Lots of rumors about the long-awaited telecom restructuring this month. Interestingly, it was sparked by a Credit Suisse report that cited Yang Hua, sec-gen of the TD-SCDMA Industry Alliance, as saying that the central government could announce a decision on 3G licensing “within days.” According to Reuters, the report also said the State Council would meet this week to finalize restructuring plans, and that an official announcement would be made soon.

All the I-bank analyst reports I’ve ever read have been pretty dry (Jonathan Anderson at UBS excepted!), and certainly not a source of exciting breaking news. Now, I’m interested in getting my hands on a copy of the CS report.

Then Marbridge Consulting’s daily newsletter provided a slew of Chinese-language media stories circulating the same rumor. Sina Tech regurgitated the Credit Suisse news. Tencent Tech reported on internal moves at the telcos suggestive of restructuring plans.

SCMP added fuel to the fire, with a report citing anonymous sources claiming that the plan had already been confirmed at a State Council meeting in Beijing last Friday. It said that another meeting this week would be held to work out implementation and management issues.

“The proposal is being discussed and the officials are going to decide senior management at the operators,” a source said yesterday.

Yesterday, I also noticed that Isaac Mao’s Twitter feed contained a message about a share-swap between Unicom and Netcom, although a check through HKEX and SEC filings yesterday didn’t reveal any announcements about it.

Stocks of China Telecom have risen because it’s expected to get a mobile operating license after the restructuring, while China Mobile shares dropped.

The Reuters story also said that Yang, Credit Suisse’s source, rebutted the report.

“It could be early, it could be late, but it won’t be soon,” Yang told Reuters in an email provided in response to questions.

So - the rumors continue to build. It’s worth noting, though, that this restructuring has been years in the making. Nothing may come out of it this time.

Links

Reuters: China close to telecom sector revamp, analysts say

SCMP: Telecoms carriers in play on talk of industry reform completion

Marbridge Daily: Rumor: State Council to finalize telecom restructuring plan

Marbridge Daily: Rumor: Telecom operators prepare for restructuring

The Chinese-English language barrier has allowed innovative companies to carve out niches in the language learning market. The arbitrage of English and Chinese, in particular, can be a lucrative practise.

One company that’s been doing this for awhile is Praxis, which runs Chinesepod out of Shanghai. Chinesepod is a podcast and website that teaches users Chinese. The podcast is free, but users pay a subscription fee for extra services. Fees start at US$9 a month for the basic package, which includes access to PDFs of dialogues, to US$200 for a year with all the bells and whistles, which includes daily practice phone calls from a Chinesepod staff member.

I’ve spoken to the Chinesepod team at their cool warehouse office near Xintiandi, and they say they’re profitable (but won’t disclose figures). They’re certainly enthusiastic about the possibilities of ‘language-casting’ (my shorthand for language learning podcasting… which is a mouthful) and have been chatting up partners and investors to expand their operations. (more…)

About this time last year, China Economic Review was planning a telecom story to roughly coincide with the issue of the next generation 3G mobile licenses.

“They’ll come in the first quarter of 2006,” people were saying, sending the Hong Kong share prices of Chinas Mobile, Unicom, Telecom and Netcom into a frenzy.

Needless to say, the licenses were not forthcoming and the peak and trough in the telecom stock prices was merely the first in a series of expectation-followed-by-disappointment fluctuations.

And now we discover that China has launched the world’s first 4G standard while its 3G counterpart still sits in the blocks. Apparently, the 4G “FuTURE Project” - which allows data transmission at 100 megabytes per second - will soon start trials running to 2010.

And then what? Will this standard eventually see the light of a commercial day?

By most accounts, 3G has been delayed due to problems with TD-SCDMA, China’s homegrown version of the telecom standard. Apparently the kinks are now ironed out and it is ready for deployment - and it can compete with the established 3G standards WCDMA and CDMA2000.

But is this really the point? China cannot allow TD-SCDMA to fail due to the political and financial capital that has been shoved behind it. White elephant or not, someone is going to be landed with the dubious honor of carrying this national technological torch.

It’s quite possible that the continued delays in the issuing of licenses is not so much driven by system hiccups as fierce lobbying by the telecom operators over who doesn’t get TD-SCDMA.

What does this mean for 4G? The risk is it will simply be a repeat performance of 3G - a standard that came to the market hopelessly late because it was developed behind closed doors, away from the commercial forces that should direct its evolution.