China banks on homegrown 3G standard

To fuel its booming mobile phone market, China to date has relied on imported technology. That may be about to change. A homegrown standard for next-generation networks could give Chinese companies an edge and allow them to grab a slice of a market dominated by European and U.S. suppliers.

With the backing of the Chinese government, the technology is guaranteed to play a role, at least in China. Mobile networks based on the third-generation (3G) standard known as TD-SCDMA (time division-synchronous code division multiple access) will be deployed by the country’s dominant mobile phone operator, the state-owned China Mobile Communications Corp., said Zhu Qiliang, director general of the telecommunications research and development centre at Beijing University of Posts and Telecommunications (BUPT), following a presentation here at the Pacific Telecommunications Council’s annual conference.

“China Mobile will definitely use it,” said Zhu. The country’s second operator, China United Telecommunications Corp. (China Unicom), has yet to decide whether it also will deploy TD-SCDMA networks, but is likely to do so, he added.

The Chinese-backed technology is best suited for use in urban areas with high population densities. Compared to the other two major 3G technologies, W-CDMA (wideband-CDMA) and CDMA2000, TD-SCDMA network equipment promises costs that are as much as 20 per cent to 50 per cent lower than those for the other two standards, according to Zhu.

All three technologies have been approved as worldwide 3G standards by the International Telecommunication Union.

TD-SCDMA offers a real opportunity for China’s equipment makers to grab a slice of a market that to date has been dominated by European and U.S. suppliers, which is one of the main reasons why the Chinese government is so eager to support the technology, said Li Shihe, director of the Chinese Academy of Telecommunications Technology (CATT), part of the Beijing-based Datang Telecom Techology and Industry Group.

Widely credited as the inventor of TD-SCDMA, Li has devoted the past six years of his life to leading a group of Chinese researchers developing the technology, he said in an interview. Li is convinced that TD-SCDMA also will be attractive for operators in other countries. AT&T Wireless Group Inc., for example, in recent months has sent several teams of researchers to visit Li’s team in Beijing, he said.

Even Japan’s NTT DoCoMo Inc., which in May is scheduled to roll out the world’s first commercial W-CDMA network in Tokyo, could become a convert in the future, Li added.

“I believe NTT DoCoMo will use TD-SCDMA in Japan too,” due to the technology’s more efficient use of spectrum, he said.

Li sees TD-SCDMA as a complementary technology rather than a direct competitor to the other two 3G standards, saying that although TD-SCDMA is best suited for use in major urban areas, W-CDMA and CDMA2000 are better suited for nationwide and international network deployment.

Officials at companies that are proponents of the other two technologies, however, showed little enthusiasm toward TD-SCDMA.

“We are waiting to see how it will work in the field,” said Anil Kripalani, senior vice president of technology marketing and international administration at San Diego-based Qualcomm Inc., a main backer of the CDMA2000 standard. Qualcomm, which owns a broad portfolio of CDMA patents, also holds “basic” patents relating to TD-SCDMA, said CATT’s Li. This would mean that Qualcomm is guaranteed royalties from sales of equipment.

Schaumburg, Ill.-based equipment maker Motorola Inc. to date has concentrated its research and development efforts on the other two technologies, said Larry Henderson, vice president and director of solutions engineering in Motorola’s Global Telecom Solutions Group. However, Motorola will support the technology if the market so requires, he added.

Motorola, together with Stockholm-based L.M. Ericsson Telephone Co. and Espoo, Finland-based Nokia Corp., are the dominant suppliers of current-generation network equipment in China.

For the network equipment makers, the stakes are high. Li estimates the size of the global 3G market at US$600 billion to $1 trillion, of which 20 per cent will be in China. Grabbing even a slice of the 3G market in China may be enough to give the domestic equipment suppliers the economies of scale to pursue an export push and thus expand their international reach.

Leading Chinese equipment makers, including Shenzhen-based Huawei Technologies Co. Ltd. and two affiliates of Datang, will be among the domestic makers of TD-SCDMA equipment, he said. In addition, Datang has also signed an agreement with Siemens AG, under which the German company plans to manufacture TD-SCDMA base stations at a joint venture in Shanghai. Siemens earlier had backed a similar technology it was developing on its own, but has since joined the TD-SCDMA camp, Li said.

The first field trials of TD-SCDMA are scheduled to take place later this year, perhaps as early as in April, and the first commercial TD-SCDMA products are expected to hit the market by next year, he added.

China needs to deploy 3G networks in a timely manner to deal with an expected spectrum shortage that will curtail the growth of the country’s current second-generation networks, said BUPT’s Zhu. The country is already the world’s second-larget mobile phone market, with more than 85 million users at the end of 2000, Zhu said, citing the latest available subscriber statistics.

CATT’s Li estimates that China’s GSM (Global System for Mobile Communications) network capacity will hit a wall at about 120 million to 150 million subscribers, while CDMA networks will be able to serve an additional 30 million to 50 million users.

The spectrum crunch and perceived need for higher wireless data and Internet access speeds are why China needs to deploy 3G technologies, he added.

Having dedicated the past six years of his life, with “no free time, no vacations,” to developing wireless technologies that ultimately resulted in the TD-SCDMA standard, Li is now looking forward to a change of pace. “This year I will retire,” he said.

Datang Technology and Industry Group, in Beijing, can be reached at