Red Herring on China's TD-SCDMA
>> China’s 3G Standard Blooms
After stumbling in initial trials, China’s TD-SCDMA standard hits its stride.
Red Herring
Beijing
April 27, 2005
tinyurl.com
Beijing’s efforts to promote China’s homegrown third-generation (3G) wireless standard look increasingly likely to bear fruit, participants and industry analysts said at the conclusion of the International TD-SCDMA Summit Wednesday in Beijing.
“I’ve been a big skeptic on where TD-SCDMA fits in, but now it’s clear that the standard has made real progress,” said Ted Dean, managing director of Beijing-based telecom consultancy BDA, citing progress in the development of handsets—a dearth of which, analysts said, has been the bane of 3G deployment in other markets.
A growing number of integrated circuit (IC) design companies and major handset vendors debuted chipsets and phones at the summit, and TD-SCDMA (time division-synchronous code division multiple access) handsets appear poised to move quickly from the lab to the marketplace when Beijing finally gives carriers the green light to deploy 3G networks.
The outlook for TD-SCDMA has improved markedly from six months ago, when the Chinese standard flopped in its first field trials. At the time of the trials last fall, only one prototype TD-SCDMA chipset was available for testing.
But a current round of tests began in February and will continue through June. “This time, the tests are powered by real chipsets,” said Ping Wu, president and CEO of Sunnyvale, California-based IC design firm Spreadtrum. The current TD-SCDMA trials involve 10 different chipsets from multiple vendors including ADI, Commit, T3G, and Mr. Ping’s company, which was the first to produce a band chip for the TD-SCDMA standard last year.
A total of 20 different TD-SCDMA handsets from 14 vendors have already been built. Those vendors include domestic Chinese brands Ningbo Bird, Hisense, Putian, and Yinghuada; Taiwan-based DBTel; and Korean heavyweight Samsung.
“Handsets have been the weak link in the value chain,” said Mr. Dean. “But I have much more confidence that a company like Samsung will produce a product that people will want to buy. That’s a sign that is going to be a success in the market.”
Focus on Research
Since Beijing’s telecom authorities first began promoting the TD-SCDMA standard in 2003, foreign vendors, convinced that rollout of at least one 3G network based on the Chinese standard was inevitable, have forged a number of alliances with Chinese vendors. But alliances like that between Nortel and Putian and between Alcatel and Datang—an early TD-SCDMA technology leader that had also previously partnered with Siemens—were focused on research, not on actual commercialization.
This changed with the establishment last March of TD Tech, a joint venture between Siemens and local champion Huawei. “TD Tech is a big shift,” said Mr. Dean. “Siemens going from Datang to Huawei is about the sale of the equipment of the operators rather than R&D—areas in which Siemens and Huawei are both very strong.”
While some analysts and industry insiders once privately derided TD-SCDMA as a standard motivated strictly out of protectionism and nationalism and dismissed its foreign proponents as opportunistic sycophants, the Chinese 3G standard has begun to win plaudits on some of its technical merits.
“In the lab, at least, has real advantages. It’s theoretically better-suited to high-density areas, and should have better downlink capability than WCDMA,” said Zhang Dongming, director of research at BDA. “With Siemens and Huawei getting involved, with Samsung and ADI getting involved, it’s a good bet carriers can leverage these features to offer a successful service,” said Mr. Dean.
In theory, time division also uses bandwidth more efficiently than code division. “With TD, you can share the same frequency for both transmission and reception, while with code division, transmission and reception are simultaneous over a pair of frequencies, so more frequency is consumed. Frequency is an asset—it’s a cost,” said Spreadtrum’s Mr. Wu.
The push for China’s own standards, and not just in 3G, stems, in part, from dissatisfaction in the Chinese tech industry with high intellectual property (IP) licensing fees Chinese firms have had to pay to foreign IPR holders. Beijing’s growing impatience with Qualcomm, which has stonewalled on Beijing’s requests that it reduce IP licensing fees, was made amply evident to participants in this week’s International TD-SCDMA Summit.
Without naming any specific company, Jiang Xingsheng, section chief of the Ministry of Information Industry’s Science and Technology section, joined in a chorus of indignation from other ministries and regulatory bodies about “certain companies charging unreasonably high intellectual property right [IPR] fees, which are not good for the industry.”
The End Game
China’s telecom Mandarins have not, however, made clear how China will handle IPR for TD-SCDMA or even where IPR will actually rest. “It’s not clear whether the end game here is to create a Chinese Qualcomm or a Chinese technology with low IP fees or none at all,” said Mr. Dean. “Even if they charge nothing for licensing fees, at least Chinese companies will have avoided paying them, as they’ve been doing.”
Most industry watchers speculate that barring any disasters with the ongoing trials, China’s State Council will issue 3G licenses, including at least one specifically for TD-SCDMA, no later than early 2006. But for Spreadtrum and the other 15 companies that make up the TD-SCDMA Industry Association (TDIA), the announcement couldn’t come too early.
“All member companies of the TDIA agree that this technology should be released and confirmed as soon as possible. Waiting [on issuing licenses] sends a weak signal,” said Mr. Wu. “If Beijing were actually to let China Mobile go ahead and deploy, people would speed things up all along the value chain.”
With no market at present for its TD-SCDMA chipsets, Spreadtrum has focused on making ICs for existing GSM/GPRS handset design houses like San Jose-based Cellon and Chinese vendors like Ningbo Bird. Mr. Wu said that Spreadtrum shipped 1 million chipsets in 2004, but with intense competition and narrowing margins in that arena, he is biding his time before 3G licenses are issued.
But other analysts wonder privately whether the premature issuance of a TD-SCDMA license would leave TD-SCDMA proponents red-faced and unready for the actual market. “Saying they want it is a good slogan,” said one industry insider, “and it might speed things up. But I honestly doubt that anyone on the equipment or handset side would really be ready.” <<
- IC - |
