Chinese users resistant to 3G's charms

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Chinese users resistant to 3G's charms

New services are unnecessary and expensive, says survey

By CAROLINE GABRIEL

Published: 14 April, 2010

READ MORE: China | TD-SCDMA | UMTS

Mobile users in China see 3G as "unnecessary" and "expensive", despite all the marketing and build-out efforts of the three cellcos, according to a new survey by China Reality Research.

This found that 71% of 2G users have no plans to upgrade to 3G and uptake in areas where 3G is activated has only reached 10%. "Most users don't think that there is a need to subscribe to a 3G service," said the research firm, which questioned over 300 customers in March. "Many also think 3G pricing is expensive."

Only 10m customers had signed up for 3G by the end of 2009, and operators were targeting just 30m new subs this year, said CRR. The main problem identified for China Mobile was its TD-SCDMA network, which still has a limited number of affordable and attractive handsets. The cellco is also being more cautious about subsidies than its rivals though it will soon ship a range of low end 3G phones priced below $150, to help meet its target of 10m new customers this year.

For W-CDMA carrier Unicom, the main obstacle to uptake has been high perceived pricing. "Unicom's 3G strategy is not working," says the report, as quoted by TelecomAsia.net. "The minimum monthly 3G plan is high at RMB98 and handset subsidies are only given to customers who are committed to a high upfront payment and expensive monthly plans."

Unicom does plan to increase subsidies to achieve its goal, which is also to add 10m new subscribers by year end. While there are 1.5m iPhone users in China, most of these are still in the grey market, or using EDGE with cheaper tariffs from China Mobile. Unicom - the only official carrier - has reportedly sold only 400,000 iPhones as of January.

CRR believes that China Telecom is the most aggressive on 3G, but it only had 4m EV-DO users at the end of 2009. It also plans to increase low end handsets and subsidies to attract around 10m new users.