China finally gets 3G phones

But not if they use foreign technology

Simon Burns in Taipei, vnunet.com 31 Mar 2008

China, the world's largest mobile phone market, will begin rolling out 3G networks next month after many years of delay.

China Mobile, the country's dominant mobile phone company, will run a commercial test of 25,000 3G phones and data cards that use the locally-developed TD-SCDMA technology.

The soft launch will cover eight major cities. The deployment requires government permission, but China Mobile has not said whether it has received a licence for a nationwide rollout.

China Mobile chairman Ping Wu said in a statement: "Today's announcement demonstrates China Mobile's strong commitment to commercialise TD-SCDMA.

"It includes a host of measures to facilitate market acceptance of this technology including attractively priced calling plans, six subsidised handsets and USIM cards for consumers who purchase TD-SCDMA handsets through other channels.

"There will be demonstration centres in eight cities, financial incentives for resellers, publicity campaigns and after-sale customer support."

China's government has backed research into TD-SCDMA following complaints that basic technology royalties from China's booming telecoms sector were all going to foreign companies.

Although 3G networks using foreign-developed technology, such as W-CDMA, have been possible in China for more than three years, the Chinese government delayed 3G deployment while researchers struggled to perfect TD-SCDMA.

During the wait, even China Mobile executives have occasionally wavered in their support for the troubled standard.

The government is expected to issue licences for 3G networks based on more established technologies once TD-SCDMA has established a foothold in the market by virtue of a period of exclusivity.

However, analysts warned of possible technical problems with the new standard.

"There are many technical defects and problems to be solved during the pre-commercial tests," Wang Yuquan, president of Frost & Sullivan China, told the China Daily.

"I think China's TD-SCDMA still has at least one year to go before it becomes a mature technology."

The TD-SCDMA Industry Alliance, which represents firms behind the standard, has predicted that their technology's market share will grow to between 14 and 35 per cent of new handset sales by the end of 2008.

Official predictions that TD-SCDMA might also find a market outside China have met a lukewarm reaction from industry observers.

"TD-SCDMA is likely to face an uphill battle outside mainland China," Hwai Lin Khor, an analyst with ABI Research, said in January.

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