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Technology Stocks : Lucent Technologies (LU) -- Ignore unavailable to you. Want to Upgrade?

To: KYA27 who wrote (6899)	3/29/1999 7:45:00 PM
From: Bindusagar Reddy	Read Replies (1) \| Respond to of 21876

U.S.-China Deal Over Telecom Standard Hits Static on Revived Military Worries By IAN JOHNSON Staff Reporter of THE WALL STREET JOURNAL BEIJING -- Just as U.S. telecommunications companies were set to celebrate China's acceptance of a technological standard that could net them billions of dollars in sales, U.S. worries about China's military have damped the festivities. U.S. Commerce Secretary William Daley was to preside over the signing Thursday of a $500 million sale by Motorola Inc. and Lucent Technologies Inc. of CDMA technology to a Chinese telecom company. The deal, to be feted at the annual China-America Technology Summit in the southern Chinese city of Guangzhou, was the result of intense lobbying by U.S. officials, who persuaded China to supplement its European-standard cellular phone network with CDMA, a U.S. standard that stands for code division multiple access. On Monday, Chinese Premier Zhu Rongji confirmed that China would use CDMA. Problem is, the Chinese company running the country's CDMA network is none other than Great Wall, a Chinese telecom company half-owned by the Chinese military. As politically savvy Washington trade officials learned of Great Wall's powerful backer, Mr. Daley's presence at the signing was quickly nixed. While the deal will go ahead without Mr. Daley, his presence became politically impossible once his advance team contemplated the commerce secretary being photographed with employees -- no matter how far removed -- of the People's Liberation Army. Not that Great Wall is any military-run behemoth. Last year, government officials said China's military would divest itself of companies. Great Wall is still 50% military-owned -- the other half is owned by China Telecom, the government telephone giant -- but its military ties are expected to be cut later this year. Great Wall also is puny compared with other Chinese telecom companies. China Telecom controls the country's fixed-line network and handles most cellular-phone calls with European GSM technology. Its nominal competitor, China Unicom, has a tiny fixed-line network in one Chinese city and a small cell-phone network that also uses GSM, or global system for mobile communication. Great Wall comes in a distant third. It handles some data transmission but its prize is military control over the frequency bandwidth used by CDMA. That allowed Great Wall to be chosen to conduct CDMA trials in four Chinese cities -- trials so far involving just 800,000 subscribers. The test seemed to be going nowhere until U.S. lobbying caused China to change its mind and allow CDMA, the idea being that another technological standard would help foster more market competition in the country's highly regulated telecom industry. Thursday's planned signing highlights the potential sales that China's decision to allow CDMA could mean for U.S. firms. The $500 million in sales should allow Great Wall to double the number of CDMA users from 800,000. Government officials now say they will boost CDMA users to 40 million by 2005 -- with most equipment provided by U.S. companies. Return to top of page \| Format for printing