China Mobile to Offer High-Speed Service From April

China Mobile Communications, owner of the world's largest phone company by users, will begin third-generation wireless trials in April as the country prepares to offer high-speed services nationwide this year.

The company will start the trials in eight Chinese cities including Beijing and Shanghai, Rainie Lei, a Hong Kong-based spokeswoman for China Mobile, said by telephone, responding to a Sina.com report earlier.

Handset makers and equipment suppliers including Ericsson AB, the world's largest network manufacturer, are expecting 3G services to spur about $20 billion in spending by China's phone companies, according to CLSA. The trials may raise optimism that the government will provide third-generation services by the Olympic Games in Beijing in August.

“The progress for the tests is coming along as the company said it would,” said Chen Haofei, a China International Capital analyst in Beijing. After the trials are completed, the company will be able to evaluate demand for the service, he said.

China hasn't set a timetable for issuing 3G licenses or said how many it will grant. China Mobile Communications, which will hold the trials on phones that use a locally developed technology, plans to focus on the nation's bigger cities where incomes are higher and customers are looking for services that allow faster downloads of videos and music, as well as video conferencing.

The company will provide 40,000 handsets that use the time division synchronous code division multiple access technology and 10,000 wireless data cards to customers on a paid basis, while 20,000 phones and 5,000 cards will be given to users for free.

“There will be people in China who'll want to experience 3G,” said Duncan Clark, the Beijing-based managing director of researcher BDA China. Demand for the China Mobile service may be held back by “a limited choice of handsets, and it will take time for content providers to develop applications,” he said.

Subscribers will pay a monthly fee of 50 yuan in the trials and local calls will cost 0.40 yuan per minute, China Mobile's Lei said.

Sending short text messages, or SMS, will cost 0.10 yuan each within China Mobile's networks, and 0.15 yuan to networks owned by another operator, Lei said. Video calls will cost 0.6 yuan per minute.

The company will also offer the service in the cities of Guangzhou, Tianjin, Shenzhen, Xiamen, Shenyang, and Qinghuangdao.

ZTE, Samsung Electronics and LG Electronics are among the mobile-phone makers whose handsets have qualified for the service, Lei said.

The phone carrier announced the news to domestic media at a briefing in its office in Beijing this morning. The overseas press weren't invited.

China Mobile, the Hong Kong-listed unit, added users at a record pace in the fourth quarter as it focused on rural areas, where residents' average disposable income is about a third of their urban counterparts. China Mobile gained 7.97 million subscribers in February, its highest monthly additions, for a total of 384.35 million.

Chinese rural dwellers' average annual disposable income for last year was 4,140 yuan, compared with 13,786 yuan for city residents.

China Mobile shares rose 2.5 percent to HK$118.30 at the close of Hong Kong trading, compared with 2.7 percent gain in the benchmark Hang Seng index. The phone company's stock has risen 68 percent this year.