China's PHS User Scale is Expected to Reach Its Peak over the Next Three Years with 90.41 Million People.

DUBLIN, Ireland -- Research and Markets (http://www.researchandmarkets.com/reports/c34038) has announced the addition of China PHS Development in 3G Era 2005 to their offering.

Our data indicates that the Personal HandyPhone System (PHS) user volume had reached 65.221 million by yearend 2004. Meanwhile, China Telecom and China Netcom are speeding up their preparation for the launch of 3G license. China Telecom and China Netcom, who will operate 3G and PHS services simultaneously, have to face the considerable pressure from the dual-network operation. Are they going to face the similar dual-network operational problems with China Unicom? How does PHS cooperate with 3G? Such questions are the core issues that telecom operators should focus on and get prepared for. This report has conducted in-depth researches on the PHS networks, terminals, users and services development after the 3G-license issue.

Our Findings

PHS Maturity Stage in 2005

The Chinese PHS market has experienced the market introduction stage in 1998-2001 and growth stage in 2002-2004. Its maturity stage and decline stage are expected to be in 2005-2007 and 2008-2010, respectively.

After 3G-license issue, the PHS and 3G markets will coexist in three to five years.

PHS Network Expansion Rate Decreases

In the Chinese PHS market, the PHS service profits much more in the core and secondary cities than in other cities. The Chinese PHS potential market is decreasing.

After obtaining the 3G license in 2005, China Telecom and China Netcom will continue investing in the PHS systems according to the 3G network commercialization status, PHS user development, market competition and the return of PHS investment.

China Telecom and China Netcom are expected to cooperate in the 3G network construction. This will reduce the 3G network investment by RMB 20 billion. Such cooperation may allow the PHS systems to continue developing.

Since the PHS network and 3G network are absolutely different in terms of the computer room equipments, power supply equipments, base station locations and transmission systems, mobile operators can hardly change the PHS networks into the 3G networks. Therefore, the mobile operators are unlikely to reduce the investment in the 3G network construction.

In order to raise the tremendous fund for the 3G construction, China Telecom and China Netcom will reduce the investment in the current PHS networks.

It is necessary to continue expanding and improving the PHS networks at the beginning of the 3G network construction stage. With the 3G services getting mature, the PHS service importance will decrease and network maintenance will become the primary task for the PHS networks.

Continuous PHS User Scale Development in the Next Three Years

Abundant marketing methods induced the increase of the PHS users in 2004.

The launch of 3G license has drawn the attention from China Telecom and China Netcom. Therefore the growth rate of the PHS user scale will decline in 2005. It is expected that the PHS user scale growth rate will keep on decreasing persistently in the next several years.

Fierce Competition in PHS Terminal Market

The Chinese PHS terminal manufacturers are increasing and the competition is intense in various aspects, such as products and sales channels.

Although the PHS/3G dual-mode mobile phones are feasible in terms of technology and time, the potential market is limited and is dramatically influenced by the mobile operators marketing strategies.

Terminal users main concern on the PHS/GSM dual-mode mobile phones is the different service prices and terminal prices between the mobile telecom services and PHS services. PHS users set their highest acceptable PHS phone price at RMB 1500. It is predicted that the price for the PHS/GSM dual-mode mobile phones will be stabilized between RMB 3000 and 4000.

Our Forecast

The PHS users will increase 32.5 million, to 68 million in year 2005.

The PHS user scale growth rate will largely decrease in the three years after the 3G license is launched. However the PHS user scale will approach its peak in the next three years and will reach 90.41 million in 2007.

The PHS network installation rate will reach 82% in 2005 and will be stabilized at 85% from 2006 to 2007.

The PHS annual investment will considerably drop at the 3G licenses launch, and will gradually decrease afterwards. It is predicted that the PHS investment in 2005 is RMB 3.7 billion, which is 64% less than that in 2004. Moreover, the annual PHS equipment investment will drop to RMB 800 million by 2007.

Topics Covered

1 PHS Life Cycle

2 PHS Development in China

2.1 PHS User Scale and Geographical Distribution 

2.2 PHS Network Capacity and Network Installation Rate

2.3 PHS Terminal Market Competition and Market Expansion

3 3G Development Prospect in China

3.1 The Possibility Analysis on the Chinese 3G license Launch

3.2 Possibility and Feasibility of China Telecom and China Netcoms Cooperation on the 3G Network Construction

4 PHS and 3G Coexistence 

4.1 User Scale Forecast in 2004-2007

4.2 PHS Network and 3G Network Coexistence

4.3 Importance and Feasibility of PHS Dual-mode Terminal

4.4 PHS Services and 3G Services Coexistence

4.5 PHS Users Stable Transition to 3G Users

5 Our Suggestions

Appendix: Our Collection Process & Methodology

Graph Index

Table Index

Companies Mentioned

China Mobile, China Telecom, China Netcom

For more information visit http://www.researchandmarkets.com/reports/c34038