Ericsson Bets on Chinese 3G

Ericsson AB (Nasdaq: ERICY) has staked its claim on China’s homegrown 3G standard, teaming with ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763) for the development of kit based on Time Division Synchronous Code Division Multiple Access (TD-SCDMA) technology and announcing plans to establish its own regional R&D center.

Developed by the Chinese Academy of Telecommunications Technology, TD-SCDMA has been approved by the 3rd Generation Partnership Project (3GPP) and combines older TDMA with the Time-Division Duplexing (TDD) technique 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 TD-SCDMA, and the technology is tipped to feature in the award of 3G licenses, due later this year (see China Preps for TD-SCDMA).

Ericsson appears confident that TD-SCDMA will prove a commercial success in the region. The Swedish vendor has announced a deal with ZTE for development of kit, only a week after announcing its intention to play a role in the standard (see Wireless Bytes).

“Ericsson is to integrate ZTE’s TD-SCDMA Node B into its radio access network, including hardware and software, on an OEM basis,” notes a prepared statement (see Ericsson Teams With ZTE). “The two parties will also team up to participate in the TD-SCDMA trials in China.”

A Node B is a base transceiver station (BTS), and the connection point between a wireless device and the cellular network.

An Ericsson spokeswoman was unable to divulge specific financial details of the deal or a planned timeframe for product availability.

Earlier this week, ZTE launched its TD-SCDMA product portfolio, a market the Chinese company is keen to talk up in light of its muted success with other 3G technologies such as W-CDMA and CDMA 2000 1xEV-DO (see ZTE Touts TD-SCDMA Kit). “Given ZTE’s limited history with 3G, the company could use a strong partner like Ericsson on its side,” writes Current Analysis’s Peter Jarich in a recent report.

The same point is made in this month's issue of Light Reading Insider, which analyzes the strengths and weaknesses of ZTE and other Chinese telecom equipment manufacturers (see Telecom's China Syndrome).

Meanwhile Ericsson has also announced plans to establish an R&D development center for TD-SCDMA technology in Nanjing. Specific details from Ericsson were not forthcoming, but the company expects the operation to employ “50 research staff at first.” (See Ericsson Plans Chinese 3G Base.)

Ericsson is not the only Western network vendor attempting to grab a slice of the TD-SCDMA pie. Nortel Networks Ltd. (NYSE/Toronto: NT) has teamed with China Putian; Siemens AG (NYSE: SI; Frankfurt: SIE) has linked with Huawei Technologies Co. Ltd.; and Alcatel (NYSE: ALA; Paris: CGEP:PA) has announced a similar deal with Datang Telecom Technology Co. Ltd. (See Nortel Teams on Chinese 3G, Huawei, Siemens Push 3G Deal, and Alcatel Tangos With Datang.)

— Justin Springham, Senior Editor, Europe, Unstrung