CDMA vendors dismayed as China 3G remains a distant prospect

22 Sep 2003

US-based CDMA technology pioneer Qualcomm has publicly claimed that it believes the Chinese government will not introduce third-generation (3G) mobile services this year, as it had previously hoped. Beijing has still not posted a timetable for issuing 3G licences and equipment makers, including Qualcomm, which had hoped for a start to the process in the second half of 2003, are preparing themselves for disappointment. Qualcomm chairman Irwin Jacobs was left disheartened after a meeting with the Chinese vice-premier Zeng Peiyan last week. ‘Originally I thought the decision (on the launch of 3G) would be made before the end of this year,’ Jacobs told the Financial Times. ‘Now I think it is fairly clear that it will go into next year’. He also added that the release of a vital government report on the testing of 3G technologies looks likely to be put back until November 2004. The delay has dismayed Qualcomm and other foreign vendors backing its cdma2000 standard, which had hoped the huge Chinese market would provide a boost to flagging technology sales. However, the news was been welcomed by local equipment manufacturers which are developing their own TD-SCDMA protocol, a home-grown alternative to Qualcomm’s technology.

China has been tipped as one of the major growth markets in the Asia-Pacific region, largely because despite a rapid rate of subscriber addition, cellular penetration remains low. The industry regulator, the Ministry of Information Industry (MII), predicts that there will be at least 290 million mobile subscribers in China by the end of 2005, a massive increase but one which at today’s population count would take cellular penetration to just 22%. With this in mind, the launch of 3G is a hot topic. The MII claims that it is currently in the process of choosing between the three standards: cdma2000, W-CDMA and TD-SCDMA, and that the introduction of 3G services is a sensitive issue. Qualcomm has held talks with both China Telecom and China Netcom about adopting its technologies, and the Californian firm says that it is confident that they will opt for cdma2000. Meanwhile local vendor Datang remains confident that China Mobile will take up TD-SCDMA, which could trigger an ugly battle between itself and Qualcomm. The US company collects royalties on every CDMA chip sold and has patent claims on both W-CDMA and cdma2000. Should its rivals’ TD-SCDMA standard become established in China, Qualcomm is expected to assert intellectual property rights on the technology because of its basis in CDMA.

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