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China Picks WCDMA, CDMA2000 as 3G Mobile Standards (Update2)

By Janet Ong

http://www.bloomberg.com/apps/news?pid=20601080&sid=a8NwYqsuyc3U&refer=asia

May 16 (Bloomberg) -- China selected two international technologies as its high-speed mobile-phone standards, placing equipment makers such as Ericsson AB closer to receiving contracts worth as much as $20 billion.

The government will adopt wideband code division multiple access, or WCDMA, and CDMA2000 technologies for the nation's third-generation mobile-phone networks, Wang Lijian, a Beijing- based spokesman at the Ministry of Information Industry, said by telephone today. China in January 2006 picked the domestically developed time division synchronous code division multiple access, or TD-SCDMA, standard as one of its 3G technologies.

Phone equipment makers such as Ericsson are awaiting China's issuance of 3G licenses to drive network spending in the world's biggest mobile-phone market as growth slows in Europe and the U.S. Wang today reiterated China doesn't have a timeframe for awarding the permits, after the government said 3G services will be available for the 2008 Olympics in Beijing.

``China needs to use WCDMA and CDMA if it wants to fully develop the potential of its mobile market, but the government's main focus will continue to be on the domestic TD-SCDMA,'' said Tiffany Feng, an analyst at Guotai Junan Securities Ltd. in Hong Kong. ``The readiness of TD-SCDMA will still be the biggest factor in deciding when 3G services start in China.''

The ministry set technical specifications for WCDMA and CDMA2000 in a statement posted on its Web site to ``provide more clarity'' for domestic and foreign companies to develop related products based on all three standards.

Global Standard

``WCDMA is the most widely accepted global standard and China can't afford not to have it,'' said Marvin Lo, an analyst at Daiwa Institute of Research in Hong Kong. ``The clock is ticking and China is getting closer to issuing 3G licenses.''

Riitta Maard, spokeswoman at Nokia Siemens Networks, said it's a ``good thing'' China has chosen a global standard, declining to comment further before confirming the news. Nokia Siemens is the phone equipment venture formed by Nokia Oyj, the world's largest handset maker, and Siemens AG last month.

Aase Lindskog, a spokeswoman at Ericsson, the world's largest maker of wireless network equipment, declined to comment before receiving confirmation of the Chinese decision.

3G Contracts

China's telephone carriers may spend 150 billion yuan ($20 billion) to build 3G mobile networks, according to Francis Cheung, head of Asian telecommunications research at CLSA Ltd. in Hong Kong.

The nation's six telecommunication operators, as well as equipment suppliers, have taken part in trials for all three standards since June 2001, the ministry said in the statement.

ZTE Corp., China's biggest publicly listed telephone equipment maker, last month won orders from China Mobile Communications Corp. to build networks based on TD-SCDMA. ZTE makes gear for all three mobile standards.

TD Tech, a venture between Siemens Communications Group and closely held Huawei Technologies Co., China's largest phone equipment maker, also won some orders from China Mobile. Huawei makes equipment based on WCDMA and CDMA2000.

The number of mobile-phone subscribers in China rose 17 percent from a year earlier to 480.7 million at the end of March. About 66 percent were subscribers of China Mobile Ltd., the world's largest wireless operator by users and a unit of China Mobile Communications. The remainder are customers of China Unicom Ltd.

Third-generation technology offers better reception, faster access to Internet, and services such as video conferencing.

San Diego-based Qualcomm Inc. is the dominant manufacturer of chipsets for CDMA2000 mobile phones and also makes processors for WCDMA. Dallas-based Texas Instruments Inc., the world's biggest maker of cell-phone chips, is the leader in WCDMA.

To contact the reporters on this story: Janet Ong in Beijing at [e-mail]

Last Updated: May 16, 2007 07:31 EDT