The government is expected to invest 1.4 billion yuan (US$168.7 million) to aid the development of a homegrown standard for third generation mobile communications, according to industry insiders.

The new investment, which will be the second round of government funding for a group of eight Chinese companies, is expected to be announced this week at a telecom expo in Beijing.

Industry analysts say the new financing, along with a recent government decision to delay issuing 3G licenses to 2005 instead of next year, shows Beijing is determined to support a domestic standard rather than relying on foreign technology.

"The National Development and Reform Commission, the Ministry of Science and Technology and the Ministry of Information Industry have a project to invest 1.4 billion yuan more into our TD-SCDMA Industry Group soon," said Qu Guangfeng, an engineer at Datang Mobile Communications Equipment Co Ltd.

Datang invented the core technology for the new standard -- known as Time Division Synchronous Code Division Multiple Access -- along with its German partner Siemens AG.

The technology is one of three global standards currently being developed for third generation -- or 3G -- mobile communications, which will also allow mobile phone users to exchange voice, picture and video data at much quicker speeds than are currently achievable, making it possible to hold video conferences on handsets, among other applications.

In August, the government gave 700 million yuan (US$84.68 million) to the TD-SCDMA Industry Group, which is formed by eight domestic companies developing products and services based on TD-SCDMA. They include Datang, Legend Group Limited, Chinese Electronics Corporation Telecom, Huawei Technologies Co Ltd, ZTE Corp, Putian Telecommunications Co Ltd, Holly Communications Group Inc and Guangzhou Soutec (Group) Technology Co Ltd.

The companies are working on core technologies, network equipment and handsets based on the standard.

"That investment will speed up the commercial use of TD-SCDMA technology in China," said Qu.

Government officials were not available to discuss the new investment yesterday, but CCID Consulting Co Ltd, a Beijing-based consulting company close to the Ministry of Information Industry, confirmed the capital infusion will take place.

"That investment will quicken the development of TD-SCDMA technology," said Deng Zhiping, a senior telecom analyst with CCID. "More importantly, it shows the Chinese government's determination to support homegrown TD-SCDMA technology."

The technology will have strong competition globally. US-based Qualcomm Inc is working on its own standard called CDMA 2000, while Finish-based Nokia Oyj's is developing a technology called WCDMA.

Both of those competitors are further along the development path than the new domestic standard, which the TD-SCDMA group claimed in a report will be ready for commercial deployment in the fourth quarter of next year.

(eastday.com November 11, 2003)