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Telecommunications Policy

Telecommunications Policy 36 (2012) 888–900

0308-59

http://d

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URL: www.elsevier.com/locate/telpol

Developing mobile telecommunications to narrow digital dividein developing countries? Some lessons from China

Becky P.Y. Loo n, Y.L. Ngan

Department of Geography, The University of Hong Kong, Pokfulam Road, Hong Kong

a r t i c l e i n f o

Available online 18 October 2012

Keywords:

Digital divide

China telecommunications

Mobile technologies

3G (Third-generation technology)

Government policie

61/$ - see front matter & 2012 Elsevier Ltd. A

x.doi.org/10.1016/j.telpol.2012.07.015

esponding author. Tel.: þ852 3917 7024; fax

ail addresses: bpyloo@hku.hk (B.P.Y. Loo), elin

a b s t r a c t

This study examines the question of whether the geographical digital divide in China has

reduced with the introduction of mobile, including 3G, telecommunications. Geographical

digital divide is measured primarily by teledensity at the provincial level. Changes of the

geographical digital divide over time are analyzed within the framework of hardware,

software, and other factors. Following this analytical framework, mobile or wireless

telecommunications has higher potential of equipping the poor and narrowing the digital

divide, especially in developing countries. In terms of hardware, the installation cost of

wireless technology is often lower than fixed-line telephone services, especially in remote

rural areas and/or areas of difficult terrains. The hardware required by users, notably

mobile handsets, is also cheaper to own than personal computers (PCs). In terms of

software, a greater variety and more flexible packages are often offered for mobile

telecommunication services, and most applications on mobile phones are simpler and

more user-friendly. Moreover, the requirements of mobile technologies on some other key

factors known to affect information and communication technology (ICT) adoption rates

are also lower. In particular, the requirements for language, especially English, proficiency

and computer literacy are lower. Furthermore, proactive government measures have been

implemented in China to narrow the digital divide through supportive policies influencing

the factors named above. Under these circumstances, the well-known association between

economic growth and widening digital divide (a difficult dilemma faced by governments of

most developing countries) has been reversed in China after 2005.

& 2012 Elsevier Ltd. All rights reserved.

1. Introduction

Digital divide is broadly conceptualized as the division or gap between those who have access to ICT and are using iteffectively, and those who do not (Bridges.org, 2001). While the term has ‘‘defied a consented definition since itsconception’’ (Hilbert, 2011, p. 715), the digital divide is clearly ‘‘not just about e-technology availability but also otherdimensions like accessibility, affordability, reliability, speed and utilization’’ (Loo, 2012, p. 187). In this light, the digitaldivide has always existed among different countries (Batty & Barr, 1994; Beilock & Dimitrova, 2003; Hargittai, 1999; Loo,2012; Rasanen, 2006), different areas within countries (Chakraborty & Bosman, 2005; Spooner, 2003), and among differentgroups of people (Chen, Lin, & Lai, 2010; Gideon & Gabel, 2011; Horrigan, 2007). In this paper, the geographical digitaldivide is examined. A simplified framework for analyzing the geographical digital divide is shown in Fig. 1. The first set of

ll rights reserved.

: þ852 2559 8994.

gngan@gmail.com (Y.L. Ngan).

Geographical Digital Divide Key issues: • Geographical scale/Spatial unit of analysis • Key ICT indicator(s), e.g. teledensity vs

bandwidth

Hardware Factors Key issues: • Infrastructure/

Availability• E-devices, e.g. PCs

and mobile phones used by individuals

• Other relevant facilities and equipment

Software Factors Key issues: • Service quality, e.g.

cost, speed and reliability

• Type, e.g. Bandwidth

• Ease of use • Number, type and

attractiveness of applications

Other Factors Key issues: • Wider economy,

notably GDP per capita

• Technologicalliteracy

• Language• All other factors

deemed to be relevant to ICT adoption

Government Policies

Fig. 1. An analytical framework of geographical digital divide.

B.P.Y. Loo, Y.L. Ngan / Telecommunications Policy 36 (2012) 888–900 889

key issues relates to defining appropriate geographic scale and ICT indicator(s). The current analysis uses provincialadministrative units in China as the unit of analysis; and the number and density of subscribers to different types oftelecommunication services are analyzed. No doubt, the Internet bandwidth reflects the contemporary digital divide ingreater details (ITU, 2003). However, the density of subscribers is the most consistent indicator that reflects theavailability, affordability and desirability of different types of telecommunication services to Chinese citizens during thestudy period from 1978 to 2011. The data used are mainly official data published in the China Statistical Yearbook (NationalBureau of Statistics of China, various years) and the Annual Report of China’s Communication Industry Statistics (ZhonghuaRenmin Gongheguo xinxi chanyebu, various years).

By comparing the provincial disparities of the fixed-line and mobile eras, this study examines the question of whetherthe geographical digital divide in China has reduced with the introduction of mobile services (including 3G technologies).Changes in the geographical digital divide over time are affected by a multitude of factors, which are analyzed in terms ofthe hardware, software and other factors (Fig. 1). Hardware factors mainly refer to the physical infrastructure, facilities andequipment necessary to support a telecommunication technology. In remote rural areas and/or areas of difficult terrains,the installation cost of wireless facilities is often lower than fixed-line telephone networks, whether copper or optic fiber(Fosu, 2011; Harwit, 2008). The provision of infrastructure in many central and western provinces in China has beenparticularly challenging due to the complex physical geography; and the Qinghai-Tibet railway is a typical case in point(Wu, Li, & Liu, 2010). To individual users, having the relevant equipment is also essential. With regard to Internet access,the cost of owning PCs using the fixed-line technology is often much more expensive than that of owning smart phonesusing the wireless technology.

Software factors mainly refer to the type and quality of telecommunication services, including bandwidth, cost, speedand reliability, and the ease of use of the equipment and its associated applications. With mobile telecommunications, agreater variety and more flexible service packages are often offered. Apart from voice telephony, smart phones can supportmany different non-Internet-based applications. With subscriptions to third-generation (3G) mobile telephone services,many real-time Internet applications are available. Compared with software on PCs, these mobile applications are simplerand more user-friendly.

