Spec in hand, China needs 3G apps, exec says

Spec in hand, China needs 3G apps, exec says
BEIJING — China's telecom carriers still have a long way to go to find an effective business model that would enable a successful launch of third-generation (3G) services, according to one of the country's telecom equipment makers. Nevertheless, the government is expected to issue 3G licenses in 2004.

"Today, there aren't enough people working on applications, and that is a pity," said Wei Shaojun, president and chief executive officer of Datang Telecom Technology Co. Ltd. (DTT), which is part of a corporate group that helped develop China's 3G standard. "We can have a handset with a beautiful screen and a camera, but that's not enough. With such an expensive handset, [subscribers] want to know what services they can get. This is the key issue."

The Chinese government has congratulated itself on a conservative approach to the 3G era, pointing to European telcos sagging under the heavy debt-load of 3G licenses as something China was able to avoid. Even so, like many countries considering 3G, China has not made much headway on applications and is lacking a driving force in that area.

So big, many cultures

"Who will play the leader? China Mobile has enough power but, unfortunately, today they are not doing that. They are waiting," Wei said. "Even if they want to do that, they have to solve the problem of how to develop applications according to the environment of different provinces. They need to consider the scale of China. It is so big and has many different cultures, so to meet the requirements of all these different groups is very challenging."

In some ways, uncertainty over when 3G licenses will be issued is having an impact on development, too. No firm timetable has been set, leaving industry players trying to divine what the government will do and when.

Many industry observers within China believe the Ministry of Information Industry is stalling for time, in order to enable DTT's sister company, Datang Mobile, to rally industry support around China's standard, known as time-division synchronous code-division multiple-access (TD-SCDMA), and to come up with network backbone equipment and end-user handsets.

Wei said commercial 3G trials are likely this year. Next year, the government should issue licenses that would enable a rollout, he said. Wei termed 2004 "very important" if greater competition is to take place among the main fixed-line and wireless providers in China.

The DTT president also believes that three 3G standards can coexist in China, the only place in the world where that is set to happen. The nation's two wireless providers-China Mobile and China Unicom-today use GSM/GPRS and CDMAone/cdma2000 1x. But the government has encouraged development of TD-SCDMA so that Chinese companies would have a stake in the intellectual property of wireless communications. Datang Mobile has been the tool to commercialize that strategy and some industry watchers here surmise that one of the nation's fixed-line providers will be compelled to use it.

Betting on TD-SCDMA

So far, Datang Mobile has worked with Siemens on backbone network equipment and spurred the development of a handful of foreign-dominated joint ventures that are developing chip sets, reference designs and handsets. A few of the companies that have signed on include Philips, Samsung, Nokia, Texas Instruments and Motorola. ZTE Corp., a major Chinese network infrastructure provider, is also working on TD-SCDMA.

TD-SCDMA now is one of three 3G standards approved by the International Telecommunication Union. Its backers say that it is more bandwidth-efficient than competing technologies and, thus, highly suited for deployment in densely populated Chinese cities. It is also at least 20 percent cheaper to implement, they say.

Still, some doubt whether a standard that is largely still in the lab will be able to compete against the more-entrenched competitors: wideband-CDMA and cdma2000 1x EV DV. Wei thinks it will. "TD-SCDMA will take market share because it is Internet-oriented," he said. "And 3G is all about communicating with the Internet."