China's homegrown 3G may overcome bumpy start

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Victoria Ho ZDNet Asia

Published: 05 Aug 2008 08:36 BST

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Despite deployment troubles, China's homegrown 3G standard will probably be given more than a fighting chance to take off there, according to analysts.

That standard, TD-SCDMA (time division-synchronous code division multiple access), has seen its fair share of bumps on its road to deployment.

Initially slated for wide deployment during the Beijing Olympics, connectivity issues including dropped network connections and spotty coverage prevented China Mobile — the country's largest mobile operator and the one leading the TD-SCDMA rollout — from making this a reality for the Games.

Mark Natkin, managing director at Beijing-based Marbridge Consulting, told ZDNet Asia that TD-SCDMA's reception is still lukewarm — a result of the standard not delivering as promised.

Natkin said consumers in the country have been slow to jump over from their existing 2G subscriptions partly because of the prohibitive cost associated with acquiring new handsets, but also because TD-SCDMA has not delivered the performance jump over 2G as promised, he added.

Reports of user responses have been varied. According to China Mobile, the number of TD-SCDMA users hit 52,000 as of July. But China Business News reported in June that only 2,000 handsets have been purchased.

Nonetheless, the standard has a chance to gain a foothold in the market because of its head start over competing standards, said analysts.

A government official said last month that China will issue 3G licences in six months, although this is not confirmed, in which case "TD-SCDMA has a healthy head start to get a customer base locked in before the competition comes", Natkin said.

Hwai Lin Khor, wireless research analyst at ABI Research, also said users are exploring TD-SCDMA for lack of other choices. "Being the only high-speed 3G available in China now, China Mobile subscribers do not mind giving it a chance to improve," she said via email.

Khor added that China Telecom, which has bought over China Unicom's CDMA operations, will still "take some time for infrastructure deployment and manpower allocation... hence, the soonest we can see WCDMA and CDMA2000 go commercial will be some time in the third quarter of 2009".

This gives China Mobile over a year to work through TD-SCDMA's kinks, she noted.

Mainly, the operator will still have to work on improving TD-SCDMA coverage, said Khor. China Mobile will also probably have to provide heavy subsidies for handsets "for at least another two years" to entice buyers.

TD-SCDMA handsets lack economies of scale and wide community support due to fewer manufacturers making them, so they are still pricier than their 3G counterparts at this stage, she explained.

Motorola, LG and Samsung won a contract to collectively deliver 30,000 units to China Mobile by last month.

Credit: TD-SCDMA's headstart to ensure foothold from ZDNet Asia

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