China Telecom (CHA.NYSE; 00728.HK) has gradually dismantled its subsidies for 3G network interface cards, which have been promoted in full swing since 3G services were launched.

Both of the carrier's subsidiaries in Beijing and Shanghai have stopped offering free 3G network interface cards to subscribers, though Shanghai still offers preferential pricing to customers who prepay one year's worth of fees.

China Telecom's CDMA2000 3G network access service package charges by duration rather than by traffic volume as China Mobile (CHL.NYSE; 00941.HK) and China Unicom (CHU.NYSE; 00762.HK) do, which considerably helped it in gaining 3G service subscribers.
Nevertheless, 3G bandwidth is much narrower than ordinary broadband. The network could become severely bogged down during peak usage times when users connect via their network interface cards.

Therefore, China Telecom began altering its development strategy for promoting 3G network interface cards in H2 2009.

According to one telecom insider, users of the 3G network interface cards once accounted for a 41 percent share of the carrier's total 3G users, but the proportion fell to 17 percent by the end of 2009 after one half year's adjustment. China Telecom has decided to place more emphasis on developing 3G mobile phone users.

Source:Xinhua