While China Unicom battles to establish itself as a credible second operator to China Telecom, the People's Liberation Army (PLA) has emerged as the dark horse of the mainland telecommunications market. The PLA is able to move into the telecommunications field since the armed forces already own and operate a national phone system for their own use. Moreover, the PLA has been allocated portions of the 800 MHz spectrum for security wireless use. The army's first foray into commercial telecoms came 10 years ago when it began leasing telephone lines connected to its exchanges to nearby individuals or businesses. Since then, the PLA increasingly has used its spare capacity commercially. The legal basis for this appears fuzzy, although a recent bond offering document on behalf of Star Digitel, which is trying to raise cash for mainland ventures with the PLA, noted: 'The company understands that the PLA's use of its excess telecommunications resources to provide commercial services was sanctioned in 1995 with the support of the State Council and the Central Military Commission for such use as part of the development of China's economy.' However, it appears the PLA had been dabbling in the cellular market well beforehand, selling off excess capacity on its analogue AMPS networks on a localised basis. It also has been active in the paging market. In August 1995, the then Ministry of Posts and Telecommunications (MPT) and telecommunications department of the PLA general staff headquarters agreed to set up a joint venture to co-operate in developing a national CDMA network. The 50-50 venture, as China Telecom Great Wall, would use the PLA's 800 Mhz capacity and the MPT's operational knowhow. This is all a little confusing, since some of the PLA's earlier AMPs networks also are called Great Wall, even though they are not part of the new venture. China Telecom Great Wall sanctioned four trial sites where the emerging, US-developed CDMA technology could be put to the test. Four equipment vendors also were selected. Motorola built a network in Beijing; Lucent Technologies established a second in Panyu, in Guangdong province; Samsung established a third in Shanghai; and Nortel built a fourth in Xian. The networks have been constructed and underwent testing last year. But as the months continue to roll by without official permission for a go-ahead, suspicion is rising that the MPT's successor, the Ministry of Information Industry, is sitting on its hands over the issue. Some analysts question the logic of the ministry sanctioning another competitor, even one in which it claims a 50 per cent interest, when it boasts a vice-like grip on the cellular market. The most recent indications are that a final decision on CDMA rests at the State Council. Great Wall seems ready to adopt similar tactics to Unicom in using foreign cash to fund its build-out and tap foreign expertise for operations. Hutchison Whampoa, for example, has disclosed its intention to sell equipment and consulting services to the company in a deal likely to involve investment as well. The Great Wall branch in Shandong province recently appeared confident enough to issue a tender to potential partners. Some analysts believe Hongkong Telecom may have been chosen, but a more recent rumour suggested foreign-partner selection was on hold. When national-level approvals are handed down, Beijing's Great Wall network is likely to be the first up and ready to go. It already has nearly 3,000 people using it as part of the so-called commercial trial.