HONG KONG-“This time it’s for real,” stated Robert Mao, president of Nortel Networks China.
But Irwin Jacobs, chairman of Qualcomm, was rather more sanguine. “I’ve gone from being cautiously optimistic,” said Jacobs, “to optimistic.”
The CDMA Development Group (CDG) fielded representatives from Ericsson, Lucent Technologies, Nortel Networks and Qualcomm on the opening day of International Telecommunication Union (ITU) Telecom Asia 2000 in Hong Kong. They were celebrating the signing of a memorandum of understanding (MoU) between Qualcomm and China’s Ministry of Information Industry (MII).
The MoU confirmed MII’s support of Qualcomm’s framework agreement with China Unicom to cooperate in developing CDMA technologies. According to Jacobs, the ministry’s validation indicates support for the deployment of a nationwide network by China Unicom based on IS-95A technology.
“It’s a clear indication from the MII,” agreed Scott Erickson, vice president of global marketing for Lucent Technologies. “We’re now waiting for the very important next step.”
This next step would presumably involve infrastructure contracts and could be imminent. Or it might be a long wait. The framework agreement with China Unicom was signed back in January 2000, and since then, the prospects for the widespread deployment of cdmaOne in China have been the subject of ever-conflicting rumors.
There are disruptive forces at work, implied Perry LaForge, executive director of the CDG. “The plans for CDMA in China have not changed over the past year,” stated LaForge at a third-generation (3G) roundtable discussion in Beijing at the end of September. “But rather, confusion stemming from worldwide propaganda has offset the truth, making it difficult for the global market to keep track of the progress that CDMA has made in the region.”
One indicator of progress could be the introduction of the world’s first subscriber identity module (SIM) card-enabled
CDMA handset, unveiled in October in Beijing, developed by Chinese manufacturer ZTE in association with Gemplus. The introduction of a universal identification module exchangeable with a GSM SIM card is a result of pressure from China Unicom, which has not been overly enthusiastic about introducing cdmaOne into China’s established GSM market.
China has only two mobile operators: China Mobile, split off from the incumbent China Telecom about a year ago, and China Unicom, created as a second carrier to encourage competition. Both have nationwide licenses and operate extensive GSM networks through provincial subsidiaries. At year-end 2000, China Unicom had 18.5 million subscribers on its GSM and CDMA networks compared with China Mobile’s 52 million across its AMPS, TACS and GSM networks. Currently, there are more than 70 million cellular subscribers in China, representing a penetration rate of just 5.5 percent.
But nothing is straightforward in China. China Telecom actually operates a 1 million subscriber network based on PHS technology, which provides limited mobility. Reports circulating at ITU Telecom Asia 2000 indicated China Telecom will soon receive a new mobile license of its own. Policy reversals are not unknown in China.
And China Unicom is now officially a cdmaOne operator, having been given the responsibility to commercialize the four trial CDMA networks in Beijing, Shanghai, Xian and Guangzhou. These were originally operated by Great Wall, the former commercial unit of the People’s Liberation Army. During ITU Telecom Asia 2000, it was confirmed that a major new cdmaOne network is already operating in Tianjin.
It was also confirmed that infrastructure for the Tianjin network is being supplied by Datang Telecom, the first Chinese manufacturer to have its CDMA equipment certified by the government. Datang is first in the queue of Chinese vendors developing
CDMA capabilities in anticipation of a tender from China Unicom for a nationwide IS-95A network.
But if a tender does materialize, Western vendors may have difficulty getting a slice of the action. Jichuan Wu, China’s minister of information industry, emphasized during the opening session of the ITU Telecom Asia 2000 Forum his desire for China’s telecom companies to “own their own infrastructure.” Not only that, he also wants them to “own their own intellectual property.”
Datang has a licensing deal with Qualcomm and will be paying royalties for its CDMA technology. But Datang, which owns the China Academy of Telecommunications Technology, is championing TD-SCDMA-the Chinese-developed member of the IMT-2000 family. According to a Datang spokesman, TD-SCDMA does not use any of Qualcomm’s patents, so no royalties will be payable.
Qualcomm’s Jacobs disagreed, of course, asserting Qualcomm’s intellectual property rights (IPRs) in areas such as power control, multiple reflections and handoffs are what enable CDMA systems to become commercial. Resolution of this issue is unlikely to occur until after China has joined the World Trade Organization (WTO).
It is known that the U.S. stance on China’s entry into the WTO has changed following the MoU between China’s MII and Qualcomm. Exactly what has been negotiated in exchange for the ministry’s apparent support for a nationwide cdmaOne network remains to be seen. In the meantime, notes Jacobs, “We look forward to participating in the TD-SCDMA Forum.”
