Prospects for the development of third generation (3G) mobile telecommunications in China are now much clearer.

Last week, Information Industry Minister Wang Xudong sent out a clear message that the development of 3G is firmly on track, after years of government caution.

Wang told the ministry's working conference, held last week in Beijing, that the ministry, in collaboration with other government bodies, will make suggestions to the State Council regarding the development of 3G in China at an "appropriate time" this year.

Although Wang's statement hit the headlines, it came as no surprise to industry analysts.

It is the first time that the Chinese Government has mapped out a time frame for its 3G strategy.

Interest therefore developed in the industry, with the growing belief that 3G's introduction to China is imminent as there are no further reasons to delay its implementation given the technology's rapid development around the world.

However, questions like "have all the 3G standards matured?", "is China really ready for the take-off of 3G?", and "what licenses should be issued to boost the 3G development?" have yet to be answered to guarantee the official roll-out of China's 3G strategies.

Ready to go

Acknowledged by the International Telecommunication Unicom, there are three 3G standards, including the European-based WCDMA (Wideband CDMA), US-based CDMA 2000 and China's TD-SCDMA (Time Division-Synchronous Code Division Multiple Access).

"From a technical perspective, I believe among the three 3G standards, both WCDMA and CDMA 2000 are becoming mature and can now be rolled out for commercial use," Zhang Zhijiang, general manager of the Department of Technology of China Unicom, told China Daily.

"The conclusion is based on 3G trials organized by the ministry in the past few years," he said.

Zhang was pleased with the minister's remarks last week, regarding them as " quite positive."

China Unicom operates both GSM and CDMA networks and is expected to adopt the US Qualcomm-based CDMA 2000 while migrating its current networks to 3G.

"We are ready to do the network migration after we obtain a 3G license," he said.

He said China Unicom is closely monitoring the development of 3G to ensure a quick response.

Zhang said it will take about six months for China Unicom to upgrade its current 2.5G networks to 3G.

For China Unicom's GSM users, the company is currently using GSM 1X technology to enable its GSM users to access the CDMA networks, characterized by their speedy wireless Internet connections and fast wireless date transmission.

China Unicom has so far signed up more than 100 million mobile subscribers including GSM and CDMA users.

China Mobile, the world's largest mobile carrier in terms of subscribers, it is likely to land a 3G license based on WCDMA, which is regarded as a natural upgrade for GSM to migrate into 3G.

Zhang expected China Mobile to take at least nine to 12 months to upgrade its current network to 3G.

"My guess is mid-year, or at the completion of the next phase of TD-SCDMA tests. At least two licenses will be awarded initially (WCDMA and CDMA 2000) with more likely to follow at a later date," said Michael Thelander, founder and chief executive officer of US research house Signals Research Group.

"A TD-SCDMA license will be awarded at some point, probably fairly early in the process, but it is not clear to me if it will be one or two licenses or if it will be a nationwide or regional license," he said.

"Assuming that a TD-SCDMA license is awarded initially, I believe that the government will award at least three licenses," he added.

Thelander said he believed that another factor that could determine the number of licenses is what the government does regarding the number of operators and whether or not it merges or splits the existing operators.

He believes China Tietong needs funding, perhaps from a partner, before it can deploy a 3G network.

TD-SCDMA enhanced

With continued government support, TD-SCDMA has witnessed rapid progress over the past year.

Sources from the China Academy of Telecommunications Research under the ministry said that the Chinese Government will conduct the third phase of commercial tests for the three 3G standards.

All the six major telecom operators such as China Mobile, China Unicom, China Telecom, China Tietong and China Railcom will take part in the test, starting at the end of March, which will mainly focus on TD-SCDMA.

Huawei, ZTE, China Putian and Datang are among the equipment providers involved in the test.

According to Huawei, this round of tests will focus on handsets, chips, and TD-SCDMA's compatibility with the two other 3G standards.

Test for WCDMA and CDMA 2000 are supplemental as previous tests in the second phase proved that the two standards are comparatively mature.

"We are quite confident that the commercialization of TD-SCDMA will be realized in June this year," said an official from Datang Mobile Communications Equipment Co Ltd.

According to the official, who wished to remain anonymous, more than 10 handsets supporting TD-SCDMA system will be launched in June.

As one of the internationally acknowledged 3G standards, the Chinese Government has allocated 155MHZ frequency resources to support the domestic standard.

"I believe that licenses will be issued depending on the maturity of TD-SCDMA and how successful WCDMA is in major markets outside China," said X.J.Wang , a senior analyst with Yankee Group.

He said he believed that the Chinese Government is skilled at using regulations and policies to promote and secure its national interests, with the promotion of TD-SCDMA being an ideal example.

"There is nothing wrong for a country's top regulator to protect its national interest, and my impression is that the government has generally done a good job," he said.

"However, I would encourage more transparency in terms of overall policies. The issuing of 3G licenses particularly requires more transparency, which can help foster a healthier investment environment," he added.

He added that China's 3G licenses are expected in the first half of 2005, but they may be pushed back to 2006 or later.

In another development, Credit Suisse First Boston (CSFB) announced that it expected the Chinese Government is to issue 3G licenses in the fourth quarter of this year.

Strong commitment

As the world's largest telecommunications market, China has become a market almost all the 3G equipment providers and terminal producers feel compelled to take part in, such as Motorola, Nokia, Siemens, Nortel Network, Ericsson, Huawei, ZTE, Samsung and LG.

Siemens, for example, claims to be one of the best 3G solutions providers as it is involved in two of the three 3G standards - WCDMA and TD-SCDMA.

"We are carrying out our 3G investment and development step by step," said Gao Yan, senior vice-president of Siemens (China) Mobile Communications Ltd.

"We maintain our position by sticking to the two standards," a situation which enables Siemens to have an "unique position" in China's wireless market, he said.

CDMA 2000 and WCDMA are currently well established and growing, signing up more than 140 million subscribers so far, operated by 113 operators in 50 countries and regions worldwide.

(China Daily January 19, 2005)