Global Insight Perspective | |
Significance | The vendor selection for TD-SCDMA networks by China Mobile favours local firms who stand to gain from the government’s drive to push local technology. |
Implications | Increasing activity around TD-SCDMA indicates the growing likelihood that 3G licenses will be announced imminently. |
Outlook | TD-SCDMA is unlikely to gain much ground outside of China, and the push for vendors to develop the technology could distract vendors from increasing success on the global market. |
China Mobile has announced two vendors for the TD-SCDMA network deployment, mandated by the Chinese government, as it tries to push its own new network standard. ZTE has emerged as the biggest winner, with reports last week stating that it is to receive 50% of the contracts. Networks are to be deployed in Beijing, Qinhuangdao, Tianjin, Shenyang, Shenzhen and Xiamen, as well as the provision of core networking equipment in several cities—Beijing, Xiamen, Qinhuangdao and Guangzhou.
Xinhua Financial Network reports an article from the Nanfang daily, stating that Datang Mobile has won 37% of the China Mobile 3G plans, providing TD-SCDMA base station equipment in Shanghai and Guangzhou. TD Tech Co. was also reported to have won 14%, while Potevio won 3% of the contracts, valued at 26.7 billion renminbi (US$3.4 billion). China Mobile recently reported that it would be doubling the size of the trial area to 10 cities (see China: 12 February 2007: China Mobile to Build Additional TD-SCDMA Trial Network—Report).
Outlook and Implications
Although 3G licenses have still not been issued, China Mobile has been mandated with the rollout of TD-SCDMA networks across the country, as the test area expands from five to 10 cities. China will be aiming to have services available running on the home-grown network before the Olympics in 2008 as it seeks to showcase the new prospective ”third standard” to a sceptical industry. TD-SCDMA has faced some scepticism from within China and faces many difficulties in gaining acceptance outside of the country where the government has pushed to ensure that network tests and deployments are carried through (see China: 14 February 2007: China Netcom Prefer Unicom's GSM Network than China-Developed TD-SCDMA). The contractors announced here remain true to the intention to boost local vendors by developing the local standard, so far shutting out the foreign vendors who have expressed an interest in developing technologies based on the standard, though Alcatel and Nokia-Siemens have engaged in joint ventures with local partners (see China: 27 November 2007: Alcatel, Datang in Coordination for TD-SCDMA Development).
Pushing ahead with test deployments despite the lack of official 3G licences aims to provide the TD-SCDMA standard with a significant headstart in its home territory before other technologies get a look into the large Chinese market. The main cities will likely be covered by the ”test” networks, with issues with the commercially untested technology to be resolved before 3G licenses are officially issued. With deployment contracts being handed out, that moment appears to be drawing closer (see China: 5 December 2006: Minister Says China Could Issue 3G Licences "Very Soon"; Not Mulling Industry Reshuffle).
TD-SCDMA is intended to give local vendors a boost, but Chinese vendors have become increasingly competitive and successful in supplying low-cost networking equipment to the global marketplace without this aid. With low likelihood that TD-SCDMA will be adopted in other countries, the push to develop TD-SCDMA as a local alternative may prove an unnecessary and expensive distraction for local infrastructure vendors and carriers.