Chinese tap CDMA technology
( have not seen this posted)
Network launch aids Qualcomm
By Jennifer Davies
UNION-TRIBUNE STAFF WRITER
January 9, 2002
Qualcomm toppled the great wall to the Chinese cell-phone market yesterday.
In a ceremony at the People's Great Hall in Beijing, China, Unicom became the first wireless carrier in the world's most populous nation to use Qualcomm's code division multiple access, or CDMA, technology.
China Unicom, the nation's No. 2 wireless carrier, flipped the switch on a network that could serve as many as 15 million cell-phone users in 350 Chinese cities.
For the last decade, San Diego-based Qualcomm has doggedly tried to gain a toehold in China, considered the world's fastest-growing wireless market, with more than 1.2 billion potential customers. In August, China surpassed the United States as the nation with the most cell phones.
Qualcomm, which owns the patents to CDMA, earns royalties on sales of CDMA equipment.
But questions linger about whether CDMA will take off in China.
Industry analysts have called China Unicom's $2.9 billion CDMA network a gamble because of its difficult competition with the dominant wireless standard called GSM, or global system for mobile communications. Currently, China has less than 1 million CDMA users, whereas the country has more than 136 million customers using phones based on GSM.
Jeff Jacobs, Qualcomm's president of global development, acknowledged that the launch of service was not the end of Qualcomm's 10-year quest but rather the beginning of new phase of competition.
"We've got to do a lot of work to start to move more customers to CDMA," said Jacobs, who was in Beijing to attend the ceremony.
Qualcomm is focusing on getting other carriers to switch to CDMA as well as helping China Unicom build out its network to cover as many as 50 million customers in the next two years.
"There's going to be lots of focus on the execution from here on in," agreed Alistair Scott, a telecom analyst with Merrill Lynch in Hong Kong.
Analysts say Unicom appears to be promoting the service cautiously for fear that an aggressive launch could cause network failures and a dearth of available CDMA handsets.
China Unicom originally said it planned to have 2 million to 4 million CDMA customers in the first quarter. But the company characterized yesterday's launch as a three-month trial in which it would be seeking suggestions from users about how to improve the quality of the service before expanding.
China Unicom Chairman Yang Xianzu, however, brushed aside concerns about its new network.
"We are quite confident about the future of the CDMA market," he said at a launch ceremony in Beijing attended by top government and China Unicom officials, as well as Qualcomm Chief Executive Irwin Jacobs.
Yang gave no forecast of how many CDMA subscribers Unicom hopes to sign up this year. But Jeff Jacobs said the goal was to have between 4 million and 8 million by the end of the year.
"Obviously, we would like to see it be closer to the 8 million number," he said.
China Unicom officials said the number of preregistered users had surpassed 500,000, but later acknowledged that those users had reserved a CDMA number without necessarily subscribing.
One reason analysts are skeptical about CDMA's chances is that China Unicom doesn't plan to offer any price breaks to get customers to switch from GSM service. Yang said Unicom would charge standard rates for the new service rather than its usual 10 percent discount, explaining that the company was targeting higher-end customers for the CDMA service.
China Unicom is marketing the new network to customers wanting better voice quality and the ability to more quickly use the newest wireless Internet applications.
Scott said Unicom may have a hard time winning over the subscribers since its current CDMA service is voice-only.
"It's not entirely clear what the incentive is for customers to switch, certainly before mobile data services become available later this year," he said.
Yang said, however, that Unicom planned to deploy Qualcomm's next-generation wireless technology, called CDMA200, later this year. The new technology allows subscribers to send and receive data at much faster speeds than currently available.
Qualcomm's stock gained 99 cents to close at $48.19 yesterday.
Jennifer Davies: (619) 293-1373; jennifer.davies@uniontrib.com
signonsandiego.com |
