According to the initial plans of the three operators, 3G networks will cover all large and medium-sized cities and most counties in China by 2010.

1-trillion-yuan investment

"The application of 3G technology is more significant in promoting the rapid formation of 3G-related industrial chains," said Liu Jiuru, Deputy Director of the Electronic Technology Information Research Institute of the Ministry of Industry and Information Technology, in his article published by Economic Daily.

Liu also said the three operators' investments in base station construction and business development would total 400 billion yuan ($58.6 billion) this year, and cell phone users would spend more than 400 billion yuan on new 3G handsets. Moreover, 3G also would promote the development of new businesses such as the cultural creative industries, driving up domestic consumption by another 100 billion-200 billion yuan ($14.6 billion-$29.3 billion). Total domestic consumption would reach 1 trillion yuan ($146.4 billion) this year, he said.

Liu said China would see 320 million new cell phone subscribers because of the introduction of 3G technology, while the total number of mobile phone subscribers would reach 1 billion. This was expected to drive up the GDP growth rate by 3 percentage points and create up to 800,000-1 million job opportunities, Liu said.

Furthermore, as the operators ramp up 3G network construction, they will also increase the development of 3G business so that the technology can be widely used in education, art, science, entertainment, telecommunications, commerce, daily work and life, health care, emergency medical service and disaster relief.

Among the three 3G networks, TD-SCDMA will be the most powerful in spurring domestic demand, Liu said. With the encouragement of state policies on TD-SCDMA, domestic manufacturers of telecom equipment, terminal equipment, chips, elements and parts, instruments and cell phones as well as sales agents will be able to enhance their technology. They also will increase their investments in technology transformation, equipment upgrades and research and development.

A slice of the pie

With the massive development of 3G networks in China, cell phone makers are accelerating their research and production of 3G cell phones. Industry insiders estimate that 3G cell phones will account for more than two thirds of the country's total number of cell phones in 2011. An anonymous official from the Yulong Computer Telecommunication Scientific (Shenzhen) Co. Ltd., maker of Coolpad cell phones, said the company would introduce two models of 3G cell phones for China Telecom subscribers at the end of April.

In the meantime, China Telecom plans to purchase 20 million 3G cell phones this year. Besides Coolpad, cell phone makers such as Samsung Electronics and ZTE are all participating in the competition for a slice of the pie. European, American and South Korean cell phone makers also are eager to get in on the action. At a forum on the investment and financing of China's telecom industry last November in Beijing, the world's biggest cell phone maker, Nokia, said that it was prepared to sell all its WCDMA cell phone models in China. American handset manufacturer Motorola is working with China Mobile's 3G network, and its TD-SCDMA cell phones are available nationwide. South Korea's LG is more ambitious, offering 25 3G cell phone models compatible with all three kinds of networks.

Besides the cell phone market, competition for 3G wireless access points is becoming fierce. More and more manufacturers are entering the market. Nokia has said it will enter the market at the end of this year. In the meantime, overseas manufacturers of personal computers, including Samsung, HP and Dell, and domestic brands such as Lenovo, Founder, Haier, Hisense, Tongfang, Malata, Acer and BenQ have all participated in the 3G competition. They have installed 3G wireless access points in their notebooks, calling them "netbooks" to promote their sales.

For mobile operators, notebooks with built-in wireless access points can spur the growth of value-added business. They have started ordering "netbooks" applicable to 3G networks from personal computer manufacturers. Analysys International Consulting, a market research company, estimates that China's telecom operators will order 1.4 million "netbooks" in 2009, and the overall amount will reach 10 million in 2013.