The wireless industry shouldn’t be surprised about the confusion surrounding China Unicom’s cdmaOne technology deployment plans in China.
After all, the prospect of widespread cdmaOne technology deployments have been uncertain for at least two years, resulting in a continuing political saga. One thing is for sure: The longer cdmaOne deployments are delayed, the stronger a foothold Global System for Mobile communications technology gains.
“The longer the issue takes to be resolved, the more dominant GSM becomes and less of a case can be made for any 800 MHz frequency deployments (of cdmaOne technology),” said Herschel Shosteck, chief executive officer and president of Herschel Shosteck Associates Ltd.
China Unicom, which competes with giant China Mobile, already offers GSM service, but received the go-ahead last year from the Chinese government to deploy cdmaOne technology as a way to differentiate itself. China Mobile supports more than 50 million customers. Unicom has about 5 million customers, and the Chinese government has vowed to help the carrier better compete with the former government-owned telecom monopoly. Approving cdmaOne technology was one way the government was assisting Unicom.
Unicom had planned deployments in the 800 MHz band, while GSM would stay in the 900 MHz bands. The carrier had expected to offer cdmaOne service by now, but various hold-ups ranging from World Trade Organization and licensing issues to standard paperwork problems have halted any plans for cdmaOne deployments. Investors in Qualcomm were hopeful in February, when the cdmaOne patent-holder worked out licensing issues with Unicom, but Unicom’s plans have been on hold since then even though the carrier issued requests for equipment from various vendors.
Last week, it appeared Unicom had no plans for cdmaOne deployments as it began its two-week road show with analysts to draw between $4 billion and $5 billion in an initial public offering. Unicom told analysts that a cdmaOne network isn’t in its short-term plans.
Meanwhile, an unidentified Unicom spokesman confirmed that the cdmaOne project still is on track, said a local Chinese newspaper, Xinhua News Agency. Vice Minister of Information Industry Zhang Cunjiang emphasized that “the biggest support from the government is to solely authorize China Unicom to construct and operate the CDMA network.”
“We have continued to work with manufacturers, and statements from the government indicate that it’s going ahead,” Irwin Jacobs, Qualcomm chairman and CEO, told RCR. “So far, it’s more limited than our original discussions. At some point, something has to happen.”
Qualcomm’s stock fell as much as 13 percent last week on news of Unicom’s statements. Jacobs said it is his understanding that Unicom established a subsidiary to handle the IPO, but the cdmaOne licenses were not provided to that subsidiary. Other sources close to Unicom indicate the carrier hasn’t mentioned cdmaOne technology in conjunction with the IPO because Unicom’s rollout plans were too unstable when the carrier was preparing for the IPO. It didn’t want to mislead investors.
At a Chinese telecommunications conference hosted by Information Gatekeepers in Washington, D.C., earlier this month, a Unicom official indicated the carrier was still waiting for government approval of its cdmaOne rollouts, and commercial service would likely be delayed by a year, confirmed Hui Pan, chief economist with Information Gatekeepers in Boston.
The longer Unicom must wait for cdmaOne technology, however, the less sense it makes, say analysts. GSM operators are moving to their own version of Code Division Multiple Access technology anyway when they deploy third-generation networks in about two years.
But Jacobs said to upgrade from today’s cdmaOne technology to 1XRTT, a 3G standard that adds 144 kilobit data speeds and extra capacity, is straight forward, requiring software enhancements. South Korea’s SK Telecom is expected to be the first to commercially deploy 1X technology later this year. A Unicom executive told attendees at last year’s CDMA World Congress that the company wanted to move to 1X technology as quickly as possible.
