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3G licence delay buys China time to develop technology

The central government is buying time to allow the mainland's homegrown third-generation (3G) mobile-phone standard to develop by delaying the issuance of licences for the advanced communications technology.

Supporting a delay are mainland telecommunications suppliers such as Datang Telecom, a strong proponent of TD-SCDMA, which is developing equipment to support the standard, and mobile-phone carriers China Mobile and China United, which want more time to recoup their investments in second-generation networks.

Advocating a speedy issuance of 3G licences are fixed-line carriers China Telecom and China Netcom, which want to move into the new arena, and domestic and international vendors of WCDMA and CDMA2000 equipment who are eager to tap a market estimated at 400 billion yuan (HK$374.72 billion).

Caught in the middle is the Ministry of Information Industry (MII), which has yet to state clearly when it will issue 3G licences but so far appears to be lending its support to TD-SCDMA and holding off as long as possible.

'It's not an easy task for the MII to balance all parties' interests,' said Song Junde, a professor at Beijing University of Post and Telecommunications, whose research institute was tapped by the State Council and the MII to advise on how the mainland's 3G policy should be developed. 'Everybody has their own interest and everybody is putting pressure on the MII.'

Yet it is clear backers of TD-SCDMA have the upper hand, with government regulators putting national interests ahead of anything else.

MII officials recently told 12 telecoms equipment vendors - including Motorola, Nokia, Huawei and ZTE Corp - it was pushing back field trials for all 3G mobile technologies to between February and June next year. The tests for the WCDMA, CDMA2000 and TD-SCDMA standards had originally been scheduled for the fourth quarter of this year.

Zhao Yilin, chief engineer of personal communications at Motorola (China) Electronics, said the central government could formulate its 3G licensing policy after the tests were concluded, although the MII might choose not to wait for the results.

Industry players have speculated the MII will issue 3G licences on May 17 to celebrate the nation's International Telecoms Day. But if the field trials are not completed until June, it may be the third quarter of next year at the earliest before 3G licences are issued.

One key problem was that the development of TD-SCDMA handsets lagged network and systems development by six to eight months, MII officials said.

'Unlike the other 3G technologies, there are still too few vendors involved in the development of TD-SCDMA technology,' MII vice-minister Lou Qinjian said.

He said systems and terminals to support the mainland standard were far behind their European and United States counterparts - WCDMA and CDMA2000, respectively - and needed to improve further.

But mainland officials are unabashed in their support for the home team. It is certainly in China's economic interest to have its own wireless technology standard: its market is the largest mobile market in the world, accounting for a quarter of the global wireless segment.

'Of course it is a very political issue. Every country supports its own technology,' Mr Song said. 'The Europeans support WCDMA and the US supports CDMA2000.'

The mainland has also favoured TD-SCDMA in the allocation of frequencies for 3G technology. The MII has set aside 155 megahertz of spectrum for TD-SCDMA, compared with 90 megahertz to be shared by WCDMA and CDMA2000.

Klaus Maler, general manager of the TD-SCDMA division at Siemens, said the allocation of frequencies could make or break a 3G standard in China.

'The key is that the government, by the allocation of frequencies ... will define the market. The government will definitely support [TD-SCDMA],' he said.

While the MII is unlikely to force carriers to adopt TD-SCDMA, keeping the spectrum supply limited for WCDMA and CDMA2000 could mean they might have to adopt the homegrown standard anyway once spectrum for the foreign standards are used up.

China Mobile, which previously said it would adopt WCDMA technology, had recently softened its stance, saying it might also roll out TD-SCDMA networks in remote areas to supplement a WCDMA network.

Rival China United had also said it was closely monitoring the development of TD-SCDMA and would not rule out the new technology if it matured as a standard.

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