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China's 3G drive prompts industry maneuvering

Posted: 23 Apr 2003 ?? ?Print Version ?Bookmark and Share

Keywords:china mobile? td-scdma? mobile phone?

No one should wonder any longer whether China's third-generation (3G) mobile standard will see the light of day: It will. The question now is whether enough of China will embrace the spec to make its pursuit worthwhile. But the companies willing to answer in the affirmative are multiplying by the month.

Mobile-industry players that have hedged their bets against China's TD-SCDMA (time-division synchronous code-division multiple access) include such offshore companies as Nokia (the biggest booster of wideband CDMA), Motorola, LG Telecom, Philips Semiconductors, Samsung Electronics, and STMicroelectronics. Within China, Datang Mobile, ZTE, and UTStarcom are moving on TD-SCDMA.

China Mobile, China's largest telecom provider and largest user of GSM/General Packet Radio Service networks, reportedly has completed voice tests for the spec in Sichuan province. Datang Mobile said the trial runs, which took place in Chengdu and Chongqing, used Datang's network equipment and software. Datang called the tests "preliminary" and said real-world scenarios might be the next step with further support from operators.

So it seems that, slowly, the dark horse of 3G mobile standards is gaining traction here. It's not surprising. A country that is largely devoid of any significant intellectual property (IP) in the electronics segment isn't about to pass up a chance to make its mark in an industry where it commands the greatest amount of global users - now at about 200 million and counting. China missed out on royalties from 2G and 2.5G; it doesn't intend to repeat the mistake with 3G.

The China government - despite the fast-paced transitions in the country over the past two decades - hasn't kicked the habit of centralized planning, and it remains reluctant to give up influence as China transitions to a market economy. So the government will try its best to engineer a niche and create demand for TD-SCDMA.

The fact that more than a dozen companies are working on a spruced-up specification that crashed and burned in Europe several years ago is proof of the power of that influence.

Indeed, China (in concert with early spec developer Siemens AG) has spent several years fine-tuning TD-SCDMA, which has joined W-CDMA and cdma2000 on the short list of 3G standards approved by the International Telecommunication Union. Backers said TD-SCDMA is cheaper to deploy and more bandwidth-efficient than the two other standards - attributes that would suit it to deployment in China's dense cities.

Soon after Siemens lost the battle to make TD-SCDMA a standard in Europe, it found a new patron in China, which quickly adopted the technology. The sometimes overly exuberant government-controlled media in the country have even reassigned paternity: Instead of Siemens, now it is Li Shi-he, the CTO of Datang Mobile, who is the "father of TD-SCDMA."

For Datang, a state-owned enterprise with close ties to the China Academy of Telecommunications Technology, the success of the standard is the company's chance to make it big. With some IP up its sleeve and the blessing of Beijing, Datang is becoming a major player in the Chinese telecom industry.

But the attraction may be only skin-deep. TD-SCDMA will doubtless emerge from the lab, but its ultimate status in the market will depend on how fast it does so.

"It will be tough," said Johan Pross, CEO of the newly formed T3G, a joint venture among Philips, Datang and Samsung that is developing silicon and handsets. "I know what it takes to implement a standard. We must be fast, fast, fast, or we will not get market share, because other competitors" - namely, W-CDMA and cdma2000 - "are there with proven technology."

So far, the government has held back on issuing 3G licenses. The reason, officials said, is to give the market more time to develop business models for the next-generation technology. Conveniently, it also gives more time to companies developing TD-SCDMA offerings. But licenses must be issued next year, at the latest, or China risks dampening the market for 3G and delaying increased competition in the mobile operator market.

"Next year will be very important," said Wei Shaojun, president of Datang Telecom Technology Co., a sister company to Datang Mobile that is also pursuing W-CDMA technology.

For the betting public, early odds are that more than a million Chinese will be using TSM (the 2G precursor to TD-SCDMA) next year and that perhaps 10 million will being using the real thing within a few years.

Today, though, that would be less than 5 percent of the mobile market.

- Mike Clendenin

EE Times

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