China's 3G Standard Wins Government Favour

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Last updated at: (Beijing Time) Thursday, October 31, 2002

China's 3G Standard Wins Government Favour

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The Chinese Government has opted to give concrete technical support to domestically developed third generation (3G) mobile communication technology, widely expected to be the next big thing in the mobile communications business.

And China's Datang Telecom and German giant Siemens are likely to come out major winners.

According to Zhou Huan, president of Datang, the government has allocated broader spectrum resources for TD-SCDMA (time division synchronous code division multiple access), a 3G technology developed by Datang, rather than for those developed by European and American companies.

Accordingly, Datang is set to become another Qualcomm, the US-based core technology owner of CDMA technology that became rich by collecting licensing fees from vendors and carriers. And Siemens, a major partner of Datang, will also reap profits from users of TD-SCDMA technology.

After investing over 200 million euros (US$203 million) in TD-SCDMA over the last few years, Siemens announced last week it will sink another 50 million euros (US$50.8 million) into the development of TD-SCDMA.

Beside China-based TD-SCDMA, the other two 3G technologies are the European-developed WCDMA (wideband CDMA) and CDMA2000, nurtured by Qualcomm.

The government's spectrum allocation, which is very favorable for TD-SCDMA, paved a golden way for Datang and Siemens, Zhou said.

"China's mobile telecom market will no longer be a playground for overseas companies in the coming 3G age," said Zhang Guobao, deputy minister of the State Development Planning Commission.

Zhang said with the adoption of the domestically invented technology, China will no longer pay billions of dollars in licensing fees to overseas core technology owners.

But the reality Datang and Siemens has to face is, TD-SCDMA is a relatively younger technology that has no commercialized network equipment or mobile terminals.

Johan Lodenius, senior vice- president of Qualcomm, the core patent owner of CDMA2000, said one of the major obstacles facing TD-SCDMA is that there is still no TD-SCDMA chips for mobile phones.

"There could be years before TD-SCDMA's real commercial use," he said.

To hurry up TD-SCDMA's commercialization, Datang yesterday kicked off an alliance with seven other telecom vendors to produce sets of TD-SCDMA equipment.

The seven other members of the alliance include Soutec, Huali, Huawei, Legend, ZTE, China Electronics Corp and China Putian, who are chip makers, mobile phone vendors and network equipment makers.

China Mobile and China Unicom, the country's dual mobile carriers, attended the launching ceremony of the industry alliance.

While neither has announced they would adopt TD-SCDMA technology in the 3G age, it is widely believed that if the government issues new mobile licences to other telecom carriers, TD-SCDMA will very likely be used by the new mobile carriers.

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