0t cdma related -- U.S. firms eye China telecom prize amid WTO talks
By Matt Pottinger
BEIJING, April 22 (Reuters) - As China and the United States sought to hammer out a
WTO deal on Thursday, U.S. telecom firms Lucent Technologies and Motorola were
jockeying for mobile phone contracts worth around $600 million, industry sources said.
The two companies are battling for CDMA technology contracts likely to be offered this
year by China Unicom, China's number two state telecom operator.
This week they are pitching their CDMA (Code Division Multiple Access) networks to China Unicom, which is awaiting final
approval to roll out a two million-subscriber system by December, a U.S. executive close to the talks said.
''Big carrots are being waved at both Lucent and Motorola,'' the executive said.
''We're expecting Unicom to release the first tenders in May and they're expecting to have our responses in June.''
The contracts are not directly linked to the latest round of World Trade Organisation talks that kicked off in Beijing on
Thursday. But China is embracing CDMA technology as part of a flurry of market-opening initiatives linked to its 13-year quest
to join the WTO.
A China Unicom official confirmed the meetings, but denied they involved contract negotiations.
''We're having technology consultations. We have not reached a stage of negotiations yet,'' the official said.
But the official reiterated pledges by Premier Zhu Rongji that U.S.-developed CDMA networks would be allowed to compete
with the entrenched GSM standard sold by European rivals, including Ericsson and Nokia.
''The roll out of CDMA is a certainty, it's just a question of scale,'' the official said.
China Unicom, set up in 1994, had been hobbled to stop it competing with state-owned monopoly China Telecom, industry
officials say. But Beijing is breathing new life into the company as Zhu attempts to spur domestic competition.
Backers of CDMA tout it as superior to GSM (Global System for Mobile Communications), arguing it uses less bandwidth and
will be more compatible with future generations of mobile phones.
Unicom sees the technology as its best shot at competing with China Telecom, both because of its technological advantages
and because Beijing is unwilling to allow Unicom to duplicate GSM networks in cities where they already exist.
China Unicom has its own GSM networks, but they service only five percent of the country's mobile phone users.
A second Unicom official said the company would continue to build GSM networks in areas where there were no mobile
systems, but would phase in CDMA systems to compete with China Telecom networks.
''We'll be doing both. Exclusively rolling out GSM is impossible and at the same time it would be wrong to develop only
CDMA,'' he said.
He said Unicom's recent announcement that it intended to spend $2.87 billion on mobile networks this year referred to GSM
investments, while CDMA funding ''has yet to be worked out.''
The U.S. executive said Unicom had signalled it was confident it would have funding to launch a two million subscriber capacity
system by December, translating into roughly $600 million in sales.
The contracts could be split 50-50 between Lucent and Motorola, with other players such as Nortel, Ericsson and Samsung
out of the running for now, the executive said.
Related News Categories: computers, publishing, telecom, US Market News
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