TD-SCDMA in China

November 13, 2005

Despite recent news that paints a fairly pessimistic picture about the chances for TD-SCDMA's commercial success, I'm not ready to abandon hope just yet. The Chinese 3G standard may not be ready to join ISDN and CDPD on the list of "Great Ideas that Never Succeeded."

I just returned from a two-week trip to China where I visited several carriers, hardware vendors and attended the PT/Wireless & Networks Comm China show in Beijing. I've got some additional comments about China's proposed 3G standard TD-SCDMA

Despite the fact that Motorola, Sony-Ericsson and Nokia have all said that they are not currently working on TD-SCDMA handsets, most of the major US and European infrastructure companies are in some kind of TD-SCDMA joint venture with Chinese companies. For example, Nokia and Putian announced their JV a couple weeks ago.

China is working hard to show people attending the 2008 Beijing Olympics how much economic and technological progress the country has made. Even though the games are only three years away, I believe that China could emulate Korea's unveiling of its CDMA 1XEV-DO system for their Olympic games: Build limited networks that cover only the Olympic venues and make sure journalists get to watch video clips on TD-SCDMA phones. There may not be any commercial customers signed up by then, but they'll still get the public relations benefits of demonstrating a working system.

When visiting the TD-SCDMA Alliance booth at the PT/Wireless & Networks Comm China 2005 show, they made it look as if the TD-SCDMA ecosystem is fully developed; There were glass cases full of stylish handsets, base stations, test equipment and antennas emblazoned with"TD-SCDMA." You might wonder, "Do they work?" I wonder that too. But what is clear is that Chinese companies, some of them state-owned, seem to be committed to moving forward with TD-SCDMA.

The idea of a homegrown 3G standard isn't so far-fetched when considering the size of the Chinese market. In-Stat's most recent estimates find there will be 166 million NEW wireless subscribers in China in the coming five years. That number is greater than the combined subscriber figures for Cingular Wireless, Verizon Wireless and most of T-Mobile today. With a market that size, economies of scale are certainly achievable, especially considering the lower cost of intellectual property in base stations, networks and handsets.

One final thought on the development of any new airlink technology: CDMA was a ghastly and embarrassing failure in its earliest days. Today, though, it's considered at least equal if not superior to other systems. Take a look at W-CDMA for another example of a slow start for a fine system. It's hard work to make something like TD-SCDMA work. It could take a while. I wouldn't write it off yet.

In-Stat