'Big player' approach backed for China 3G
China has a better chance of ensuring the growth of its homegrown 3G standard by giving a strong player such as China Telecom a head start in deploying the technology, industry players say.
The move would also improve Beijing's position in bargaining for lower royalty payments with foreign companies who held the intellectual property rights to rival CDMA standards, they added.
The mobile network for TD-SCDMA, the rights for which is owned by Datang Mobile Communications Equipment, was ready for commercial launch, they said. Already, mobile phone vendors have been fine-tuning handsets so that when Beijing issues TD-SCDMA licences this year, the technology can connect to existing 2G GSM networks.
According to recent media reports, China Telecom, in collaboration with mainland telecommunications equipment vendor ZTE Corp, has expanded its TD-SCDMA trial network in Shanghai to some 30 base stations.
As a result, China Telecom is expected to be issued the first TD-SCDMA licence, probably this year.
'You need an economically strong player to run TD-SCDMA who is capable of bearing the risk of the technology as it is unproven,' said Wang Jing, a professor at Tsinghua University specialising in China's information technology.
'And between China Mobile and China Telecom, China Telecom would strive to build the best 3G network as it is, after all, its first foray into the mobile business,' said Mr Wang.
For the first half of last year, China Mobile had net cash of 51.72 billion yuan and net profit of 24.04 billion yuan, compared with China Telecom's 12.3 billion yuan cash and 11.29 billion yuan net profit.
Apart from TD-SCDMA, Beijing is also expected to issue licences for WCDMA and CDMA2000, whose intellectual property rights are mainly held by foreign technology giants such as Qualcomm, Nokia and Ericsson.
While it is unclear when Beijing will be issuing 3G licences, Information Industry Minister Wang Xudong has said that the government would be introducing policies on 3G technology this year, covering the issues of spectrum allocation, tariffs and the regulatory environment. The government has already assigned a 155-megahertz bandwidth for TD-SCDMA.
Lu Wu, vice-general manager for Datang Mobile, said at a recent industry event that Chinese handset makers were set to launch in December a final six-month test on TD-SCDMA handsets. This means the government could start issuing licences for the technology from June, sources said.
Cui Xiaolong, senior analyst at Analysys International, said it would make sense to push the homegrown technology as it would boost Beijing's bargaining power with foreign mobile intellectual property rights owners, such as Qualcomm, which pioneered the CDMA technology and owns 31 per cent of the global CDMA patent pool.
With its self-developed 3G technology rolled out and run by a telecommunications giant, Beijing would be in a better position to negotiate with foreign mobile patent owners.
'It would send an important signal to these foreign intellectual property rights owners that if you want to have a meaningful market share in China's vast market, you cannot demand sky-high royalties for your technology,' said Mr Cui.
