China's "Little Smart" business will maintain its growth despite the possible launch of third generation mobile communications (3G) this year.
The subscribers of Little Smart, a cheap wireless communication service, will rise by 15.3 million to 101 million by the end of 2006, predicted Wang Jianzhang, director of the planning department with the Ministry of Information Industry (MII).
As it may interfere with the radio spectrum of 3G, Little Smart, also known as the personal hand phone system (PHS), is believed by many experts to be under threat when China launches 3G.
The Little Smart and 3G have different market orientations; they can develop independently, said an expert with the Telecommunications Academy under the Ministry of Information Industry.
3G is targeting the high-end users who are interested in the mobile data businesses while Little Smart, with bargain rates and one-way charges, is feeding the wireless communication demands of common people, said the expert who did not give his name. Therefore, Little Smart and 3G will be complementary to each other and coexist in the long run, he said.
The network optimization, technology and business innovations are maintaining the development of this cheap service, the expert said.
Little Smart has been criticized for its weak signal and being non-user-friendly. The main provider of the technology, UT Starcom, has made heavy investment to improve it.
The separation of card and handset allows subscribers to change the handset without changing the number. Short message services and multi-media message services have made Little Smart more like mobile phones.
UT Starcom is working to improve the signal range of Little Smart. A solution combining the PHS with a fixed line has been put into application.
The subdivision of the market and managerial innovation will increase the subscribers of this service, the expert said.
Government statistics show that approximate 60 percent of the newly added fixed line subscribers in China last year were "Little Smart" users. By the end of 2005, China's PHS users had topped 85 million.
China Telecom and China Netcom, the two fixed line operators in China, are going to invest 5 billion yuan (about 620 million US dollars) to optimize the PHS networks.