China's 3G competition kicks off

Staff Writer
27 Jun 2007



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May-June 2007

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As the issuance of 3G licenses in China draws near, the competition to get a share in the world's largest market mobile market is set to heat up.

While the 2G/2.5G market is dominated by European vendors like Nokia Siemens, Ericsson and Alcatel-Lucent, analysts suggest that local vendors like Huawei Technologies and ZTE will play an important role in deploying all 3G standards - W-CDMA, cdma2000 and TD-SCDMA.

In fact, as shown from the results China Mobile's recent $2.1 billion tender for pre-commercial TD-SCDMA networks in eight cities, local vendors have emerged as the biggest winners of the 3G game.

According to research firm Norson Telecom, ZTE was the biggest winner in the tender, grabbing nearly 50% of the total contracts. Following second was Datang Mobile, which took a 26% share, while TD-Tech, the joint venture between Siemens and Huawei, grabbed a disappointing 13%.

While Chinese vendors took the lion's share of the tender, foreign vendors were not completely losing out. Ericsson, for instance, grabbed a paltry 1% of the contracts (in Shenzhen), thanks to its OEM partnership with ZTE. Nokia Siemens and Alcatel Shanghai Bell, in a way, also have set their foot in the TD-SCDMA market, credited to their respective local partners - TD-Tech and Datang.

Norson Telecom says winners of the tenders will benefit from the future upgrade, especially in cities like Beijing, Shanghai, Guangzhou and Shenzhen. The Beijing-based research firm predicts Chinese operators' investment in TD-SCDMA networks will grow from $5.9 billion in 2008 to $9.3 billion in 2010.

Among all the vendors, XJ Wang, VP of Asia-Pacific research at the Yankee Group, says ZTE and its partner Ericsson are well positioned in the TD-SCDMA market, given the fact it is the first vendor to announce the commercial availability of an HSDPA flavor of TD-SCDMA. Also, he added, ZTE's capability to introduce a radio network controller that can support W-CDMA and TD-CDMA base stations is particularly compelling for operators like China Mobile to deploy a hybrid TD/W-CDMA network that has both TD-SCDMA and W-CDMA radio access networks.
By no coincidently, Ericsson's greater China president Mats Olsson last month told a Hong Kong newspaper that Ericsson is re-evaluating its partnership with ZTE, with the possibility of setting up a joint venture.

Hu Jian, deputy director of TD-SCDMA at ZTE, however, downplayed that option, saying ZTE can independently provide end-to-end TD-SCDMA solutions.

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