China Mobile has been open in its preference for WCDMA as it can upgrade its existing network, based on GSM, a 2G technology, rather than build from scratch. GSM and WCDMA share the same core networks, which could help China Mobile save some costs if it chooses to upgrade its GSM networks to WCDMA networks.

Some analysts expect the US Government might seek to apply pressure on Chinese regulators on 3G licensing, which could mean the licensing process could be further delayed.
Yet, a big factor affecting the licensing scheme might be the government's intention to restructure the domestic telecom industry.

Status quo

Currently, only China Mobile and China Unicom are offering mobile phone services. China Telecom and China Netcom , struggling with their slowing fixed-line telephone business, are hankering for 3G licences to provide the cellular services.

Many industry analysts expect the government to restructure the industry by merging the top four State-owned operators to three, as part of its efforts to spur effective competition.

China Unicom, which runs cellular networks based on two different technologies, CDMA and GSM, is expected to sell one of the two networks to China Telecom and China Netcom.

Statistics by MII showed that China had 449 million mobile phone subscribers by October.

China Mobile dominates the market. Hong Kong -listed China Mobile Limited had 291 million users by October.

An industry restructuring could create some bigger players which could more effectively compete with China Mobile, analysts said. And 3G licensing could offer a good chance to reshuffle the industry.

The State-owned Assets Supervision and Administration Commission (SASAC) has repeatedly denied it could seek to split China Unicom, but said it is "working on realigning the industry."

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