China 3G standard needs overseas markets to succeed - ITU

BEIJING, Sept 16 (Reuters) - China’s domestically developed 3G mobile network standard must eventually expand overseas to be successful, one of many hurdles for the commercially untested technology, said the International Telecoms Union (ITU) on Wednesday.

Beijing has tapped state-owned China Mobile 0941.HK, the world's largest wireless carrier, to spend billions developing TD-SCDMA to compete with the already mature and globally accepted 3G standards CDMA2000 and WCDMA.

“Promoting TD in only the domestic market is not enough to succeed, it must expand overseas,” Zhao Loulin, the deputy secretary general of the global telecom organisation, told Reuters.

China Mobile has said profit margins will continue to be pressured as it builds out its expensive 3G network and its recent ARPU -- average revenue per user, a key barometre of profitability -- fell to 75 yuan from 84 yuan a year earlier.

The company said it had less than one million 3G users in June and predicted it would have 3 million by year end, but that is far short of the 10 million the official Shanghai Securities News said the company had originally targetted.

Analysts said the slow acceptance for the TD standard was due to a lack commercially available handsets and poor network infrastructure.

“There are many challenges for TD,” said Zhao.

Zhao said for TD to become widely accepted, its handsets must be able compatible with other networks when there is no TD coverage.

The executive said the Chinese government would need to provide some assistance or incentives for countries to adopt TD technology, but fell of short of saying a direct subsidy was needed.

“If there was money available, that would be better,” he said. “But it’s not just a matter of money. All countries help their companies expand overseas.”

China Mobile's smaller rivals, China Unicom 0762.HK and China Telecom 0728.HK, have been awarded 3G licences for the more mature standards, but they both have much less expertise operating wireless networks.

$=6.83 yuan Reporting by Kirby Chien; Editing by Chris Lewis