Last but not least, the requirements of mobile technologies on some other key factors known to affect ICT adoption are alsolower. Many studies on digital divide have pointed to economic factors, particularly income per capita, to be the most importantfactor in affecting ICT penetration (Beilock & Dimitrova, 2003; Hargittai, 1999). However, other factors such as education level,religion, degree of openness/freedom, race, language and institution were found to be important as well (Beilock & Dimitrova,2003; Chakraborty & Bosman, 2005; Fong, 2009; Hargittai, 1999; Loo, 2003, 2007; Roycroft & Anantho, 2003; Tengtrakul & Peha,2011). With the hardware and software characteristics described above, many barriers common in lagging regions of developingcountries, namely lower education level, more ethic minorities, lower language proficiency, poorer technological literacy andlower degree of openness become less forbidding. In relation to the theory of innovation diffusion (Rogers, 2003), the users’friendliness of mobile technologies is associated with a faster rate of adoption of an innovation and, hence, a steeper logistic curvefor reaching the inflection point of cumulative adoption in a society within a shorter period of time.

Table 1Number and density of fixed-line and mobile phone subscribers, 1978–2010.

Year Fixed-line telephone Mobile telephone

Number of subscribers (in 10,000) Density (per 10,000 population) Number of subscribers (in 10,000) Density (per 10,000 population)

1978 193 20.1 – –

1979 214 21.91 – –

1985 312 29.5 – –

1990 685 59.9 2 0.2

1991 845 73.0 5 0.4

1992 1,147 97.9 18 1.6

1993 1,733 146.2 64 5.4

1994 2,730 227.8 157 13.1

1995 4,071 336.1 363 30.0

1996 5,495 449.0 685 56.0

1997 7,031 568.7 1,323 107.0

1998 8,742 700.7 2,386 191.3

1999 10,872 864.3 4,330 344.2

2000 14,483 1142.7 8,453 666.9

2001 18,037 1413.3 14,522 1137.9

2002 21,422 1667.7 20,601 1603.8

2003 26,275 2033.2 26,995 2089.0

2004 31,176 2398.4 33,482 2575. 8

2005 35,045 2680.2 39,341 3008.7

2006 36,779 2798.0 46,106 3507.6

2007 36,564 2767.3 54,731 4142.2

2008 34,036 2562.9 64,125 4828.6

2009 31,373 2350.9 74,721 5599.2

2010 29,434 2195.1 85,900 6406.1

Source: National Bureau of Statistics of China (various years) and Zhonghua Renmin Gongheguo xinxi chanyebu (various years).

B.P.Y. Loo, Y.L. Ngan / Telecommunications Policy 36 (2012) 888–900890

Fig. 1 further shows that the above factors can be shaped by government policies. Highly uneven development oftelecommunications in a country can lead to social instabilities; and many studies urged governments to bridge the gapbetween the population of haves and have nots (Harwit, 2008; Lee, 1997; Madden, 2010; Xia, 2010). Nonetheless, thedigital divide often widens with the economic development of a society because wealthy individuals and areas are likely tohave higher access to advanced telecommunication technologies (Bagchi, 2005; Moss & Townsend, 2000). Providinguniversal access is one of the strategies for governments to address the digital divide by providing or guaranteeing aminimum level of services to all individuals in a society (Alleman, Rappoport, & Banerjee, 2010; Levin, 2010; Mitomo &Tajiri, 2010; Xia & Lu, 2008). Some scholars argue that private sector participation, competition and effective regulation(PCR policies) are the solutions to digital divide (Utsumi, 2002). Innovative ways of mobilizing investment, programs ofsector reforms based on competition, private sector participation and effective regulations should be encouraged,especially in developing countries. However, the United Nations (UNCTAD, 2006) suggests that successful diffusionefforts must go beyond the PCR policy. As illustrated in Fig. 1, proactive government policies can be formulated to narrowthe geographical digital divide.

2. Background: The Chinese context

Since 1978, China had introduced the Open Policy and economic reforms. Table 11 shows the number and density offixed-line telephone and mobile telephone subscribers from 1978 to 2011. In the early stage of the Open Policy, there werearound 1.93 million fixed-line telephone subscribers. The fixed-line teledensity was only about 20.1 subscribers per 10,000population. It increased more than tenfold to 227.8 in 1994 and 80 times after a decade to reach 1667.7 in 2002. Due to theincreasing popularity of mobile telephones, the number of fixed-line telephone subscribers recorded negative growth since2008. And the fixed-line teledensity reached a peak at 2798.0 subscribers per 10,000 population in 2006.

Compared to the growth of the number of fixed-line telephones, the development of mobile telecommunicationnetwork has even been faster. The mobile teledensity was merely about 0.2 subscriber per 10,000 population. By October2003, the number of mobile telephone subscribers (270.0 million) exceeded the number of fixed-line telephonesubscribers (262.8 million). In 2010, there were 859.0 million mobile telephone subscribers or 6406.1 subscribers per10,000 population. Throughout the study period, the mobile teledensity has continued to rise and its growth has outpacedthe population growth rate. Similarly rapid rate of mobile telephone subscriptions was recorded in India, with 119 and6412 subscribers per 10,000 population in 2002 and 2010, respectively (World Bank, 2012).

1 All telecommunication data in Table 1 are end of October, rather than end of December, data.

Fig. 2. Rural-urban disparity in fixed-line telephone services, 1978–1990.

