After years of deliberation, analysts and industry executives say, Beijing probably will start awarding licenses for so-called third-generation, or 3G, networks in the next six months or so, to give state-owned phone companies time to prepare services for the 2008 Olympics in Beijing. China already is the world’s largest mobile-phone market, and the upgrade will create what is likely to become the world’s biggest 3G wireless network.
Huawei and ZTE are expected to be big beneficiaries of all that spending. They have become major competitors in the global telecommunications industry in recent years, but they were in their infancy when China built the bulk of its existing cellphone system in the late 1990s. As a result, the two companies accounted for a combined share of only about 5% of sales of current-generation equipment in China, analysts say.
Huawei and ZTE have been pouring resources into 3G. Each company claims it has about 6,000 engineers developing 3G equipment and handsets, and they have already sealed 3G deals with smaller operators overseas.