China set to delay issue of 3G licenses, says report

The development comes as little surprise to many observers of the Chinese mobile market. Many have been speculating for years about the timing of 3G licenses, and have been proven wrong time and again as Chinese officials look for a more auspicious confluence of applications and technology that would enable its domestic telecoms to make money from the necessarily large infrastructure investments.

Once again, the blame is being put on TD-SCDMA, the domestic standard that China wants to deploy alongside wideband-CDMA and CDMA2000 1X. Yet while the latter two are ready to go, the former is still teething. During the government's most recent round of tests, iSuppli said only a few handsets passed qualification.

"The decision makers in Beijing now face and awkward choice: Either they can give up on the indigenous TD-SCDMA standard — or they can delay the timetable yet again until the specification is robust and ready," wrote analyst Byron Wu in a recent report from iSuppli.

It is highly improbable that the government would trash the standard, given that it and various companies have sunk hundreds of millions of dollars into R&D. Moreover, the government has elevated TD-SCDMA onto a political pedestal, praising it as an example of China's technical prowess and ability to develop intellectual property.

"For this reason, there is only one viable solution to the TD-SCDMA problem: Delay the 3G service licenses until China's home-grown technology is truly ready for commercial use," Wu said.