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China Unicom First to Offer Dual Network Services
China Unicom Group, resuming its once-suspended proposal of narrow-band CDMA (code division multiple access) network construction, plans to expand the current capacity of the network and arrange necessary trial operation with the next generation technology systems.
The country's second largest mobile communication operator has gained approval from the State Council to take over the country's CDMA operator, Great Wall Telecom, by means of asset transfer.
Last week, the company announced the takeover's completion, creating the country's first telecom service provider which operates both GSM (global system of mobile communications) and CDMA networks.
The asset transfer also strengthened Unicom's commitment to constructing and operating a CDMA mobile communication network in China.
"After the merger, we will appropriately expand the network capacity in accordance with practical market demand," said Wang Jianzhou, executive vice-president of China Unicom Group.
Great Wall Telecom, which was operated by the military sector, has conducted trial CDMA network services in cities of Beijing, Shanghai, Guangzhou and Xi'an, and the Hebei Province.
Experts said Unicom is likely to expand network capacity within these regions on the basis of current resources.
The mainstream mobile communication network in China, operated by China Mobile Communications Corp and China Unicom, is based on the European GSM.
"We're proposing to initiate the CDMA project on the basis of the existing network of Great Wall Telecom," Wang said. "The new network scale will depend on market demand and technology availability."
Wang said the necessary tests of next generation CDMA systems are scheduled to be conducted in the second half of this year.
China Unicom had previously viewed the CDMA cellular network, a US-favored mobile system compared with European GSM, as its best shot at competing with China Mobile, which takes up about 80 per cent the country's GSM market.
However, delays in past years have soured the perfect timing of narrow-band CDMA network construction.
The development also poses some risks to China Unicom since the current available network is based on the narrow-band IS-95 CDMA technology.
Moreover, it's not easy for one telecom service operator to manage two different kinds of mobile communication networks, which require adequate and complicated technology support and maintenance.
In an effort to divert potential risks, Wang said China Unicom Group would establish a subsidiary to fully operate the network, which would not be associated with the listing company -- China Unicom Limited -- that debuted on stock exchanges in Hong Kong and New York last June.
"But, the listing company has the right to acquire CDMA network from the parent company if the CDMA operation is successful," Wang said.
"Therefore, the potential risks of CDMA construction would not affect the business of listing company."
In spite of existing risks, China Unicom would benefit more from the operation of the CDMA network.
Experts say since the transition of narrow-band CDMA network to the third generation (3G) is smoother than the GSM network, China Unicom has the chance to be the first 3G service operator in the country.
In contrast with narrow-band GSM and CDMA network, the 3G telecom system, which is likely to be commercialized in 2003, enables much faster transfers than current systems for multimedia operations such as video images.
The CDMA construction authorization by the government also means that China Unicom gains more precious telecom frequency resources which is necessary in order to support in rapidly expanding cellular customer base.
Wang said that the final operation of CDMA network will enable
subscribers to have a wide choice of mobile communications.
The new network is expected to result in two large market demands -- CDMA telecom equipment and terminals. US-based Qualcomm, the main IPR (intellectual property right) holder of CDMA technologies, would be the biggest winner in China.
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