B.P.Y. Loo, Y.L. Ngan / Telecommunications Policy 36 (2012) 888–900 891

3. From 1978 to 1990: Widening provincial disparity during the fixed-line era

According to official statistics, mobile telephones were first introduced in China in 1987 and there were only about 20,000subscribers in 1990. Hence, the period of 1978 to 1990 was considered as the fixed-line era in China. This section first reviews andcompares the telecommunication development between the coastal and inland regions during the fixed-line era. Under the OpenPolicy, China has experienced very rapid economic growth. Its average annual GNP growth was 8.7% between 1979 and 1991. Theper capita GNP rose from RMBf379 in 1978 to RMBf2288 in 1992 (National Bureau of Statistics of China, various years). However,the economic growth was uneven with the coastal provinces and cities growing much faster than inland and rural areas (Lee,1997; (Vogel, 1989). Over this period, China had exhibited a serious rural–urban disparity in the fixed-line telephonedevelopment as well. Fig. 2 shows the urban, rural and national densities of fixed-line telephone subscribers in China. In theurban areas, the teledensity increased by about 2.5 times from about 69.0 subscribers per 10,000 urban population in 1978 to178.2 subscribers per 10,000 urban population in 1990. In contrast, the density of rural fixed-line telephone subscribers hadgrown much more slowly (1.9 times) despite its lower base of 9.2 subscribers per 10,000 rural population in 1978; and stayed at arelatively low level of 17.5 subscribers per 10,000 rural population in 1990. In other words, the difference in urban and rural fixed-line telephone subscribers per 10,000 people has widened from 59.8 in 1978 to 160.7 in 1990. Notwithstanding the increase innational per capita income in this period, the rural–urban gap in fixed-line teledensity had not narrowed but widened over time.

Apart from the disparity between urban and rural areas, uneven development of telecommunication services alsoexisted between the coastal and inland regions. Table 2 shows the number and density of fixed-line telephone subscribersbetween 1981 and 1990. It shows that the top provinces/provincial municipalities in fixed-line teledensity were all locatedin the more developed Eastern coastal region2. In 1990, Guangdong had the largest number of fixed-line telephones(834,000), followed by Liaoning (380,000), Shanghai (361,000), Zhejiang (341,000) and Jiangsu (335,000). These fiveprovinces and cities possessed nearly 40% of the fixed-line telephones in China. Throughout this period, the highestteledensities were all achieved in the largest, most developed urban municipalities along the coast. In Shanghai (270.4)and Beijing (256.0), the number of fixed-line telephone subscribers were over 250 per 10,000 population in 1990.However, Tibet (8000), Ningxia (22,000), Qinghai (24,000), Hainan (30,000) and Guizhou (67,000) – the five bottomprovinces – accounted for only 2.65% of the national total. In terms of teledensity, Guizhou (20.4) and Sichuan (21.9) wereonly having about 20 subscribers per 10,000 population in 1990.

From 1981 to 1990, the range (maximum–minimum) in provincial fixed-line teledensity more than doubled from 98.7 to250.0 per 10,000 population. Overall, the coefficient of variation (CV)3 is a key indicator measuring the statistical dispersion ofthe provincial datasets. Both in terms of the absolute number and density of fixed-line telephone subscribers, the CVs haverisen from 1985 to 1990. The fixed-line teledensity in East China (1161.3 subscribers per 10,000 people) was more than twicethose in Central (428.1 subscribers per 10,000 people) and West China (347.5 subscribers per 10,000 people) in 1990.

2 East China refers to Beijing, Tianjin, Liaoning, Shanghai, Jiangsu, Zhejiang, Fujian, Shandong, Guangdong and Hainan. Central China refers to Hebei,

Shanxi, Inner Mongolia, Jilin, Heilongjiang, Anhui, Jiangxi, Henan, Hubei and Hunan. West China refers to Guangxi, Chongqing, Sichuan, Guizhou, Yunnan,

Tibet, Shaanxi, Gansu, Qinghai, Ningxia and Xinjiang.3 CV is defined as the ratio of the standard deviation to the mean of a data series. Distributions with CVo1 are considered having low-variance,

while those with CV41 are considered having high-variance.

Table 2Disparities in fixed-line telephone subscribers at provincial and regional levels, 1981–1990.

1981 1985 1990

Number of

subscribers (in

10,000)

Subscribers per

10,000 people

Number of

subscribers (in

10,000)

Subscribers per

10,000 people

Number of

subscribers (in

10,000)

Subscribers per

10,000 people

Top provinces/provincial municipalities

1 Liaoning 16.1 Beijing 106.3 Liaoning 21.5 Shanghai 131.3 Guangdong 83.4 Shanghai 270.4

2 Guangdong 13.8 Shanghai 100.8 Guangdong 18.3 Beijing 129.8 Liaoning 38.0 Beijing 256.0

3 Henan 13.1 Tianjin 53.9 Shanghai 16.0 Tianjin 62.7 Shanghai 36.1 Tianjin 137.5

4 Shandong 12.5 Liaoning 45.6 Shandong 15.8 Qinghai 49.9 Zhejiang 34.1 Guangdong 131.4

5 Shanghai 11.7 Jilin 34.6 Jiangsu 15.3 Jilin 42.1 Jiangsu 33.5 Liaoning 95.8

Bottom provinces/provincial municipalities

1 Ningxia 0.8 Sichuan 7.7 Tibet 0.6 Sichuan 13.8 Tibet 0.8 Guizhou 20.4

2 Tibet 0.4 Anhui 12.7 Ningxia 1.1 Anhui 15.4 Ningxia 2.2 Sichuan 21.9

3 Qinghai 1.4 Guizhou 14.2 Qinghai 2.0 Guizhou 15.6 Qinghai 2.4 Hunan 23.7

4 Xinjiang 3.2 Hunan 14.9 Gansu 4.1 Hunan 15.9 Hainan 3.0 Anhui 25.0

5 Gansu 3.4 Gansu 17.5 Guizhou 4.6 Henan 18.6 Guizhou 6.7 Guangxi 25.6

Rangea 15.7 98.7 21.0 117.5 82.6 250.0

Mediana 7.6 22.3 8.8 25.4 14.6 42.4

Meana 7.5 29.2 9.6 35.4 18.9 64.6

CVa 0.5 0.8 0.5 0.8 0.8 1.0

Region

Easta 95.5 417.4 127.2 524.0 315.2 1161.3

Centrala 81.6 221.3 96.2 250.8 170.2 428.1

Westa 45.0 221.3 53.9 251.9 82.6 347.5

Source: National Bureau of Statistics of China (various years) and Zhonghua Renmin Gongheguo xinxi chanyebu (various years).a While only data of selected provinces/provincial municipalities are shown in this table, summary descriptive statistics are based on the entire provincial database. Moreover, data in this Table have been

rounded up. All calculations are based on raw data. Provincial/regional totals may not add up to national totals.

