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Alcatel to Tango With Datang?

Alcatel SA's (NYSE: ALA; Paris: CGEP:PA) efforts to strike a Chinese partnership deal for the development of Time-Division Synchronous Code Division Multiple Access (TD-SCDMA) technology has raised the prospect of a potential tie-up with local player Datang Telecom Technology Co. Ltd.

The French incumbent vendor has repeated its intention to jointly develop 3G infrastructure equipment based on TD-SCDMA technology, a move flagged by Unstrung earlier this year (see Alcatel Mulls Chinese Move).

“We’re in very serious talks with local Chinese firms to do something together,” says Christian Reinaudo, president of Alcatel’s Asia-Pacific operations, according to a Reuters report today.

A spokeswoman for Alcatel confirmed that the report is “totally true.” No further details were forthcoming.

Likely Chinese candidates include Datang, Huawei Technologies Co. Ltd., and ZTE Corp. In light of Datang’s track record of TD-SCDMA partnership deals, analysts believe the local player to be a strong suit for Alcatel. Datang has struck similar deals with Nortel Networks Ltd. (NYSE/Toronto: NT) and Siemens AG (NYSE: SI; Frankfurt: SIE). (See Siemens Prepares for China Deal and Nortel, Datang Open 3G Lab.)

“I'd be surprised to see Huawei joining with Alcatel as they appear to be competing in emerging markets,” notes Gartner Inc.’s Jason Chapman. “Maybe Datang are opening its doors to more vendors?”

"Datang would have to be the logical choice," adds Peter Jarich of Current Analysis. "Datang and Siemens are the founders of the technology and it's much less likely that Alcatel would get together with Siemens."

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).

— Justin Springham, Senior Editor, Europe, Unstrung

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