China holds huge bargaining chip in
hunt for wireless tech
By George Leopold
EE Times
(01/31/01, 11:13 a.m. EST)
WASHINGTON — China is dangling entry to its huge
wireless market as a bargaining chip to gain access
to core code-division multiple-access (CDMA)
technologies that will form the basis for
next-generation mobile telecommunications
services there, a U.S. government report has
found.
The report, compiled by the State and Commerce
departments in September 2000, concluded that
China's Ministry of Information Industry (MII),
which calls the shots on wireless deployment in
China, is reluctant to give the green light to
second-generation CDMA technologies.
"MII wants to pay less royalty fees for the
third-generation mobile technologies," the study
said. "China uses the commercial deployment of 2G
CDMA technology as a bargaining chip to gain, with less expenses, the
core CDMA technologies which [form the basis for] 3G mobile
telecommunications technology."
If Chinese manufacturers are able to produce CDMA equipment, Beijing
believes foreign companies would have a tougher time dominating
China's 3G market as they have the second-generation market. "The
effective usage of the limited frequency resources of CDMA
technology will eventually persuade China to use the technology for
its mobile telecommunications network, which will surely lead to huge
sales opportunities to U.S. firms," the report added.
Indeed, Chinese industry officials have stressed recently the need to
use China's limited spectrum efficiently. A full 75 percent of China's
available spectrum under 1 GHz is set aside for TV applications.
Another 10-to-15 percent is controlled by the military, leaving the
remainder for existing cell phone applications.
The Chinese government reached a framework agreement in February
2000 with CDMA pioneer Qualcomm Inc. (San Diego) on the handling
of CDMA intellectual-property rights. Since then, several Chinese
companies have negotiated CDMA manufacturing agreements with
Qualcomm.
Qualcomm announced in December that it had formalized the
framework agreement through a memorandum of understanding with
MII. The memorandum confirmed MII's support for Qualcomm's
agreement with China Unicom to cooperate on developing CDMA
technologies in China.
"This [memorandum] also supports the deployment in China of a
nationwide network based on CDMA technology with continued
migration to advanced CDMA technology supporting higher data
rates," Qualcomm said.
High stakes
The stakes in China are high. The average annual growth rate for
China's wireless market has exceeded 100 percent over the last
decade. With penetration rates for mobile phones estimated to be
only 4.7 percent of China's population of 1.2 billion, analysts said the
number of new mobile subscribers could be huge. The U.S. & Foreign
Commercial Service, a Commerce Department agency with personnel
at U.S. embassies around the world, predicted in the CDMA report
that China would have 78 million mobile-phone users by the end of
2000.
MII and senior Chinese government officials are expected to decide
soon what technologies China will use for 3G mobile
telecommunications. They will also decide which companies will
receive licenses to build and operate China's 3G network. Three or
more companies may be selected, according to industry analysts.
Contenders include China Unicom, China Telecom and China Mobile.
China Unicom has said it will deploy cdma2000 in the first half of 2001.
According to the U.S. report, other possibilities include China Mobile
using wideband CDMA and China Telecom deploying a 3G system
based on time-domain synchronous CDMA technology.
The final decisions could be made by top officials such as Vice Premier
Wu Bangguo, who supervises MII from his position on China's State
Council. The U.S. government report said a final decision might also
require the approval of Premier Zhu Rongji and even President Jiang
Zemin. |
