REPORTS THIS WEEK that China Unicom won an international leadership award for developing its third-generation (3G) network and international roaming services seemed unusual. As China's regulator is still mulling over its options for preferred 3G technology standards, this might seem premature. What is probably more likely is that China Unicom's progress reflects its confidence that Qualcomm's CDMA 2000 technology is the one it is going to run with. In this growth-challenged industry, should investors also be awarding China Unicom a premium for its 3G prospects - or is this also premature? The award bestowed by a CDMA industry body in the United States might seem self serving, yet its significance is also symbolic of the technology's recent progress. It would be hard to imagine many prizes being dished out by backers of the rival WCDMA standard. After a year of delayed launches, disappointments and dropped calls, the contrast between the two 3G systems could hardly be starker. Operators such as KDDI in Japan and SK Telecom in South Korea have seamlessly upgraded their networks and millions of customers to the third-generation CDMA standard. Most GSM operators, meanwhile, are just thankful to have postponed investment as the struggles of Hutchison Whampoa's fledgling '3' network in Europe are chronicled in the media. China Unicom's game plan is of particularly interest to the industry as it is in the unusual position of having built both voice GSM and CDMA networks. What was once a burdensome duplication that had it marked down by investors, now gives it more options when it goes to 3G. Of course, its GSM business, with 72 million users, still dwarfs its 15 million-user CDMA network. China Unicom is still confronted with the some difficult choices. It needs to offer new data services profitably yet upgrading two networks would be costly. The CDMA network upgrade progression has clear attractions - not only is it a lot cheaper as it needs only software upgrades, rather than costly new base stations - it has been vindicated elsewhere. Customers, of course, still need to cough up for new phones. By contrast, offering its GSM customers new 3G data services would require a wholesale new network build-out. With the help of Qualcomm, China Unicom thinks it has an answer to these problems with a new dual-band phone: the GSM1x. Using a new chipset developed by the American manufacturer, the mobile phone can run on both networks. It should allow GSM users to roam into CDMA's advanced data services network while CDMA users can now roam on GSM networks while abroad - a key shortcoming of CDMA. According to China Unicom, the service will also free up half of its scarce GSM spectrum. GSM1x certainly sounds a promising solution; if it can be successfully launched to customers China Unicom may merit an award. Cynics will inevitably be sceptical of promises based on handsets that have a habit of not materialising. Yet the people behind these handsets are Qualcomm engineers, the same ones who invented the original CDMA technology. Six mainland manufacturers are reported to be ready to produce this dual-mode model for commercial launch midway through next year. The challenge then is to come up with phones that are attractive looking and low priced. If these phones do materialise, China Unicom could conceivably steal a lead in the mainland 3G market. By the time the regulator divides up WCDMA and the mainland's own TD-SCDMA licences - not expected until the end of next year - and new networks are built, China Unicom will already be offering advanced data services. But an official award of a 3G licence for China Unicom to go with the one received earlier in the week might be pragmatic. Surely, the mainland government could present this as a useful concession to the growing complaints over China's bilateral trade deficit with the US. Awards aside, it looks as if investors might now have to consider buying China Unicom because of its CDMA business, rather than despite it.