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Alcatel Mulls Chinese Move

Light Reading
LR Mobile News Analysis
Light Reading
3/24/2004

Alcatel SA (NYSE: ALA; Paris: CGEP:PA) is reported to be in partnership talks with an unidentified Chinese vendor over plans to jointly develop 3G infrastructure equipment based on Time-Division Synchronous Code Division Multiple Access (TD-SCDMA, wot else?) technology.

Developed by the Chinese Academy of Telecommunications Technology, TD-SCDMA has been approved by the 3rd Generation Partnership Project (3GPP) and combines older Time-Division Multiple Access (TDMA) with Time-Division Duplexing (TDD) techniques of broadcasting over a single chunk of spectrum, rather than the normal two bands (see TD-SCDMA Forum Joins 3GPP).

The Chinese government has been eagerly touting the benefits of this new technology over established rival 3G standards such as Wideband-CDMA and CDMA2000 (see W-CDMA: China's No. 1 Son? and Chinese 3G: Open to All?).

To date, all six carriers trialing third-generation networks in the region have tested the nascent TD-SCDMA flavor -- China Mobile Communications Corp., China Netcom Corp. Ltd., China Telecommunications Corp. (NYSE: CHA), China Unicom Ltd., China Satellite Communications Corp. (China Satcom), and China Railcom Co. Ltd. -- and the technology is expected to feature in the award of 3G licenses next year (see Global Vendors to Rule China? and Chinese 3G Faces Further Delay).

According to a China Daily report, Alcatel is in contact with a “Chinese company” for the production of TD-SCDMA kit.

Alcatel president and CEO Philippe Germond is quoted in the story as saying, “There will be partnership with a Chinese company and the discussion is ongoing... We see China as a strategically important market for our global growth.”

Any such move would follow in the footsteps of rival vendors. Last August, Siemens AG (NYSE: SI; Frankfurt: SIE) announced a tie-in with local player Huawei Technologies Co. Ltd. in an effort to promote the homegrown Chinese standard; and Nortel Networks Corp. (NYSE/Toronto: NT) has teamed with Datang Mobile Communications Equipment Co. Ltd. (see Siemens, Huawei Start 3G JV and Nortel, Datang Open 3G Lab).

Alcatel has already been busy tapping market demand for 3G services, investing heavily in Chinese R&D through its 3G Reality Centre in Shanghai (see Alcatel Boosts China R&D). A tie-up with a domestic vendor would further increase its market presence.

“It is important for Alcatel to work with local partners because they have the knowledge and expertise of this technology,” says IDC senior analyst Paolo Pescatore. “As a global player, Alcatel can’t go it alone.”

Alcatel had not responded to calls by press time.

— Justin Springham, Senior Editor, Europe, Unstrung

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