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Table 3Regional distribution of fixed-asset investment in transportation, post and telecommunications, 1985 and 1990.

1985 1990

Amount (RMBf100

million)

Regional

share (%)

Investment Intensity (RMBf/

100 people)

Amount (RMBf100

million)

Regional

share (%)

Investment Intensity (RMBf/

100 people)

East 58.7 34.3 1748.6 99.0 47.8 2694.8

Central 19.3 11.3 453.2 37.3 18.0 794.9

West 13.4 7.9 482.4 22.9 11.1 755.4

National

total

171.0 1642.0 207.2 1817.2

Source: National Bureau of Statistics of China (various years) and Zhonghua Renmin Gongheguo xinxi chanyebu (various years).

Note: Regional totals may not add up to national totals.

B.P.Y. Loo, Y.L. Ngan / Telecommunications Policy 36 (2012) 888–900 893

During the fixed-line era, the highly uneven availability of hardware, that is, fixed-line telephone infrastructure, seemed tobe the most important factor in accounting for the geographical divide. As China Telecom monopolized the public fixedtelephone network (FTN) until 1998 (Loo, 2004), the high spatial concentration of the FTN cannot be separated from statepolicies (Fig. 1). Table 3 shows the spatial distribution of fixed-asset investment in the transportation, post andtelecommunications (TPT) sector in 1985 and 1990. A breakdown of the fixed-asset investment in telecommunications aloneis not available at the provincial or regional level. In 1990, nearly half of the national total TPT fixed-asset investment wasdevoted to the coastal region (47.8%) but the inland regions only accounted for 11.1–18.0%. Before 1990, the state did not injectmassive capital into interior China to speed up its telecommunication development but continued to develop the moredeveloped eastern regions first. When population size is taken into consideration, the imbalance in TPT capital investment isstill obvious. In both 1985 and 1990, the investment per capita was more than three times higher in the East (RMBf1748.6 in1985 and RMBf2694.8 in 1990) than those in Central (RMBf453.2 in 1985 and RMBf794.9 in 1990) or West China (RMBf482.4in 1985 and RMBf755.4 in 1990). Not surprisingly, the coastal-inland divide (as measured by the CV of fixed-line teledensity)has widened. This was not only due to physical and historical differences but also the state policy of designating certain citiesand special economic zones along the coast to develop first (Lee, 1997; Vogel, 1989). During the fixed-line era, theunavailability of telecommunication infrastructure (hardware) in the less-developed provinces remained a critical factor inunderstanding the geographical digital divide in China.

4. Between 1990 and 2010: A twist during the early mobile era

If difficult terrain and hostile climate were the major reasons which led to the lagging teledensity in inland China, will thenew wireless technologies help narrow the geographical digital divide? In this section, the development of different kinds ofmobile telecommunication services such as wireless paging services, Short Message Services (SMS), and mobile networks arereviewed. For mobile telephones, 1G refers to the first generation of mobile communication devices and they rely on analogtransmission. Analog transmission means that the transmission is a transfer of an analog source signal (e.g., radio signals)which uses an analog modulation method (Lee, 1995). 2G means the second-generation wireless telephone technology.2G cellular telecommunication networks were commercially launched on the Global System for Mobile Communications(GSM) standard. GSM supports voice calls and data transfer speeds of up to 9.6 kbit/s, together with the transmission of SMS(Short Message Service) (Singal, 2010). The 3G technology was first launched in 2001 in Japan (UMTSWorld, n.d.); and the otherparts of the world started using either the US-developed CDMA 2000 (code division multiple access) or Europe-developedWCDMA (wideband CDMA) technology. Since then, many people had been expecting the launch of 3G licenses (CDMA 2000 orWCDMA) in China. However, 3G services were only officially launched on 7th January 2009 (Zhu, 2009).

After mobile telephones were first introduced in China in 1987, there were only about 18,000 mobile telephone subscribersin 1990 (Table 1). Before that, another wireless technology, that is, paging services (pagers), had once been widely adopted inChina. Fig. 3 shows the development of the wireless paging services from 1987 to 2005. In 1987, there were 31,000 subscribersand it reached its maturity (48.8 million) in the Chinese market in 2000–2001. The wireless paging service density also reacheda peak in the same year, with 385.4 subscribers per 10,000 population. Table 4 shows the provincial and regional breakdownsof wireless paging service subscribers for selected years. In 2002, the highest densities were not achieved in the most developedurban municipalities, such as Beijing (394.9) and Shanghai (428.3), but in Hainan (1054.8), Fujian (553.7) and Liaoning (545.6).A closer look at the provincial data (not all shown in Table 4) shows that the density of wireless paging service subscribers inHeilongjiang (478.6) and Hunan (489.7) in Central China, and Guangxi (369.5), Shanxi (328.0) and Xinjiang (374.3) in WestChina were higher than both the national average and the median. Correspondingly, the provincial gap, as measured by the CVsof the density of wireless paging services at the provincial level, narrowed rather noticeably from 1.8 in 1990 to 1.0 in 1994 and0.6 in 2002. The wireless paging technology enjoys most benefits of the mobile telecommunication technologies of being morewidely available (infrastructure) and cheaper and simpler to use (software and other factors). Nonetheless, it’s finally replacedby mobile telephones because of the unregulated channels, changing consumption pattern and that the mobile networks havedeveloped into a more mature state after the mid-2000s (People’s Daily, 2000; Fong, 2009).

