Canadian communications giant Nortel Networks has signed a framework agreement to establish a joint venture focusing on TD-SCDMA with the State-owned China Putian Corp.

Putian is one of the nation's top telecom equipment makers.

The planned venture will focus on research and development, and the manufacturing and sales of equipment for both TD-SCDMA and WCDMA, which is backed by Europe.

However, most of the resources will be put into TD-SCDMA, said Robert Mao, president and chief executive officer (CEO) of Nortel Networks, China.

There are three major 3G standards: WCDMA, the US-backed CDMA2000 and TD-SCDMA.

Putian will own 51 percent of the venture with Nortel taking the remainder.

Nortel and Putian are still discussing the fine print of the planned venture.

The two firms hope to sign a final agreement by June 30.

Nortel president and CEO Bill Owens declined to reveal details about the venture, such as the amount of money involved and the launch time.

Nortel is one of the few foreign telecom giants that have thrown their weight behind TD-SCDMA's development.

Last year, Germany's Siemens launched a US$100 million venture with China's top telecom equipment maker, Huawei Technologies, to develop TD-SCDMA.

That was followed by a joint venture between France's Alcatel and Datang Mobile, a subsidiary of the State-owned Datang Telecom Group, the major developer of the TD-SCDMA standard.

Alcatel has committed US$32 million to the venture.

The Chinese Government is firmly supporting TD-SCDMA, and Premier Wen Jiabao and visiting Canadian Prime Minister Paul Martin witnessed Thursday's signing ceremony.

Owens says TD-SCDMA is "a very important area for 3G build-up in China."

He said Nortel was also "investigating other markets outside China" to promote TD-SCDMA.

The Chinese Government hopes all products based on TD-SCDMA will be ready for commercial use by the middle of the year.

The two companies co-operated on TD-SCDMA projects during the recent 3G field trials that were sponsored by China's Ministry of Information Industry.

Global telecom giants like Motorola and Ericsson have said they would back TD-SCDMA if the technology was more advanced.

Observers say their commitment so far remains largely a gesture.

A senior analyst with US research firm Yankee Group, X. J. Wang, said TD-SCDMA "has a future in the Chinese market" as "the Chinese Government still wields tremendous power over the Chinese wireless market."

"Industry players must not ignore TD-SCDMA," he said.

Wang said he expected the government to give more policy and regulation support to TD-SCDMA following the licensing of 3G.

The government is yet to give firm indications when it is going to start handing out 3G licences to operators.

But industry analysts widely believe it will happen around the middle of the year, after further improvements to TD-SCDMA have been completed.

(China Daily January 22, 2005)