China inching closer to 3G licensing

Just when it seemed like the world had stopped making predictions about when China’s government would grant third-generation licenses to operators, reports surfaced in the Chinese press indicating that the government will make its move in February.
An article published by ShanghaiDaily.com lays out that a TD-SCDMA trial was launched in September in Beijing and a few other places with 20,000 government officials, telecom carrier staff and telecom equipment company executives. Ken Wu, deemed a senior official at the Ministry of Information Industry, is quoted as having said at a recent 3G summit in Beijing, “I use the TD-SCDMA phones and the model has proven able to surmount technology obstacles such as short battery life and overheating on long calls.”
The article then cites Chinese officials as having said that 3G licenses will be issued once the trial wraps up in February. Interestingly, Tang Ru’an, president of Datang Mobile, a company that has supported TD-SCDMA from the technology’s earliest inceptions, explained the timeline of TD-SCDMA’s launch.
“The host country is required to deploy a network 18 months ahead of the Olympics if it aims to adopt a new technology for the games. So the deadline is February,” Ru’an said.
However, the article also pointed out that China’s 3G license-granting will not touch off an all-flavor flurry of network deployments. Rather, the government is expected to allow one carrier to launch a TD-SCDMA network with licenses for the already-proven CDMA2000 and W-CDMA technologies to be dealt with later. There was no mention of how much later, but it’s a sure bet that Chinese carriers wouldn’t mind being able to show off their 3G networks during the 2008 Beijing Olympics. The question is, what would the government like the world to see during the Olympics?
Nevertheless, Cao Shuming, an MII official in charge of 3G tests, told attendees at the Beijing 3G summit that TD-SCDMA “is now qualified for commercial use after tests on wireless networks, connection to other networks and digital antennas.”
But as ShanghaiDaily.com points out, TD-SCDMA is probably still not ready for prime time. Current Analysis analyst Peter Jarich told RCR Wireless News that the Chinese technology faces an uphill battle on several fronts.
“Cost-it will take lots time to build the scale achieved by either CDMA2000 or W-CDMA,” explained Jarich. “Maturity-it’s nice that phones deliver decent battery life and don’t overheat, but if we’re just getting to that point now, the technology is just learning to crawl. Roaming-for years, this has dogged CDMA2000, the case for TD-SCDMA will be worse. Timing-operators are already moving on HSPA and DORA (EV-DO Revision A), and by the time TD-SCDMA is close to mature, they’ll be looking seriously at LTE-TD-SCDMA will have to move quick to catch up.”
Most industry-watchers say doubts about TD-SCDMA’s technological viability will hamper its chances of blasting out of China, especially into mature markets in Europe.
“I think TD-SCDMA had a chance to move outside China, but I’m not sure it still does,” said Jarich. “Lots of operators own 3G licenses set up for TDD. If you need to launch an IMT-2000 technology in the band, you’re left with TD-CDMA or TD-SCDMA as your only options. At this point, though, it seems pretty late. If I were a European operator who hasn’t yet tapped out my paired 3G spectrum, I wouldn’t be in any hurry to look at TD-SCDMA.”
Perhaps, but Yankee Group’s XJ Wang says if TD-SCDMA is successful in China, we’ll see carriers in Africa and Latin America use TD-SCDMA to launch 3G services within two to three years. Wang noted the Chinese government provides several African nations with financial support, and China would probably require that in return for that support, African carriers opt for Chinese vendors as they upgrade their wireless networks.
That said, non-Chinese equipment vendors stand to cash in on their sizable TD-SCDMA investments once China gives one of its carriers a green light to push forward with the technology. Though the industry’s top equipment peddlers rarely mention their TD-SCDMA portfolios, many of them have already secured friends in Chinese telecom circles. Consider that L.M. Ericsson has already partnered with ZTE Corp. on the TD-SCDMA front; Siemens S.A. has allied itself with Huawei Technologies Co. Ltd.; Nokia Corp. is working with China Putian and Alcatel Inc. hooked up with Datang Mobile and Shanghai Bell.
“Ericsson stands to gain the most, by far, from China’s TD-SCDMA market,” said Wang.
Conversely, the industry’s leading phone makers haven’t made a peep regarding TD-SCDMA handsets. Ironically, Qualcomm Inc., often rumored to be on the verge of slapping TD-SCDMA-handlers with patent violation lawsuits, told RCR Wireless News that it has TD-SCDMA chips for handsets ready to go and is already working with Huawei, ZTE and others. Could it be that Chinese developers will pay Qualcomm’s royalties after all?
The world will have to wait and see. Wang said he expects TD-SCDMA infrastructure’s price points to be equitable with those of W-CDMA, but TD-SCDMA handsets could actually cost more than W-CDMA’s because most TD-SCDMA handsets will need to be dual-mode, hosting both W-CDMA and TD-SCDMA chips.
No matter the cost of the network gear or the devices, the Chinese market is a colossal proving-ground for TD-SCDMA technology.
Wang estimates that in five years, China will have 1 billion users since the government is pushing hard to expand communications into the vast nation’s countryside.
As for 3G licenses coming in February, Jarich isn’t buying it.
“I’m not sure why anyone is still willing to speculate on the timing of 3G licensing in China,” Jarich said. “Time and again, people have been wrong. I hope, for the industry’s sake, that we’re close. But, I wouldn’t bet on it.”
Wang said the timing of the licenses isn’t the most important thing to consider.
“The point is that by 2008, China will have some type of TD-SCDMA network up and running,” said Wang. “And that doesn’t mean other types of technologies won’t be there as well. China will have CDMA2000, W-CDMA and TD-SCDMA. The country cannot afford to be isolated from other parts of the world economically.”