New 3G trials in China due to last months

March 11, 2007

The latest trials for the homegrown third-generation mobile standard TD- SCDMA starting this month will last at least 10 months, said a source at a participating equipment vendor.

The trial, this time led by China Mobile Communications, the parent of China Mobile, covers at least eight cities, including the six cities where the 2008 Beijing Olympics Games are scheduled to be held.

"It's like a neverending story as there was a TD-SCDMA trial in 2005," the source said. "The latest trials are still only a partial test. Maybe a complete test will be needed after that."

Separately, a mainland media report quoted an industry source as saying that China Mobile Communications will ask equipment providers to submit bids for TD-SCDMA network equipment this week. The procurement bids had previously been reported to be worth 18 billion yuan (HK$18.15 billion). But last month, the amount was said to be as high as 26.7 billion yuan, a figure set by the National Development and Reform Commission.

"The situation is that the authority kept expanding the trial while starting construction of the network, but without issuing any licenses," said China Everbright Research analyst Wong Chi- man.

"But I think the government will still be able to offer 3G services for the Olympic Games in 2008 as promised, since the network upgrade for the other two standards won't take too long."

It is widely believed Beijing will issue three 3G licenses: one for the homegrown TD-SCDMA, one for W-CDMA as used in Europe, and one for the CDMA 2000 system adopted in Japan and South Korea.

The 2G standards used in the mainland are GSM and CDMA. As both GSM and W-CDMA use the same core networks, running 3G services based on W-CDMA will lower costs by using the existing network. Likewise, CDMA networks can easily be upgraded to support 3G services based on CDMA 2000.