Fig. 3. Wireless paging service subscribers in China, 1987–2005.

B.P.Y. Loo, Y.L. Ngan / Telecommunications Policy 36 (2012) 888–900894

Table 5 shows the disparities in mobile telephone subscribers at provincial and regional levels between 1990 and 2010.In 1990, a single province – Guangdong – already accounted for 11,100 mobile telephone subscribers, that is, about 60% ofthe national subscribers. Four years later, the wealthiest coastal provinces and cities continued to represent the bulk ofsubscribers. Guangdong (480,000), Jiangsu (97,700) and Zhejiang (92,200) were having the highest numbers of mobiletelephone subscribers; and the eastern region accounted for more than 70% (1.17 million out of 1.57 million) of the totalmobile telephone subscribers in 1994. The provincial median of mobile telephone subscribers in 1994 was 34,000. Thefigures in Jiangsu and Zhejiang were more than doubled the median while Guangdong was more than 14 times higher;however, Tibet was 34 times less than the median. In other words, despite the introduction of mobile telephones since1987, the geographical divide continued to widen throughout the 1990s and early 2000s.

In 2005, the situation changed rather noticeably with the CV of the number of mobile telephone subscribers dropped belowone (0.9 in 2005). By 2010, the CV further reduced to 0.7. When population distribution is taken into account, the digital divideat the provincial level was even smaller with a CV of 0.3 only for the number of subscribers per 10,000 population in 2010. Atthe regional level, the ratio between the teledensities of East and the Central China dropped from over 211.9 in 1990 to 1.9 onlyin 2010. The ratio between the teledensities of East and West China has also reduced from 114.6 in 1990 to 1.6 in 2010. In otherwords, mobile telephone subscriptions in China have eventually demonstrated a more equitable spatial pattern over time.

Another useful indicator during the Early Mobile Era was the volume of SMS sent. On the one hand, SMS was notsupported by 1G mobile telephones. On the other hand, while 3G telephones support SMS, there are many more commonlyused applications such as What’s Apps and Facebook Mobile for people subscribing to 3G services. Starting from 2002,more than 58.3 billion SMS were sent in China and the volume increased nearly 10 times and reached 594.5 billion in 2007(Zhonghua Renmin Gongheguo xinxi chanyebu, various years). The growing trend continued and by 2010, the numberincreased nearly 40% to 827.7 trillion (Zhonghua Renmin Gongheguo xinxi chanyebu, various years). Along with the overallmobile telephone development and changing consumption pattern, the number of SMS was largely concentrated in EastChina in 2006 but it has decreased to around 55% in 2010 (Zhonghua Renmin Gongheguo xinxi chanyebu, various years).Correspondingly, the number of SMS from Central and West China accounted for the remaining 45% in 2010. When the CVof the number of SMS at year-end between 2006 and 2010 is calculated, a similar convergence pattern can be seen. The CVwas 1.0 in 2006 and it dropped continuously and steadily to 0.7 to 2010. The trend indicates that the usage of SMS was notconcentrated in wealthy provinces only but has become more and more widely available at the provincial level.

In terms of hardware, the new mobile technologies made the building of telecommunication infrastructure less challenging.However, there was still high digital inequality (CVs above one) in the mobile telephone subscribers in China throughout the1990s and early 2000s. Explicit state policies to support areas lacking advanced telecommunication tools were lacking. In 1997,Xu Li from the Ministry of Posts and Telecommunications (MPT) argued that the welfare of the whole telecommunicationnetwork should not be sacrificed to develop the poorer parts of the country (Harwit, 2008). The lower cost and more user-friendlymobile technologies, without policy support, were not associated with a more equitable subscription to telecommunicationservices in China until the mid-2000s. In 2005, the rising costs of fixed-line installation and falling fees for setting up mobile

Table 4Disparities in wireless paging services subscribers at provincial and regional levels, 1990–2002.

1990 1994 2002

Number of subscribers

(in 10,000)

Subscribers per

10,000 people

Number of

subscribers

(in 10,000)

Subscribers per

10,000 people

Number of

subscribers

(in 10,000)

Subscribers per

10,000 people

Top provinces/provincial municipalities

1 Guangdong 19.1 Guangdong 30.0 Guangdong 188.5 Shanghai 370.2 Hunan 324.6 Hainan 1054.8

2 Shanghai 3.5 Beijing 28.6 Liaoning 91.1 Hainan 294.6 Guangdong 286.5 Fujian 553.7

3 Beijing 3.1 Shanghai 25.9 Fujian 81.8 Guangdong 281.8 Zhejiang 244.9 Liaoning 545. 6

4 Fujian 2.2 Liaoning 5.0 Zhejiang 79.6 Fujian 256.9 Liaoning 229.3 Zhejiang 527.0

5 Jiangsu 2.0 Hainan 4.9 Jiangsu 60.7 Liaoning 223.9 Sichuan 208.9 Tianjin 516.4

Bottom provinces/provincial municipalities

1 Ningxia 0.0 Ningxia 0.0 Tibet 0.2 Tibet 6.6 Tibet 2.90 Tibet 108.6

2 Tibet 0.0 Qinghai 0.1 Qinghai 0.7 Qinghai 15.6 Qinghai 6.60 Guizhou 119.9

3 Qinghai 0.0 Guizhou 0.3 Ningxia 2.7 Guizhou 16.6 Ningxia 17.40 Qinghai 124.8

4 Guizhou 0.1 Jiangxi 0.4 Gansu 4.3 Gansu 18.3 Gansu 37.70 Anhui 140.3

5 Gansu 0.2 Tibet 0.5 Inner

Mongolia

5.3 Inner

Mongolia

23.3 Inner

Mongolia

45.10 Gansu 145.4

Rangea 19.0 30.0 188.3 363.5 321.7 946.2

Mediana 0.5 1.2 26.0 52.5 88.9 240.9

Meana 1.5 4.5 34.4 99.9 116.3 313.3

CVa 2.3 1.8 1.1 1.0 0.7 0.6

Region

Easta 36.3 116.1 715.3 2226.6 1847.6 5336.7

Centrala 4.9 12.4 236.1 516.8 1103.3 2249.1

Westa 2.5 6.3 81.6 253.7 655.5 2125.6

Source: National Bureau of Statistics of China (various years) and Zhonghua Renmin Gongheguo xinxi chanyebu (various years).a While only data of selected provinces/provincial municipalities are shown in this Table, summary descriptive statistics are based on the entire provincial database. Moreover, data in this Table have been

rounded up. All calculations are based on raw data. Provincial/Regional totals may not add up to national totals.

