BEIJING-Once again there seems to be a significant delay in China Unicom’s rollout of its CDMA network. The much-plagued endeavor was on track just a couple of weeks ago, when Unicom invited tenders for the first phase of the project to the tune of 20 billion yuan (US$2.42 billion) for network purchases this year. The results were expected to be announced by the end of April. But contract signatures were cancelled at the last minute.
Has CDMA once again become the victim of worsening Sino-U.S. relations?
Jan Malm, president of China operations for Sweden’s Ericsson, confirmed to Reuters that China Unicom canceled contract signatures with at least seven telecom suppliers scheduled for the weekend of 28 April without giving a reason. The Chinese have a one-week holiday from 1-7 May, during which no new announcements were made.
The first news of the deals came from China’s Premier Zhu Rongji, who told South Korea’s Information and Communication Minister Yang Seung-taik that Samsung would be awarded US$150 million in contracts to supply CDMA network equipment and US$500 million for handsets over several years.
The list of successful bidders has not been officially announced, but is reported to include Samsung, Motorola, Lucent, Nortel, Ericsson, Alcatel’s joint venture Shanghai Bell, and several local manufacturers, one of which is Zhongxing Telecommunications Corporation (ZTE). Zhongxing President Hou Weigui expects to clinch 2 billion yuan (US$242 million) in contracts for CDMA equipment this year and hopes to gain a 30-percent domestic market share for CDMA equipment.
Last October, Zhongxing developed the world’s first interoperable GSM-CDMA subscriber identity module (SIM) card, and in June, the company expects to offer the ZTE802 CDMA handset. Zhongxing raised 1.6 billion yuan (US$193 million) on the local stock exchange in April to further develop its offerings in the fields of mobile communications, broadband data networks and optical communications.
The US$2.42 billion first-phase investment should allow China Unicom to build a 13.3 million-subscriber CDMA network in 300 cities. The company plans to spend 70 billion yuan (US$8.46 billion) in the next three years to further expand the network.
But not everybody is enthusiastic to spend so much money on a second-generation (2G) network, which would have to be upgraded to third generation (3G) almost as soon as it is completed. Serious setbacks in U.S.-China relations, such as the spy plane incident and the supply of advanced weaponry to Taiwan, provide convenient excuses to further delay Unicom’s CDMA plans.
