Joint venture gives Chinese 3G spec a boost

A handful of high-profile companies are giving China's 3G mobile standard a boost by agreeing to develop products based on the technology and forming long term partnerships and joint ventures.

In the latest move, Philips Semiconductors, Datang Mobile Communications, and Samsung Electronics have formally announced a joint venture company, dubbed T3G, to design and license core chipsets and reference designs for mobile terminals operating on the China-backed time division synchronous code division multiple access (TD-SCDMA) 3G standard.

The companies said the joint initiative will significantly speed the development and commercialization of handsets based on the conceived 3G mobile technology of China's telecom industry. They said that commercial handsets using dual mode TD-SCDMA/GSM chipsets will be available in China by early 2004.

"This is a joint venture that was born of close working relationships between the partners going back many years and because of this we are really confident it will succeed and help bring this technology to market in timely fashion," said Peter Kempf, project manager for TD-SCDMA within a marketing strategy and innovations group of Philips Semiconductors.

"We bring a huge amount of IC design, process development and chip manufacturing expertise to the joint venture, as well as our system expertise in building parts for complex technologies and cellular handsets," added Kempf. Datang brings its expertise in TD-CSDMA technology to the party while Samsung's leadership in handset design will be crucial to the venture's success.

Kempf said each partner has invested considerable resources in the venture, including capital, technology, personnel, and marketing. All three companies will transfer their respective "know-how" to T3G, which will be based in Beijing and be perhaps 100 people strong.

He said it is fair to assume Philips Semiconductors would be one of the companies manufacturing devices for the joint venture and companies, such as Samsung, who will produce the handsets for the TD-CSDMA based networks.

Johan Pross, a senior executive at Philips Semiconductors, who has been named CEO of T3G, commented "the joint venture is an autonomous company and the three partners will allow the company to expand in the market independently. T3G will also be in a position to form broad strategic alliances and provide open access to the technology."

Motorola Inc. and STMicroelectronics have also indicated that they will start pumping R&D dollars into the TD-SCDMA standard. It was not exactly clear how aggressive Motorola would be on development or whether the company was tackling network or handset equipment first. STMicro said they had licensed TD-SCDMA IP from its owner, Datang Mobile Communications Equipment Co. Ltd, and would move to develop multimode TD-SCDMA/GPRS SoC devices.

These companies join a growing, but very low-key group, including Nokia, Texas Instruments, LG Telecom, UTStarcom, and ZTE as well as other, more minor, players.

All the activity is a much-needed boost for Datang and Siemens AG, which did much of the early development work on the standard and is a major patent holder. Datang is fighting a major battle against the more entrenched standards, W-CDMA and cdma2000 1X, and few people are sure of the outcome.

The path to 3G for China's two incumbent mobile carriers, China Mobile and China Unicom, is likely to be W-CDMA and cdma2000 1X. The best Datang can hope for is that when China issues 3G licenses sometime in 2004, it can have the technology up-and-running and find a buyer in one of the country's two fixed-line providers, China Telecom or China Netcom. But even there, resistance exists.

"China Telecom told us that if they were given a 3G license for TD-SCDMA they would give it back. That is not a ringing endorsement," said Duncan Clark, managing director or Beijing-based BDA China Ltd, an influential consulting firm that specializes in telecommunications.

China has spent several years developing TD-SCDMA, which is now one of three 3G standards approved by the International Telecommunication Union. Backers of the technology said it is cheaper to deploy - and more bandwidth efficient - when compared to the two competing technologies, thus making it more suited in China's dense cities.

Technical arguments aside, China faces major challenges in rolling out 3G networks. Like many other countries flirting with 3G, it is struggling to find applications and services that will make sense on the high-speed networks. That hurdle stands as one of the major reasons that licenses have not been issued.

"China's largest carriers are both very adept at rolling out networks but they do not know how to offer services, they do not know how to segment a market and they do not know how to target user groups," said Tara Tranguch, of Beijing-based market researcher MFC Insight. "Without this kind of knowledge, launching 3G could be fatal for a carrier."

- John Walko and Mike Clendenin

EE Times