Dow Jones Newswires
BEIJING -- China United Telecommuncations, or Unicom, has scrapped
plans for a wireless network using a U.S.-developed technology standard
called CDMA, the state-run China Daily Business Weekly reported
Sunday.
But Unicom, China's number two telecommunications firm, will push ahead
with longer-term plans to use a successor technology, called CDMA2000,
the newspaper said, citing a "senior official" from Unicom whom it didn't
name.
The report reinforces what a growing number of industry observers have
been saying in recent months: that Unicom is unlikely to follow through on a
licensing deal it signed with Qualcomm in February to build a network
using so-called "narrow-band" CDMA.
"The timing of constructing a narrow-band CDMA system has become
unfavorable, so we plan to build a Wide-band CDMA (WCDMA) 2000
Network," China Daily cited the unnamed Unicom executive as saying.
Many analysts say building a new narrow-band CDMA network makes
little sense for Unicom, which has already invested billions of dollars in a
system using GSM, a competing European wireless standard. New
technologies will make both obsolete in the next few years.
Unicom had about 6.5 million users on its GSM network at the end of
April.
Unicom and its underwriters have been telling potential investors in recent
weeks that the proceeds of an initial public offering later this month,
expected to net $4 billion-$5 billion, would be used to further develop its
GSM network.
Doubts about Unicom's plans for CDMA have battered the once
high-flying stock of Qualcomm, which holds many of the patents for
current-generation CDMA. Its share closed at 72 11/16 Friday, less than
half its early January high of 200.00.
Still, Qualcomm and other companies that make CDMA equipment, like
Lucent Technologies Inc. (LU), are also pushing CDMA2000 as a
third-generation wide-band standard, and could benefit if Unicom builds a
network using CDMA2000.
The China Daily report offered no details on Unicom's plans for a
CDMA2000 network, and officials at Qualcomm and Unicom couldn't be
reached for comment Sunday.
The article said Unicom was cautious about developing a CDMA
network, which it said would require investment of more than $12 billion.
"We have to minimize the risks of such a huge investment," the newspaper
cited the Unicom executive as saying.
But it cited the Unicom official as pledging the company "will never give up
the CDMA project," which it sees as a giving it a competitive advantage
over China Mobile Telecommunications Corp., the country's largest
wireless service provider.
Citing unnamed sources, China Daily also said Great Wall Telecom, an
army-backed company, will "eventually" turn over trial CDMA networks it
now operates in four Chinese cities.
Great Wall had been slated to turn those networks over to Unicom earlier,
but state media reported last July that the plans had been canceled.
-By Jason Dean; 8610 6532-6652; jason.dean@dowjones.com |
