Boosted by both preparations for 3G and the expansion to rural communications market, China’s telecom sector fixed asset investment has seen rare growth in the first three quarters of 2006, ushering in the age of 3G in which telecom expansion is expected in both urban and untapped markets in rural areas.   From January to September in 2006, telecom sector has fixed asset investment totaled 142.48 billion yuan (US$17.81 billion), a 17.7% year-on-year increase. If the growth rate can be maintained for the rest of the year, 2006 would see a 15% growth in telecom fixed asset investment, which exceeds the 10% expected growth rate prior the year.   An analyst with Industrial Securities says such statistics showed a year with the strongest growth in fixed asset investment since 2001, unveiling a new wave of investment that prepares for the upcoming announcement regarding 3G licenses in China.     Starting in 2001, telecom sector’s fixed asset investment has been in decline from a peak of 266.25 billion yuan (US$33.28 billion) to 2005’s 203.35 billion yuan (US$25.42 billion).   However, although 3G may contribute to the growth of fixed asset investment, it is also believed that the unconfirmed schedule of 3G licenses may actually restrain telecom operators’ investment in 3G preparations. According to China Electronic News, major telecom operators on the Chinese Mainland have not allocated much budget for 3G preparations and other 3G-related projects. As the only telecom operator with stable investment growth in 2005, China Mobile’s main investment areas still lie with the expansion of 2.5G networks and the upgrade of its 2G network. However, various telecom operators have already started the preparation for construction of core 3G network and communications facilities in major cities.   According to China Mobile’s financial report, the company estimates annual capital expenditure of 83.3 billion yuan (US$10.41 billion) in 2006, which is mainly allocated for its GSM network, support system and communication facilities. Director Wang Jianzhou has also said recently that China Mobile has invested 9 billion yuan (US$1.125 billion) in rural infrastructure to enable mobile services. The year 2006 will also see an investment of more than 4 billion yuan (US$500 million) in this area.   As a researcher with the Telecommunications Research Institute of the Ministry of Information Industry Si Xianxiu comments that the growth of fixed asset investment in the telecom sector is mainly a result of telecom operators’ expansion into rural communications and the construction of infrastructure. Large-scale investments are not to be expected until the formal announcement of 3G licenses.   A senior manager with ZTE Corporation, one of the largest listed telecom equipment manufacturers on the Chinese Mainland, says that before the announcement of 3G licenses, telecom operators cannot receive confirmation of which 3G standard will be adopted. Under such circumstances, operators are not certain with in what scale their telecom networks have to be built, and thus manufacturers, including ZTE can’t provide necessary product lines.   Xu Qin, the Chief of the Technology Bureau of the Development and Reform Commission recently said that all the cities that will hold the 2008 Beijing Olympic Games would have 3G services. This signifies that by the end of 2007 at the latest, China’s telecom operators would need to have 3G networks ready in various cities including Beijing, Shenyang and Qingdao. However, the ongoing final trial of China's homegrown TD-SCDMA technology made the prospect for China's 3G unclear. A recent China Daily report said that the Chinese-developed TD-SCDMA standard is currently under trial in Beijing, Shanghai, Qingdao, Baoding and Xiamen.