China ) Update on CDMA Issues
Source: USDOC Commercial Service ) Kullman/Zarit
Commercial deployment of CDMA (Code Division Multiple Access) technology in
China is still on hold. Reasons for this delay include efforts by the
Government of China to decrease the licensing cost for domestic CDMA
equipment
manufacturing and to increase the amount of technology transfer from foreign
to
domestic CDMA manufacturers.
On July 6, 1999, the Ministry of Information Industry (MII) and the State
Development and Planning Commission (SDPC) jointly issued a notice, known as
MII
Document No. 612, placing the deployment and manufacturing of CDMA equipment
under the uniform guidance of the central government and depriving all local
governments and domestic telecommunications operators and manufacturers the
right to negotiate CDMA equipment purchasing or joint production contracts.
According to Document No. 612, MII and SDPC will take the lead in working
out a
strategy of trading market access for technology transfer.
The U.S. Government continues to lobby appropriate Chinese authorities for
CDMA
deployment. The key officials at SDPC are Vice Chairman Li Rongrong,
Director
General for High Technology Industries Shi Fenghai, and Division Director Xu
Qing. The key players at MII are Director General of Planning Dai Shuang,
Deputy Director General of Electronics and IT Products Xie Linzhen, and
Deputy
Director General of Science and Technology Wen Ku.
According to foreign CDMA company representatives, China Unicom,s Chairman
and
President Yang Xianzu has said that Unicom needs CDMA technology to
differentiate itself from China Telecom. Unicom does not want to cooperate
with
the People,s Liberation Army on CDMA as the company possesses five MHz of
its
own with a capacity of 20 million lines (each CDMA channel takes up 1.25
MHz).
Unicom is trying to obtain two more MHz to be able to offer 40 million lines
by
the end of 2003.
Company representatives believe that the Chinese government,s delay in
deploying
CDMA is related to royalty payment negotiations for CDMA patents and to the
selection of foreign partners for local CDMA equipment manufacturers.
Company
representatives explained that Chinese authorities want to avoid what
happened
when GSM (Global System for Mobile) was deployed in China. At that time,
local
manufacturers were unprepared for competition, so it took several years for
them
to catch up to foreign GSM manufacturers. Chinese authorities also believe
that
the technology transfer from foreign GSM manufacturers to local firms was
too
slow and at too low a level of sophistication.
Negotiations between Chinese authorities and a major U.S. CDMA technology
developer is one reason for the deployment delay, according to a Chinese
official. SDPC and MII are using China's large market as their bargaining
chip
and believe that they have more bargaining power with the CDMA technology
developer before China deploys CDMA. In contrast, large telecommunications
firms can simply exchange royalties because they need each other,s patents
to
manufacture various types of equipment.
Foreign CDMA company representatives highlight the importance of getting
CDMA
deployed as soon as possible. They are concerned that some groups in
China,s
telecommunications bureaucracy and private sector believe that China can
"survive" with its GSM 900 and DCS 1800 frequencies until the arrival of
third
generation (3G) CDMA technologies. They also say that time is running out
because China is concentrating on developing its own CDMA standard called
TD-SCDMA, even though the technology may be less mobile and of lower
transmission quality.
On August 18, Jiang Shaobing, Deputy Director General of MII's Planning
Department, said that China is concentrating its efforts on developing its
own
3G mobile telecommunications standard and that China has decided to deploy
second generation (2G) CDMA because of a frequency shortage, especially in
the
eastern coastal areas. However, the market for 2G CDMA technology will not
be a
large one. If 3G technology can be deployed in 2002, 2G CDMA will only
serve as
a stop-gap measure for two years, he said.
Jiang went on to say that China wants to introduce 2G CDMA because much of
the
2G technology is the basis for 3G CDMA. China seeks technology transfer,
cooperative production and joint R&D from foreign CDMA companies. Any
future
CDMA project tenders, he said, will be open to all companies, not only the
four
firms now executing CDMA trials in China (Motorola, Lucent, Nortel and
Samsung).
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