China Unicom, the smaller of the two cellular operators on the Chinese mainland, has been awarded a licence to build a mobile network in Macao based on third-generation (3G) technology.

The firm is expected to invest 48 million Macao patacas (US$6 million) by the end of this year to upgrade its current 2G CDMA (code division multiple access) network in Macao to the 3G network based on the CDMA2000 1x standard.

The 3G network will enable Unicom to offer services such as high-speed downloads and mobile Internet access as well as video calls to its subscribers.

A spokesman for the parent of Hong Kong-listed China Unicom Ltd said Unicom is now also applying for a licence from the Macao Special Administrative Region to operate the 3G business.

"We expect to secure the licence in October, which will enable Unicom to start signing up local customers," he told China Daily.

In 2007-08, Unicom will increase its investment in the 3G network by no less than 40 million Macao patacas (US$5 million).

Unicom was awarded a service licence by the Macao government last March enabling it to operate a 2G CDMA mobile network in Macao, defeating four other bidders including SmarTone Telecommunications Holdings and Macao's leading operator Companhia de Telecomunicacoes de Macao.

This made Unicom the first mainland telecom operator to offer mobile services outside the mainland.

The firm was awarded a licence last May to offer roaming services for visitors to Macao from the mainland and other parts of the world using CDMA services.

Previously there was no CDMA service provider, thus CDMA users from outside Macao were unable to operate their mobile phones there. Local residents were served by mobile services based on the GSM (global system for mobile communications) standard.

CDMA is popular in South Korea, Japan, North America and the Chinese mainland.

Analysts do not expect the mobile phone service in Macao, which has a population of more than 440,000, to generate large revenue for Unicom.

As mobile phone use is high in Macao, it will be hard to convince GSM users to switch to CDMA services, said an analyst who wished to remain anonymous.

"Unicom's push into the Macao market is largely symbolic," the analyst said.

Unicom is betting on the 3G network in Macao to gain experience operating a commercial 3G business.

The central government has yet to decide when to license operators, including Unicom, to build 3G networks on the mainland. Many industry observers now expect the 3G licensing to occur in the first half of next year at the earliest.

Unicom has built some trial 3G networks in cities such as Shanghai. And the Macao experience could help Unicom gain the upper hand in the mainland's 3G market.

Source: China Daily