3G : Getting a grip on China’s 3G plans

3G : Getting a grip on China’s 3G plans

The Chinese government’s measured approach to third-generation (3G) mobile services has left industry observers guessing when 3G licenses will be issued, but the strategy plays to the advantage of operators and equipment makers in the world’s most populous country, according to industry analysts.

“It’s clear the government is certainly willing to favour local industry with the development of 3G,” said Bertrand Bidaud, vice president of telecommunications at Gartner Group Advisory (S) Pte. Ltd.

The Ministry of Information Industry (MII), which oversees the telecommunications industry in China, has not laid out a schedule for when 3G licenses will be issued. As predictions for when this might occur have been made and then passed, Western media reports have characterized the lack of a clear timeframe for the issuance of 3G licenses as a sign of delays by the Chinese government.

However, that is not the case, said Peter Lovelock, director of MFC Insight, a telecommunications research firm in Beijing.

“They’ve always said it wouldn’t be until around now – in 2003 or 2004 – that they would issue 3G licenses,” Lovelock said, noting government officials have stated China would not proceed with licensing 3G services until the technology was mature and services were financially viable.

That was the same message Wu Jichuan, then China’s minister of information industry, gave at a Hong Kong press conference last December, commenting on China’s plans to issue 3G licenses.

Government statements concerning 3G have consistently hinted that licenses would be issued to operators in 2003 or 2004, with some recent indications that licenses could be issued in 2005, Lovelock said. “It’s now been getting pushed back a little bit,” he said.

While China will likely issue 3G licenses in late 2004 or perhaps early 2005, the government may give operators advance notice of what to expect, Lovelock said. “Within the first six months (of 2004), the MII is probably going to be letting the operators know who is getting licenses for what,” he said.

In addition to speculation over the timeframe, observers have wondered just how big a role Time Division Synchronous Code Division Multiple Access (TD-SCDMA) will play in China.

TD-SCDMA was largely developed in China and has been promoted by the Chinese government as a third 3G standard, alongside Wideband Code Division Multiple Access (W-CDMA) and CDMA2000.

Last week, China’s state-run media reported that MII will require all of the country’s six telecommunication operators, including those that are not licensed to offer mobile services, to conduct 3G trials using TD-SCDMA technology. The trials will be conducted in four Chinese cities – Beijing, Shanghai, Chongqing and Chengdu – and will last for about one year, the report said, citing comments made by Liu Qingjian, a vice minister at MII.

In addition to the required TD-SCDMA trials, Chinese operators will have the option of conducting 3G tests using W-CDMA and CDMA2000, said the TD-SCDMA Forum, an industry group, citing Chinese press reports. However, MII is not requiring operators to conduct trials using these technologies, it said.

“Some people think that the government will wait until TD-SCDMA is ready before they issue the licenses,” said a Chinese source involved with planning for 3G services, speaking on condition of anonymity. Exactly when that might happen is not clear, the source said, noting that estimates range between 2004 and 2005.

Analysts, however, discounted such speculation.

“I think it’s a bit of a stretch,” Bidaud said, predicting that China will issue 3G licenses in mid-2004. “There is probably a connection (between the development of TD-SCDMA and the timeframe for 3G licenses to be issued) but I don’t think TD-SCDMA will drive the timeframe.”

“Those people are delusional,” Lovelock agreed, adding that TD-SCDMA has marginal commercial prospects in the initial rollout of 3G services in China.

“The current timing suggests that, in the initial phase of 3G rollout in China, TD-SCDMA is not going to play a big commercial role,” he said.

Instead, TD-SCDMA’s greatest value is as a bargaining chip with foreign equipment makers, who have given Chinese operators extended access to 3G equipment for network tests and may worry that Chinese operators will opt for TD-SCDMA over W-CDMA or CDMA2000, Lovelock said.

“It’s a fantastic bargaining chip and they’ve done very well with it,” he said.

TD-SCDMA has also played an important industrial role for China, getting Chinese companies involved with the development of intellectual property and R&D activities that they wouldn’t otherwise have participated in, Lovelock said, noting that this sets the stage for further Chinese advances in wireless technology down the road. “It lays the groundwork for research beyond TD-SCDMA,” he said.

Operators can also use TD-SCDMA as a bargaining chip with the Chinese government. The technology is seen by Chinese operators as a less attractive choice than either W-CDMA and CDMA2000, which have been deployed in 3G networks outside China, Lovelock said. Since the Chinese government wants to see TD-SCDMA deployed commercially by one or more operators, they may be able to negotiate preferential subsidies or other benefits for agreeing to use the homegrown 3G standard, he said.

“They can go to the government and say, ‘If we take this TD-SCDMA burden what do we get in return?'” Lovelock said.

Chinese equipment makers have also benefitted from the slower pace of 3G licensing in China. By holding off on issuing 3G licenses, the Chinese government has bought time for equipment makers like Huawei Technologies Co. Ltd. and ZTE Corp. to close the gap with foreign vendors of 3G equipment, he said.They haven’t wasted that opportunity. Both companies now offer a range of W-CDMA and CDMA2000 equipment for 3G networks.

Would you recommend this article?


Thanks for taking the time to let us know what you think of this article!
We'd love to hear your opinion about this or any other story you read in our publication.

Jim Love, Chief Content Officer, IT World Canada

Featured Download

Featured Articles

Cybersecurity in 2024: Priorities and challenges for Canadian organizations 

By Derek Manky As predictions for 2024 point to the continued expansion...

Survey shows generative AI is a top priority for Canadian corporate leaders.

Leaders are devoting significant budget to generative AI for 2024 Canadian corporate...

Related Tech News

Tech Jobs

Our experienced team of journalists and bloggers bring you engaging in-depth interviews, videos and content targeted to IT professionals and line-of-business executives.

Tech Companies Hiring Right Now