China 3G rollout delayed until 2006

September 17, 2005

Chinese telecom officials said this week its version of 3G cellular technology had overcome feasibility problems, opening the door for issuing licenses next year.

Wei Guiming, a senior engineer with the Telecoms Standard Institute of the Chinese Academy of Telecommunications Research, was quoted in state-run media as saying "TD-SCDMA technology has been tested and has shown that it can support large-scale network operations." CATR is a unit under China's Ministry of Information Industry. Wei said it was the first time the ministry had officially announced TD-SCDMA trial results.

TD-SCDMA, the acronym for Time Division Synchronous Code Division Multiple Access, is China's home-grown third-generation mobile telecommunications standard under development. The government has invested more than one billion yuan (over $123 million) on its research and development.

Analysts note the MII has an agenda of trying to establish technology standards developed in China as a means of fostering growth in the domestic telecommunications industry. The policy has been slow to score solid achievements in the cell-phone sector, a key market driver in a country with more than 300 million subscribers.

In June 2005 TD-SCDMA performed poorly in technical trials with problems including inability to support 3G value-added applications and unsatisfactory operations between terminals.

According to Wei, a consensus had been reached on TD-SCDMA's technical feasibility with item-specific trials over the past few months pushing forward the industrial process achieving major breakthroughs.

The expert's statements were made at the "3G in China Global Summit 2005" held Sept. 14-16 in Beijing. Topics including network planning, design and optimization, service and billing strategies, service integration, as well as operators' choices among TD-SCDMA, CDMA2000 and WCDMA technologies were discussed at the gathering.

Chinese regulators are unlikely to issue operating licenses for WCDMA or CDMA2000 operations before the TD-SCDMA standard is ready for commercial deployment, according to an article in Xinhua.

However, concerns over commercial adoption still linger. Yi Mingyu, a telecoms analyst with CCID Consulting, was quoted in Chinese media last week saying "the government has good reasons to promote the technology, but for telecoms carriers it is far from convincing." TD-SCDMA has been tested by the government, but it remains an untested technology in the marketplace and thus involves potential risks carriers must carefully consider.

The country is expected to complete testing of all 3G-related technologies during the remainder of this year and may start issuing licenses in early 2006.

There is intense speculation in industry circles as to the real reason for the delay in granting 3G licenses, something regulators promised would take place in the second half of 2005. Aside from lingering problems and doubt about TD-SCDMA, another reason is an anticipated shake-up and restructuring of China's telecom industry.

Copyright 2005 by United Press International