Here is WSJ on line take. This is what I believed was happening. China Unicom could be one of the first to roll out CDMA 2000 especially if there are dual mode phones to give users access to the legacy GSM system. Market should take this as a positive, since no China "earnings" are in the QCOM estimates short term. However, most will read the heaadline and sell sell sell.
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China's Unicom Abandons Plan to Use
Qualcomm-Designed CDMA Technology
A WSJ.COM News Roundup
BEIJING -- China United Telecommunications Corp.,
China's second-largest phone company, has scrapped plans
to build a wireless network using narrow-band mobile-phone
technology, the state-run China Daily Business Weekly
reported Sunday.
However, the company, known as
Unicom, will push ahead with
long-term plans to use a technology
called CDMA2000, a senior Unicom
executive said.
The report reinforces what a growing number of analysts
have been saying in recent months; namely, that Unicom is
unlikely to follow through on a licensing deal it signed with
Qualcomm Corp. to build a network using the U.S.
company's narrow-band CDMA, or code division multiple
access.
Qualcomm, which holds many of the patents for
current-generation CDMA, is pushing CDMA2000 as a
third-generation wide-band standard. It could benefit if
Unicom builds a network using CDMA2000 technology.
Officials at Unicom and Qualcomm couldn't be reached for
comment Sunday.
Many in the industry say there is little commercial merit in
building a narrow-band CDMA system now, since the
technology will be made obsolete in the next few years.
"The timing of constructing a narrow-band CDMA system
has become unfavorable, so we plan to build a wide-band
CDMA2000 Network," the Unicom executive said.
Embracing narrow-band CDMA also would require Unicom
to build a network parallel to one it already operates using
GSM, a European wireless standard that is incompatible
with the CDMA technology.
Unicom said developing a CDMA network would require an
investment of more than $12 billion, the China Daily article
said. "We have to minimize the risks of such a huge
investment," the newspaper quoted the Unicom executive as
saying.
The company already has invested billions of dollars in
GSM. In addition, Unicom and its underwriters have been
telling potential investors in recent weeks that the proceeds
of Unicom's initial public offering scheduled for later this
month, expected to raise $4 billion to $5 billion, would be
used to further develop its GSM network. At the end of
April, it had about 6.5 million users on its GSM network.
However, the official vowed that Unicom "will never give up
the CDMA project," which it sees as a giving it a
competitive advantage over China Mobile
Telecommunications Corp., the communist country's largest
wireless service provider.
Contradictory claims have dogged the prospects for CDMA
in China for some time. China's announcement a year ago
that it would open its markets to CDMA technology helped
it gain U.S. support for its membership in the World Trade
Organization. In February, Unicom reached an agreement
with Qualcomm to license a type of CDMA called
"narrow-band" for use in China. A week later, however, the
government put the network on hold." |
