The Chinese government has given its homegrown TD-SCDMA technology a thumbs up, calling it an officially backed standard, the Xinhua news agency reported.
China’s Ministry of Information Industry said the technology is “already mature and ready for manufacturers to move ahead with production.”
Industry analysts have said that China was stalling on issuing third-generation licenses so that TD-SCDMA could mature, but pressure has been building for China to make a move since the government has made no secret of its plans to wow the world with its 3G networks during the 2008 Beijing Olympic Games. Now that the government feels TD-SCDMA is ready for prime-time, 3G licensing is expected to be awarded swiftly, and Chinese companies are surely swooning with delight as their balance sheets are about to reap the benefits of their government’s handling of the technology battle for China’s 3G buildout.
Developed by Datang Mobile and other Chinese equipment vendors, TD-SCDMA is expected to protect Chinese firms from royalty payments to the likes of Qualcomm Inc. and others. Qualcomm holds most of the essential patents to CDMA2000 1x EV-DO technology, as well as W-CDMA. With more than 400 million wireless subscribers already, China’s market is expected to grow 65 percent by the end of 2010, according to Informa Telecoms & Media.
China’s largest telecom equipment maker, Huawei Technologies Co. Ltd., will surely see some 3G action on its home turf. The company recently announced that its global sales jumped to $8.2 billion in 2005-a 40-percent increase from 2004’s results.
The company said demand for wireless mobile networks, next-generation networks, optical networks, data communications applications and software fueled the company’s sales increase. While the company noted that it gained sales in developing countries, Huawei said it’s now serving 28 of the top 50 global carriers.
And talk of Huawei’s first big deal with a U.S. carrier is getting louder.
UBS Investment Research says T-Mobile USA Inc. is the likely contractor. The carrier is looking to roll out its HSDPA network in the second half of 2006 and is expected to bid for spectrum in the advanced wireless spectrum auction scheduled for this summer to facilitate the rollout.
But UBS expects incumbent vendors L.M. Ericsson, Nokia Corp. and Nortel Networks Ltd. to stage a knock-down, drag-out fight to keep Huawei out of T-Mobile USA’s vendor selection.
Huawei’s upper hand may be the compact design of its base station, which would allow T-Mobile USA to maximize use of its existing GSM towers and cabinets and save on buildout costs of the HSDPA network, said UBS.
We probably won’t know who T-Mobile USA selects as its 3G vendor until the middle of 2006, but all the vendors know that the outcome will have reverberations in the industry for years to come.
When asked about the report, T-Mobile USA issued a statement, but did not elaborate on its 3G plans.
“T-Mobile does not preannounce details of future products and services. As we’ve stated previously, our customers will benefit from 3G services in 2007,” the carrier said.
Huawei said it began to establish an international image last year, gaining carrier contracts with Vodafone Group plc, Telefonica S.A., KPN in the Netherlands, SingTel, AIS in Thailand, MTN in South Africa and Telemar in Brazil.
“Besides, Huawei has its presence in 14 European and North American countries including Germany, France, Britain, Spain, Portugal, the United States and Canada,” the company said in a press release.
In a recent report, Current Analysis pointed out that Huawei has maintained a tight grip on its product development and technology research. For instance, the company’s GSM/UMTS and CDMA2000 solutions rely on homegrown components. But the company’s 3G portfolio includes a partnership with Siemens AG for TD-SCDMA technology, and Huawei is partnering with Intel Corp. for WiMAX development. In addition, the company teamed with Ubiquity Software Corp. to integrate Huawei’s application servers and application creation environment into the company’s Internet Protocol Multimedia Subsystem portfolio.
“3G momentum signals that the Chinese vendor can compete with the industry’s heavyweights in established as well as developing markets,” stated Current Analysis. “Yes, the company is still an emerging wireless player, facing the need to prove its reliability, polish its marketing, and, in some cases, even buy customers.
“Yet, regardless of Huawei’s immaturity, there is no denying that Huawei has the assets to become a major wireless contender.”
Current Analysis added, “Of course, Huawei’s greatest assets may derive from its position within the market. As a Chinese vendor, Huawei has a natural, or, at least, political advantage in China and a strong position in the developing world. Beyond emerging markets, however, Huawei has been able to secure deals in mature markets as well, more concretely pointing to the competitiveness of its gear.”
The industry research firm also noted that Huawei still faces some perceived biases against Chinese infrastructure providers.
“Regardless of its wireless strengths, Huawei’s weaknesses are also too great to be ignored. Huawei’s position as a low-cost Chinese vendor may help it to win some deals, but also portrays the company as little more than a cheap equipment manufacturer with a focus on costs rather than quality,” Current Analysis said.
