Determined not to miss out on market opportunities provided by third-generation technology, NEC Corp. has taken early steps into the 3G arena.
The Japanese manufacturer has begun operation of a new subsidiary in Singapore that will design and develop hardware and software for wideband Code Division Multiple Access base-station systems. Earlier this year, the company created a joint venture with ERA Technology Ltd. in the United Kingdom to develop W-CDMA infrastructure for the European market.
NEC will be one of many vendors that will fight it out for the multi-billion-dollar mobile phone market in the next century that promises Internet-friendly handsets and sophisticated high-speed data and global-roaming features. Japanese vendors, limited in the past from becoming strong worldwide contenders because of the isolated Personal Digital Cellular standard adopted by their own country, are likely to enter aggressively the 3G market.
NEC, along with other major vendors such as Sweden-based L.M. Ericsson, has been working with NTT DoCoMo-Japan’s largest mobile phone operator-to develop W-CDMA technology. NEC expects this involvement to give it a head start in the market.
NEC said in the near future it plans to market W-CDMA systems, which are based on the Global System for Mobile communications platform. The United Kingdom and Japan plan to grant 3G spectrum as early as next year. The United Kingdom will auction four licenses by mid-1999, while the Japanese Ministry of Posts and Telecommunications has set the stage to offer three 3G licenses in each operating area by the end of next year.
By 2005, NEC hopes to attain worldwide sales of $3.7 billion in the W-CDMA business, of which about $740 million will come from Asian markets outside Japan.
NEC so far has installed its analog and digital infrastructure in 13 countries and is promoting Interim Standard-95 CDMA (cdmaOne) systems in Asia and Latin America. The company has only a handful of cdmaOne contracts around the world, with the majority in Brazil. In July, NEC received an order for its cdmaOne-based fixed wireless network from Russia and Mongolia. In Japan, the company provides infrastructure for four PDC networks, and it has deployed microwave and personal handyphone system networks in Asia and Latin America.
The company reported net sales of $12.6 million for fiscal 1998 from its communications and equipment business segment. Japanese newspapers indicate the company is expected to post an interim loss of about $76.3 million for the fiscal half-year ending Sept. 30. A sluggish semiconductor market and weak sales of communications equipment were among the main causes of the poor earnings, indicated one published report.
Still undecided in the 3G arena is what air interfaces the International Telecommunication Union will come up with early next year as a family of standards. Standards bodies around the world submitted 3G standards for IMT-2000 technology consideration to the ITU. Most standards submitted are based on the W-CDMA standard, though Korea and the United States also submitted the cdma2000 standard, based on IS-95 technology.
CdmaOne innovator Qualcomm Inc. claims to own key intellectual property rights to the W-CDMA standard and has said it will not grant those rights unless the standard is converged with the cdma2000 standard.
