HONG KONG-U.S. mobile-phone vendors are gearing up for cdmaOne sales in China despite uncertainty whether the technology will be deployed there.
While China Unicom told reporters here last week it still is interested in the technology, it remained unclear when and if the company would introduce commercial cdmaOne service. The carrier plans to conduct cdmaOne tests in select cities next year.
“We’ve had several meetings with Unicom and none have gone in the direction that they are not going to do it (cdmaOne),” said Scott Erickson, vice president of global marketing for Lucent Technologies Inc.’s wireless networks division, who is based in Hong Kong. But, he said: “I’d be surprised if anything happened quickly.”
Erickson and executives from other U.S. vendors, including Qualcomm Inc., voiced disappointment at last week’s CDMA World Congress in Unicom’s deployment delay, a different tune from last year’s congress where Unicom executives laid out plans for commercial cdmaOne deployments, which were expected by now.
Instead, vendors may not see requests for equipment any time soon. Rather, Unicom is evaluating whether it wants to deploy 1XRTT technology, the third-generation path for cdmaOne technology that adds capacity and data speeds of up to 144 kilobits per second, or wait for other Code Division Multiple Access-based technologies, such as the Chinese technology path for 3G networks known as TD-SCDMA technology. It also may need to receive approval all over again from the Chinese government if it wants to deploy anything other than Interim Standard-95A technology.
Unicom’s need for cdmaOne technology isn’t as great as it was just six months ago. It aggressively has begun expanding it taxed Global System for Mobile communications network, granting several contracts to manufacturers.
“We have seen a shift in the provinces where Unicom used to be focused on CDMA back to growing GSM,” said Erickson. “There’s no financial impact for us since we’re growing the GSM network.”
Terry Yen, director of the CDMA Development Group’s Asia Pacific programs, said Unicom was anxious in January to quickly roll out cdmaOne technology because of capacity issues. The carrier has been adding about 200,000 subscribers per week to its networks, say vendors.
“Unicom went full speed ahead with this six months ago,” said Terry Yen, director of the CDMA Development Group’s Asia Pacific Programs. “Now, GSM has picked up for Unicom. They’ve gotten the coverage and capacity expanded and they care a little less than they did in January. The Chinese will make their own decision within weeks about rollouts.”
Unicom announced plans to deploy cdmaOne technology last year after the Ministry of Information and Industry gave the carrier the go ahead amid prodding from the U.S. government. The Chinese government is looking for ways to help Unicom compete against giant China Mobile, which supports more than 50 million GSM subscribers, dwarfing Unicom’s 7 million customers.
Unicom’s plans, however, suffered from numerous delays, ranging from licensing issues to paperwork problems with Chinese agencies. Unicom’s plans have been delayed so long, that analysts believe the company should wait for more advanced technology. Qualcomm said it is waiting for the Chinese government to give it a list of manufacturers who will license the technology.
Qualcomm investors were hopeful in February, when the company worked out licensing issues with the Chinese carrier, granting China’s vendors reduced royalty rates if they agreed to buy the majority of their chipsets from Qualcomm.
When Unicom began its initial public offering roadshow weeks ago, it mentioned no plans to deploy the technology, touching off a roller-coaster ride for Qualcomm’s stock. The CDG’s Yen said Unicom’s underwriters advised the carrier to leave cdmaOne technology out of the IPO because of its uncertain rollout plans.
Despite the uncertainty, U.S. manufacturers are rolling ahead with plans to work with local vendors in China to develop cdmaOne technology like they’ve done in the GSM market. The Chinese government wants to ensure that local players have mobile-phone manufacturing expertise, and while many local vendors build GSM equipment, few have cdmaOne expertise.
To that end, Qualcomm is working closely with manufacturers in China, recently announcing research and development agreements with eight local manufacturers.
“We’re providing the necessary know-how to help these companies develop equipment for trial networks,” said Anil Kripilani, vice president of technology marketing and international administration with Qualcomm. “The purpose is for the Chinese to evaluate these manufacturers for producing CDMA infrastructure and handsets. The government will have a review process. Therein lies the timing issue for Unicom or any CDMA network.”
Motorola Inc. already works with local Chinese companies such as Datang Telecom and Tech Co., Shanghai Bell and Eastern Communications Co. on the GSM side.
“Virtually every contract we get, the domestic industry receives an award too,” said Tom Hitton, vice president and assistant general manager of Motorola’s Asia Pacific customer solutions group. “It’s my strong belief that will be standard operating procedure no matter what flavor of CDMA.”
Erickson said Lucent, which also has a number of GSM partnerships with local vendors, has an application pending with the Chinese government requesting permission to set up a manufacturing plant near Beijing capable of producing end-to-end cdmaOne systems. Lucent intends to procure as many manufacturing materials from China as possible and export equipment from there.
“Other than Brazil, we don’t manufacture complete systems outside the U.S.,” said Erickson. “Even if Unicom doesn’t deploy CDMA, we still intend to do this.”
Unicom’s shaky cdmaOne deployment plans don’t seem to have fazed other Asia Pacific operators. Chunghwa Telecom in Taiwan plans to deploy a nationwide 1X cdmaOne system by next September. It will issue a tender to vendors soon, say manufacturers.
Time Division Multiple Access operators Telecom Malaysia and Hong Kong Telecom are issuing requests for product from vendors for cdmaOne equipment, say sources close to the companies. It’s unclear whether they will replace their TDMA networks with cdmaOne technology.
