Expect China Unicom to be split, ahead of 3G-licenses

China's central planners have at last developed a plan for the future of the country's telecom industry, after years of deliberations and much infighting. According to AFX a study group of the National Development and Reform Commission the best plan is to split up China Unicom and divide its assets between fixed-line operators China Telecom and China Netcom. The interest at stake are huge, so whether this proposal is going to make it might still be unclear at this stage.
China Unicom is a strange side product of the country's fast changing economic structure. Originally it was established in the beginning of the 1990s as a kind of competitor next to monopolist China Telecom. Like in many more industries at the beginning of China's industrial reform, it was a rather theoretical competition, mainly window dressing. When the Ministry of Information Industry (MII) was established in a restructuring of ministries both state-owned companies ended up in the same ministry, ending even the illusion of competition.
Since then former Prime Minister Zhu Rongji made it into one of his priorities to split up China Telecom and end the powerbase of MII. In between he forced China Unicom as a favor during a US state visit to adopt the US-technology for mobile phones(CDMA), next to the European GSM-system that was already used by both China Unicom and what would become China Mobile.
Since then China Mobile developed into its current monopolistic position, with China Unicom meekly following most of the major policy changes made by China Mobile. Both fixed-line operators China Netcom and China Telecom were left without mobile licenses, putting them in the long run in an unsustainable position as the fixed lines are being replaced by mobile connections.
By giving the CDMA-system to China Telecom and the old GSM-system to China Netcom, both would have a decent option to roll out a mature 3G-system, next to China Mobile that will have to adopt China's 3G system TD-SCDMA. When the proposal proves acceptable to all parties (it certainly looks logic), issuing the 3G licenses would be easier too.
China would end up having then three 3G-systems, certainly a compromise, like giving a city three sewage systems next to each other and in that way increasing the initial investments.