aug. 5.

"The more convenient wireless access will attract users in the cities away from broadband operators," an analyst with Analysys International, Deng Zhongyuan, told Interfax on Aug. 6.

Deng gave Beijing as an example, as the capital city has the widest wireless network coverage in China. At present, residents living in the areas within the Third Ring Road can access Internet services via terminals with WiFi or WiMax functionality. Meanwhile, the city is expanding the wireless network to cover areas within the Fifth Ring Road by the end of this year and then the whole city by 2010.

According to Deng, temporary residents moving in and out Beijing frequently are the group of people who are most likely to be attracted by the wireless services, as the application procedure for non-residents of Beijing for broadband services with Beijing Netcom is complicated and time consuming.

According to Beijing Netcom's requirements, applicants without a Beijing residence permit, or "hukou", cannot apply for broadband services if they are unable to provide a guarantee or documentation of a mortgaged property. In addition, those without Beijing residence permits are required to pay a deposit in order for the broadband service application to be accepted by Beijing Netcom.

Price competitiveness is another factor that may threaten local broadband operators. Beijing's wireless services have four price levels, specifically RMB 0.12 ($0.018) per minute,  RMB 20 ($2.92) for daily use,  RMB 60 ($8.76) for use over five days, and RMB 80 ($11.68) for use on a monthly basis.

"The RMB 80 ($11.68) fee for monthly subscription is competitive compared to price standards provided by other local broadband operators," Deng said. At present, Beijing Netcom charges users RMB 120 ($17.52) for broadband services per month, and China Mobile charges RMB 660 ($96.35) for half-yearly GPRS network access.
 
In addition to price competitiveness, wireless services will provide a new alternative for broadband users who are not satisfied with current service providers.

Beijing's wireless service provider is CECT-CHINACOMM Communications Co. Ltd. (CECT). Other than Beijing, the company also provides wireless services in Shanghai Municipality and Guangzhou City. As CECT does not own its own networks, it rents bandwidth from China Netcom and China Telecom to provide Internet access to users.

"China Netcom and China Telecom receive lease payments from CECT, however, in the future, the latter is likely to be a competition threat and may lure new and existing subscribers away from the telecom operators," Deng said.

Apart from Beijing, citywide wireless services are planned for the cities of Shanghai, Tianjin, Hangzhou, Qingdao, Wuhan, Nanjing, Guangzhou, Shenzhen and Yangzhou.

Source:INTERFAX