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88

8–

90

08

95

Table 5Disparities in mobile telephone subscribers at provincial and regional levels, 1990–2010.

1990/12 1994/12 2005/12 2010/12

No.a Den.b No.a Den.b No.a Den.b No.a Den.b

Top provinces/provincial municipalities

1 Guangdong 1.1 Beijing 3.1 Guangdong 48.0 Guangdong 71.8 Guangdong 6406.6 Beijing 9489.0 Guangdong 9624.6 Beijing 10855.3

2 Beijing 0.3 Guangdong 1.8 Jiangsu 9.8 Beijing 68.1 Zhejiang 2686.3 Guangdong 6968.2 Shandong 6190.4 Shandong 10254.5

3 Shanghai 0.2 Shanghai 1.3 Zhejiang 9.2 Shanghai 53.5 Jiangsu 2554.2 Shanghai 8122.6 Jiangsu 5923.1 Guangdong 9218.1

4 Liaoning 0.1 Tianjin 0.5 Liaoning 7.9 Tianjin 34.6 Shandong 2345.3 Zhejiang 5484.5 Zhejiang 5047.4 Tianjin 8389.5

5 Tianjin 0.1 Liaoning 0.2 Beijing 7.7 Hainan 27.4 Henan 1815.10 Tianjin 4818.8 Sichuan 4156.40 Inner Mongolia 8228.2

Bottom provinces/provincial municipalities

1 n.a.c n.a.c Tibet 0.1 Guizhou 1.7 Tibet 46.9 Guizhou 1365.7 Tibet 157.6 Jiangsu 4059.4

2 n.a.c n.a.c Qinghai 0.1 Qinghai 2.2 Qinghai 131.6 Gansu 1574.4 Qinghai 397.8 Henan 4680.5

3 n.a.c n.a.c Ningxia 0.3 Jiangxi 2.8 Ningxia 181.1 Tibet 1693.1 Ningxia 437.3 Guangxi 4803.7

4 n.a.c n.a.c Guizhou 0.6 Yunnan 2.9 Hainan 203.9 Anhui 1710.6 Hainan 594.30 Yunnan 4877.2

5 n.a.c n.a.c Gansu 0.9 Tibet 3.0 Gansu 408.4 Jiangxi 1852.0 Tianjin 1089.8 Hunan 4957.4

Ranged 1.1 3.10 47.9 70.1 6359.7 8123.3 9467.0 6795.9

Mediand 0.0 0.0 3.4 7.0 1021.1 2606.2 2214.5 6223.8

Provincial averaged 0.1 0.2 5.2 15.2 1269.1 3215.6 2775.8 6619.3

CVd 3.4 2.1 1.6 1.2 0.9 0.6 0.7 0.3

Region

Eastd 1.8 6.9 117.4 356.1 23069.6 54997.8 45892.7 95782.4

Centrald 0.0 0.0 27.4 61.5 9994.4 21975.4 24029.3 51120.2

Westd 0.0 0.1 12.0 39.7 6278.7 22709.5 16126.8 58594.5

East to Central ratiod 220.0 211.9 4.3 5.8 2.3 2.5 1.9 1.9East to West ratiod 42.9 114.6 9.8 9.0 3.7 2.4 2.8 1.6

Source: National Bureau of Statistics of China (various years) and Zhonghua Renmin Gongheguo xinxi chanyebu (various years).a ‘‘No.’’ is the number of subscribers (in 10,000).b ‘‘Den.’’ is the number of subscribers per 10,000 population.c Shanxi, Inner Mongolia, Heilongjiang, Zhejiang, Anhui, Fujian, Jiangxi, Shandong, Henan, Hubei, Hunan, Guangxi, Guizhou, Tibet, Shaanxi, Gansu, Qinghai, Ningxia and Xinjiang had none or less than 10,000

subscribers in 1990. Hainan and Chongqing were not yet provincial administrative units.d While only data of selected provinces/provincial municipalities are shown in this Table, summary descriptive statistics are based on the entire provincial database. Moreover, data in this Table have been

rounded up. All calculations are based on raw data. Provincial/Regional totals may not add up to national totals.

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B.P.Y. Loo, Y.L. Ngan / Telecommunications Policy 36 (2012) 888–900 897

networks had made mobile systems up to 80% cheaper to install. A wireless system could cost RMBf10 per month per line tooperate while the comparable cost for a fixed line was much higher at RMBf30–40 (Harwit, 2008).

Nonetheless, government policy changes were noticeable after 1997. In mid-1999, both former President Jiang Zeminand former Premier Zhu Rongji announced that the campaign of Go West would start at the beginning of 2000 (Goodman,2004). The stated goals were to promote the social and economic development of the interior and western regions of thecountry (Goodman, 2004). In 2003, the Chinese government pledged to invest 200 million yuan to narrow the geographicaldigital gap between the eastern and western regions (12 provinces and autonomous regions) in the country (Xinhua NewsAgency, 2003). In that year, MII also announced that all of China’s major fixed-line and wireless telephone companieswould have to pay an annual fee of 0.24 yuan for every telephone number they owned in order to support the diffusion oftelecommunications to rural regions (Harwit, 2008).

