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China Preps for TD-SCDMA

Light Reading
LR Mobile News Analysis
Light Reading
11/30/2004

Speculation is growing that two Chinese carriers are set to deploy the nascent Time Division Synchronous Code Division Multiple Access (TD-SCDMA) standard as a commercial 3G 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?). Despite the push, initial trials have revealed a glut of teething problems such as interoperability issues and a dearth of compatible handsets. Western vendors have also expressed mixed views on the technology (see Vendors Split on TD-SCDMA).

Local media reports this week suggest that these early setbacks are unlikely to hinder the technology’s development. Two fixed-line carriers –- China Netcom Corp. Ltd. (NYSE: CN; Hong Kong: 0906) and China Telecommunications Corp. (NYSE: CHA) -- are tipped to grab a TD-SCDMA license each, whilst incumbents China Mobile Communications Corp. and China Unicom Ltd. (NYSE: CHU) are expected to obtain a W-CDMA and CDMA2000 license respectively.

Such a split has been welcomed by analysts. “We believe this scenario is the most likely option to be adopted,” write UBS AG analysts in a research note. “This scenario would address many issues: China would push the 3G standard; the CDMA and GSM track would both be represented; TD-SCDMA is not ready for deployment, so there would be less initial capex and competition; and no mergers or corporate restructuring would be needed.” (See China Moves May Hit Vendors.)

— Justin Springham, Senior Editor, Europe, Unstrung

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