NEW YORK-At least in the short run, prospects for deployment of large-scale Code Division Multiple Access networks in the People’s Republic of China are on hold.
However, the longer-term outlook could be brighter, according to Boston-based Information Gatekeepers Inc., which hosted a recent China Telecom 2000 conference.
As the “new kid on the block,” CDMA technology has been swept up in a broad-brush federal decree calling for the termination by 2000 of Chinese/Chinese-Foreign joint ventures in telecommunications networks and services provision.
These include China Unicom, the country’s nascent second carrier, which planned to deploy a CDMA network using CCF financing. Also on the list is a CDMA network planned by Great Wall, a joint venture between China Telecom, the dominant incumbent carrier, and a commercial division of the People’s Liberation Army. Great Wall also planned to use the CCF structure for CDMA infrastructure construction financing.
As part of the telecommunications policy restructuring discussions, the Chinese government also seeks to ban the military from controlling commercial ventures, China Telecom 2000 speakers said.
The CCF structure has served as an alternative to high-yield debt financing for start-up carriers seeking to compete with incumbents, said Ken Zita, a New York-based consultant.
While China likely will scrap the CCF structure, the country’s overriding interest in becoming a World Trade Organization member likely will spur its federal government to develop alternative models allowing minority equity participation by foreign investors, said Jeanette Chan, a partner in the Hong Kong office of Paul, Weiss, Rifkind, Wharton & Garrison.
Consequently, Unicom’s planned CDMA launch could find a suitable financing vehicle under whatever reorganization results, according to Information Gatekeepers.
Likewise for China Telecom. It could decide to rent the People’s Liberation Army spectrum and develop a CDMA network itself, outside the Great Wall joint-venture structure, which requires it to share CDMA revenues equally with the PLA.
“We are true believers in CDMA,” said Marc Naddell, marketing manager of Motorola Inc. s Wireless Access Systems Division, Arlington Heights, Ill.
“Perhaps it came after certain windows were closed, but there are good opportunities, alternatives to countrywide systems, in regional and wireless local loop applications.”
Motorola, along with Northern Telecom Ltd. and two other infrastructure vendors, is involved in the Great Wall Mobile Communications Co. CDMA trial networks in service in Beijing, Shanghai and Xi’an, said Albert L.K. Leung, senior manager of CDMA market development for Nortel, Ottawa, Canada.
Nortel’s piece of the pilot project centered on an 800 MHz CDMA overlay of part of an existing Advanced Mobile Phone Service network in Xi’an.
The system is working well, with high spectral efficiency and low rates of dropped calls, he said. Nevertheless, prospects for wider CDMA deployment appear to be stymied for the moment.
“It’s a big market. I’m not sure of the near-term profits, but we are in there for the long haul,” Leung said.
Naddell and Leung spoke as part of a China Telecom 2000 panel on wireless market opportunities and development in China.
