3G prospects still out of focus
By Li Weitao and Zhu Boru (China Business Weekly)
Updated: 2004-09-16 14:23

There is no point in guessing what might happen in the run-up to the much-hyped roll-out of the 3G (third-generation) wireless communications service in China.

Yet, people continue to guess, wildly, about the timing of the 3G licensing and which standard will be selected. The 3G-related businesses are expected to be worth hundreds of billions of US dollars.

In the latest chapter in China's long-running 3G technology saga, the home-grown TD-SCDMA standard might be combined with Europe's WCDMA when operators deploy their 3G networks.

Some media recently reported the Chinese Government and the European Union (EU) are considering supporting that combination.

Last week, Hong Kong media reported the Chinese Government might consult with two associations, which represent WCDMA and US-backed CDMA2000, about the possibility of bundling the standards.

A senior British Government official has said Britain hopes China will choose a single standard.

"The general position of the UK Government is leave it (the option for standards) to the market to decide," the official said and Guangdong-based 21st Century Economic Herald, in a joint interview last week.

"Ultimately, we expect a single, unified global standard, as it is much easier to implement."

That, however, might make the already blurred 3G prospects even more obscure in China.

The Chinese Government has promised US officials it will remain neutral in the 3G licensing, choosing instead to let operators select their standards.

But analysts suggest the Chinese Government will have great clout in the decision-making process.

That is why EU officials are reportedly ready to consider supporting the combination of WCDMA and TD-SCDMA, as the Chinese Government will support WCDMA in exchange.

GSMA, a global trade association that represents more than 630 GSM and WCDMA mobile operators worldwide, formed an alliance with TD-SCDMA Forum, created to promote the Chinese standard, in June.

The alliance's purpose is to help promote the interoperability and international roaming between the two technologies, to maximize their economies of scale for the benefit of end-users, operators and manufacturers.

European telecoms equipment vendors appear ready to support the combination.

Technically, WCDMA and TD-SCDMA complement each other well, said Sari Baldauf, executive vice-president of Nokia Corp and general manager of the firm's network division.

Nokia has noticed some Chinese operators are interested in the bundling of WCDMA and TD-SCDMA, said David Ho, president of Nokia (China) Investment Co Ltd.

Bundling will create a "win-win" situation, he said.

Repeated delays of the 3G roll-out and the immaturity of TD-SCDMA are the major reasons for the growing support for bundling the standards, said Tina Wang, an analyst with Norson Telecom Consulting.

TD-SCDMA will not be ready for commercial deployment until next June, government officials have said.

"The government will not issue 3G licences before it makes sure TD-SCDMA can work. And many parties have found they must make some concessions to speed up the 3G roll-out," Wang said.

Edward Yu, president of Beijing-based consultancy Analysys International, said TD-SCDMA will have little impact, despite the speed-up of its commercialization.

"The competitive landscape remains largely unchanged. TD-SCDMA will either be combined with WCDMA or selected by minor operators as a single standard," Yu said.

China Mobile, China Telecom and China Netcom appear to be favouring WCDMA, insiders said.

Minor operators China Tietong and China Satcom favour TD-SCDMA, as they might not receive 3G licences.

Some experts have suggested up to three 3G licences should be issued to avoid fierce competition.

Only by committing to the Chinese standard will minor players likely receive 3G licences, analysts suggest.

If minor operators fail to receive licences, the only option for TD-SCDMA may be bundling with WCDMA.

The road ahead for bundled standards might be bumpy.

Wang Yuquan, president of consulting firm Frost&Sullivan (China), said he has doubts about prospects for bundled standards.

"WCDMA and TD-SCDMA complement each other well, but bundling them will make network deployment more complex," he said.

Close