To recall, the CV of mobile telephone subscribers was as high as 3.4 in 1990 (Table 5). However, such spatial inequalityhas undergone a twist during the early mobile era. In 2005, the CV of mobile telephone subscribers dropped to 0.9 and thefigure kept on decreasing to 0.7 in 2010. When population distribution is considered, the CV fell from 2.1 in 1990 to 0.6 in2004 and 0.3 in 2010. The changes in CVs show that government policies and monetary support were effective innarrowing the digital divide of the country, as measured by the mobile telephone subscribers’ density. Apart from theinvestment devoted to developing the wireless telecommunication infrastructure (hardware), the efforts of the govern-ment in delivering relevant contents (software), including through television services, under the Village Access Programs(VAP) since 2004 was very notable (Xia, 2010; Xia & Lu, 2008). The production and distribution of low-cost telephones bydomestic manufacturers also lowered the prices of mobile telephones and helped a lot in bridging the gap between coastaland inland regions as well (Loo, 2009). In 2010, the share of mobile telephone subscribers from Central to West Chinaincreased from merely 2.7% of the national total in 1990 to 45.5% (Table 5).

5. Beyond 2010: Uncertainties in the more matured mobile era

As 3G services were first launched in 2009 in Chen et al., (2010) and after is considered as the more matured mobile era.Though only initial data are available at the time of writing, the penetration rate of 3G technologies seems to be increasingat a very fast pace even during the early stage of development. At the end of 2009, there were only 12 million of 3G mobiletelephone subscribers in China; and the number more than tripled to 45 million by 2010. According to the Ministry ofIndustry and Information Technology (MIIT) of China, the number of 3G mobile telephone subscribers has reached 118.73million in the first eleven months of 2011 (MIIT, 2011).

Table 6 compares the provincial and regional distribution of 3G mobile telephone subscribers in 2009 and 2010. Althoughonly two years of statistics are available, one finds that the usage of 3G network was not concentrated in any particularprovinces after the 3G licenses were launched. The CV of 3G teledensity was 1.0 in 2009 and it dropped to 0.6 in 2010. In termsof teledensity measured as the number 3G subscribers per 10,000 population, improvements in some of the remote inlandprovinces like Inner Mongolia (76.4 in 2009 and 590.2 in 2010), Tibet (55.2 in 2009 and 255.8 in 2010), Shaanxi (98.4 in 2009and 341.2 in 2010), Ningxia (59.2 in 2009 and 287.5 in 2010) and Xinjiang (48.6 in 2009 and 253.5 in 2010) were quiteimpressive. The East to Central ratio of 3G subscribers per 10,000 population dropped from 4.1 to 2.3. West China has also beencatching up, with the East to West ratio of 3G subscribers per 10,000 population declined from 3.7 in 2009 to 2.5 in 2010.

Once again, this narrowing of the geographical digital divide during the more matured mobile era cannot be separated fromgovernment policies, especially on hardware and software factors. During the early mobile era, China Mobile had alwaysenjoyed the biggest share in the mobile telephone market. At the launch of 3G services, the Chinese government approved theleast well-developed TD-SDMA (time division-synchronized CDMA) to China Mobile and approved the relatively more matureWCDMA and CDMA2000 standards to China Unicom and China Telecom (Zhu, 2009). The decisions have given China Unicomand China Telecom a head start, since China Mobile needed more time to develop TD-SCDMA and won support from handsetmanufacturers (another hardware factor) (Wang, 2009). This helps to even the playing field between China Mobile and itssmaller competitors at the same time (Wang, 2009). Early evidence suggests that the government’s decision to decentralizethe3G mobile telecommunication market could be regarded as successful. For 2G mobile phones, China Mobile used to have 70% ofthe country’s subscribers (So, 2011); and its revenue in 2006 was three times that of China Unicom and nearly two times ofChina Telecom’s (Mao & Yang, 2008). By September 2011, the situation has improved with 43.51%, 29.74% and 26.75% of the94.12 million 3G subscribers in the country using the services of China Mobile, China Unicom and China Telecom, respectively(China Economic Information Network, 2011). So far, the government’s moves were far from creating a level playing field fordifferent 3G telecommunication operators (Xia, 2011). Yet, the resulting market shares of China Unicom and China Telecom inthe 3G market were much more balanced than the earlier reform period of 2G mobile telephones.

In July 2008, China Mobile launched the second phase of its 3G base station installation project to 28 cities4 and 21,607base stations nationwide. The TD-SCDMA base stations started to cover Central and West China in cities, such as Fuzhou,Xian, Lanzhou and Lasha (China Telecom, 2009). In March 2009, the third-phase of TDSCDMA installation for 39,000 basestations was confirmed (Hao, 2009). By the end of 2009, 70% of prefecture-level cities and 100% of the prefecture-level

4 It covered Shejiazhuang, Taiyuan, Hohhot, Dalian, Changcun, Haerbin, Nanjing, Hanzhou, Ningbo, Hefei, Fuzhou, Nanchang, Jinan, Zhengzhou,

Wuhan, Changsha, Nanjing, Haikou, Chongqin, Chengdu, Guiyang, Kunming, Lasha, Xian, Lanzhou, Xining, Yinchuan, and Urumqi.

Table 6Provincial and regional distributions of 3G mobile telephone subscribers, 2009–2010.

