Nortel builds out China Unicom GSM networks

China United Telecommunications Corp. (China Unicom), China’s second-largest mobile network operator, has awarded Nortel Networks Corp. a series of contracts to expand its nationwide GSM (Global System for Mobile communications) network.

China Unicom is the biggest competitor to incumbent China Mobile Communications Corp. in the rapidly expanding Chinese market for mobile phone services. The number of mobile subscribers in China nearly doubled last year to 85 million, according to a report by Gartner Inc.

The expansion comes as China Unicom evaluates two possible paths to high-speed data networks, one based on GSM and the other on CDMA (Code-Division Multiple Access), which the operator has just begun to set up in the first major commercial network of its kind in China. The high-speed networks are expected to offer rich data applications such as messaging, online purchases and financial trading, multimedia entertainment and location-based services, and may be the first link to the Internet for many Chinese.

Under the US$270 million contract announced Wednesday, Nortel will provide China Unicom with equipment to expand its existing networks in seven provinces and one major city, with the network capacity expected to go online by the end of this year, said David Ho, vice president and chief operating officer of Nortel Networks China, in a telephone interview Thursday. The equipment will be deployed in Zhejiang, Hunan, Shanxi, Ningxia, Henan, Xinjiang and Shandong provinces and the city of Chongqing.

The network expansions will boost the capacity of China Unicom’s Nortel-based GSM networks to 11.6 million customers from the current 7.1 million, Nortel said in a statement Wednesday.

Nortel will install additional radios, base stations and switches, as well as adding a GSM 1800MHz overlay network on top of congested GSM 900MHz networks in urban areas, Ho said. The upgrade will also add software that lets pre-pay subscribers roam among the provincial networks.

The GSM networks can be upgraded to GPRS (General Packet Radio Service), a higher speed, packet-based service, with the addition of a few modules to existing base stations and the installation of two separate gateway devices, Ho said. The added boxes would strip off data to put it on a packet-based network while directing voice calls to the current circuit-switched network. A technology trial of GPRS is now under way in Zhejiang province, just south of Shanghai, and should be finished in the third quarter of this year. It will be followed by limited customer services on a trial basis.

However, China Unicom may also choose to bring out high-speed data services by upgrading its fledgling CDMA network to CDMA2000 1xrtt, which requires just a hardware and software upgrade to conventional CDMA equipment, or it may deploy both, Ho said. Nortel has equipment ready now for either type of network, he said.

“It could very well end up that Unicom could decide to do both, because the incremental cost of doing both is very little,” Ho said.

The CDMA2000 technology, based on current CDMA networks and radio spectrum, probably will go into trials in the first quarter of next year and take three to four months. After that time, China Unicom probably will decide which mobile data technologies to deploy, he said.

Both types of networks eventually will operate at a maximum of about 144K bps (bits per second), Ho said, though actual throughput depends on how many radio channels are devoted to the service.

One current stumbling block for GPRS deployment has been the availability of handsets, which has remained limited in most locations even as the first networks have been rolled out, Ho said.

“The volume rollout of GPRS has been delayed by the major handset manufacturers,” Ho said.

Guangdong Nortel Telecommunications Equipment Ltd. earlier this year was awarded a contract to supply US$275 million worth of equipment for bringing CDMA to 2.57 million customers in six provinces and one large city, where Nortel also supplies GSM gear. The CDMA equipment is already being deployed and commercial operation should begin by year’s end, Nortel vice-president of for Business Operations Kenneth Pecot said earlier this month.

Nortel, in Brampton, Ont., can be reached at China Unicom, in Beijing, can be reached at