China: The Next Cellular Giant
China, Asia’s top mobile market, will soon be at par with the US in terms of mobile penetration.

Friday, June 15, 2001
China would be at par with the US as far as cellular penetration is concerned. According to Gartner Dataquest Asia, China is Asia’s top mobile market. Surprisingly, the Internet penetration in China lags far behind its cellular penetration. Hence, it is expected that the new Internet users will have their first Internet experience over wireless rather than wire line systems.

At present, the percentage of cellular subscribers in China is just 6.8 percent. But it has been predicted in a study – ‘China Wireless Market’ – that China’s CAGR would be 21.6 percent between 2000 and 2007, which would bring the country’s total subscriber base to about 334 million by 2007. The Strategis Group estimates that there will be a total of 120 million subscribers by the end of 2001. China Mobile, the country’s largest cell phone carrier, is already planning a new billing system, which will encourage more cell phone users to sign on. China Mobile aims to have 100 million mobile subscribers by 2005, with 40 million on a CDMA network.

The high cellular penetration has motivated top telecom companies like Nokia and Ericsson to increase their market shares in China. The demand in China for budget phones is enormous and Ericsson has designed the A2638sc to meet this demand. This is the first phone that is designed to fit a specific market.

Causes of Growth: Increased cellular penetration in China is driven by factors like increased competition, lower terminal prices, service packages and rapid adoption of pre-paid services. The country is in full swing to lead the cellular market.

• Asia: In the year 2000, mobile phone subscribers in Asia-Pacific hit 230 million, representing nearly 52 percent of growth as compared to 1999. And China topped the list with 85.3 million subscribers. Apart from China, Philippines and India have also registered a strong growth year after year. The former had 6.3 million mobile subscribers in the year 2000 – up by 132 percent increase from 1999, while the latter surpassed 3.1 million subscribers to register an increase by 97 percent.
• Europe: A study by Strategy Analytics has predicted a strong growth in the demand for mobile services in Western Europe over the next five years. Cellular penetration in the region is set to increase over 80 percent in 2004. This will contribute to a CAGR of 21 percent in mobile service revenue over the period. The market is projected to be worth almost $200 billion per annum by 2004.
• North America: From 1994 to 1999 cellular penetration rose from 15.6 to 42 percent of households and it is expected that by 2003, nearly 57 percent of all North America households will be digital cellular subscribers.

It is clear from the above that the main challenge, now, for mobile service operators, is to continuously upgrade their services to ensure compelling applications and rich content. The idea is to continue to remain appealing and relevant to the users.