2009/12 2010/12

Number of Subscribers

(10,000)

Rank Subscribers per 10,000

Population

Rank Number of Subscribers

(10,000)

Rank Subscribers per 10,000

Population

Rank

National Total 1232.2 92.3 4705.1 350.9EastBeijing 84.5 4 481.5 1 226.8 5 1156.0 1

Tianjin 38.8 12 316.0 3 61.8 24 475.8 6

Liaoning 43.4 9 100.5 9 194.8 9 445.3 8

Shanghai 62.5 7 325.4 2 199.9 6 868.0 2

Jiangsu 90.7 3 117.4 6 373.1 2 474.1 7

Zhejiang 79.5 5 153.5 5 293.6 4 539.0 5

Fujian 42.4 11 116.9 7 150.0 13 406.2 9

Shandong 93.1 2 98.3 11 371.2 3 387.2 10

Guangdong 176.2 1 182.8 4 622.1 1 595.8 3

Hainan 9.6 28 111.1 8 31.8 28 365.9 12

RegionalSub-total

783.3 2104.4 2790.7 6159.4

CentralHebei 43.7 8 62.1 17 166.8 10 231.9 24

Shanxi 21.2 18 61.9 18 120.8 16 338.0 14

Inner Mongolia 18.5 21 76.4 12 145.9 14 590.2 4

Jilin 14.9 24 54.4 21 101.4 18 369.1 11

Heilongjiang 19.2 19 50.2 23 90.4 21 235.8 23

Anhui 23.0 16 37.5 28 119.1 17 199.9 28

Jiangxi 14.9 23 33.6 30 73.7 23 165.2 30

Henan 68.9 6 72.6 15 199.6 7 212.2 26

Hubei 42.6 10 74.5 14 155.3 12 271.1 17

Hunan 30.3 15 47.3 25 160.7 11 244.6 21

RegionalSub-total

253.5 508.3 1166.9 2626.2

WestGuangxi 18.9 20 38.9 27 98.8 19 214.3 25

Chongqing 21.7 17 75.9 13 91.4 20 316.8 15

Sichuan 37.9 13 46.3 26 194.9 8 242.3 22

Guizhou 12.2 26 32.1 31 56.3 25 161.8 31

Yunnan 16.2 22 35.4 29 88.8 22 193.0 29

Tibet 1.6 31 55.2 20 7.7 31 255.8 18

Shaanxi 37.1 14 98.4 10 127.5 15 341.4 13

Gansu 14.0 25 53.1 22 52.8 27 206.3 27

Qinghai 3.5 30 62.8 16 14.0 30 248.7 20

Ningxia 3.7 29 59.2 19 18.2 29 287.5 16

Xingjiang 10.5 27 48.6 24 55.4 26 253.5 19

RegionalSub-total

158.4 567.1 707.0 2507.0

Range 174.6 449.4 614.4 994.1

Median 23.0 62.8 120.8 287.5

Mean 38.6 102.6 150.5 364.3

CV 1.0 1.0 0.8 0.6

East to Centralratio

3.1 4.1 2.4 2.3

East to Westratio

4.9 3.7 3.9 2.5

Source: National Bureau of Statistics of China (various years) and Zhonghua Renmin Gongheguo xinxi chanyebu (various years).

Notes: Data in this Table have been rounded up. All calculations are based on raw data. Provincial/Regional totals may not add up national totals.

B.P.Y. Loo, Y.L. Ngan / Telecommunications Policy 36 (2012) 888–900898

cities in the Eastern coastal region were already covered with TD-SCDMA services (Wang, 2010). According to MIIT, thethree main telecommunication operators would spend about 280 billion yuan on 3G networks in 2009–2011 which wouldstimulate the domestic economy to achieve its economic growth target of 8% (Zhu, 2008). Huge amounts of investmentwas devoted to install 3G base stations covering nearly all major cities in the country within a target time frame of twoyears (Zhu, 2008).

The huge investment and promotion of more market competition were beneficial to the narrowing of the digital dividethrough lowering prices and widening the spatial coverage of 3G services. As WCDMA and CDMA2000 are more maturetechnologies when compared to TD-SCDMA, China Telecom was the first operator which covered 100% 3G network in county-level cities in 2009 (CWW.net.cn, 2009) and China Unicom was able to achieve 95% county-level cities coverage in September

B.P.Y. Loo, Y.L. Ngan / Telecommunications Policy 36 (2012) 888–900 899

2011 (Wei, 2011). With the higher spatial coverage of 3G network in the country, more people from Central and Western Chinacould enjoy the 3G technology and thus it has helped to narrow the digital divide in the country (see Table 6).

With the telecommunication operators taking rather ambitious steps to promote the 4G mobile technologies (e.g.,when China Mobile has arranged large-scale TD-LTE trials in 6 Chinese cities and set up a demonstration network inBeijing) (Xinhua News Agency, 2011), 4G services may soon be adopted in the Chinese market. Will the next-generationtelecommunication infrastructure and equipment be ready soon? Will the services and its associated applications beaccepted by the Chinese population? Will the government policies of 4G in China be similar to 3G? As TD-LTE is anothernew technology, more research (for example, in relation to the geography of bandwidth) is needed. Yet, capitalizing on theintensive 3G infrastructure investment made earlier, it is believed that the 4G mobile technologies need not necessarily beas highly spatial concentrated as the fixed-line or earlier generations of mobile telecommunication technologies.Moreover, one needs to observe closely whether the proactive measures of the Chinese government in managing thetelecommunication market and encouraging competition among telecommunication operators would continue. Given thatthe 3G and 4G technologies are more powerful than 2G technology not only in terms of speed but also applications inrelation to exchanges of and access to digital information, the higher coverage of these wireless networks in the lessdeveloped areas of China can have a higher impact in narrowing the digital divide of the country.

6. Conclusion

In retrospect, the digital divide in China had been widening when there were only fixed-line telecommunicationservices (1978–1990). Mobile telecommunication services were first introduced in China in the late 1980s but it was notuntil the mid-2000s that the digital divide had started to narrow. The Go West policy since 2000 and the telephone andtelevision VAPs since 2004 had boosted the telecommunication hardware, software and other capabilities in the interiorand western regions. In 2003, the Chinese government pledged to invest RMBf200 million to narrow the digital gapbetween the eastern and western regions (Xinhua News Agency, 2003). While technological advancement in mobiletelecommunications has generally overcome the high costs of providing telecommunication services in the less developedareas of the developing countries, proactive government policies are still crucial in ensuring that the digital divide does notfurther widen as growth and development take place. China’s experience of combining technological advances withgovernment measures to encourage competition and support telecommunication development in the interior regions canprovide fruitful lessons to other developing countries striving to achieve both economic development and reducedgeographical digital divide.

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