Ovum comment: The first 3G contracts in China

Ovum/Jean-Charles Doineau
11 Apr 2007

As yet unconfirmed by the Chinese service provider, it seems that China Mobile has finalized its selection of vendors for the rollout of its 3G network. This network complies with a local standard - TD-SCDMA, and is likely to be the first broadband wireless network available in the country. Local vendor ZTE confirmed yesterday that it has been granted the lion's share of the contract. Though there is no formalized order yet, 'Notices of tender acceptance' have been issued. ZTE's shares rose by 14% yesterday after the announcement.

Ovum's service infrastructure research practice leader Jean-Charles Doineau comments:

Notices of tender acceptance' only covers the mobile radio access networks, and will be followed by similar confirmations in the other areas of the network, such as power management systems, transmission systems, and core network systems. So far it is hard to know exactly how much goes to which vendor, but ZTE should win about 45.54%. Ericsson, which OEMs ZTE's technology, should be granted 1.24% of the total radio contract.

Following ZTE, Datang has also been selected for about 27.45% of the contract. Alcatel-Lucent, through its Alcatel Shangaï Bell subsidiary is a partner of Datang and should own a subset of this contract. Other partners of Datang such as Fiberhome and Guangzhou New Communications have been granted 3.62% and 5.61% of the contract respectively.

Putian has been granted 2.72%. Finally TD Tech (a joint venture between Huawei and Seimens) has won 13.82% of the contract. ZTE will have to deploy in Beijing, Shenzen, Tianjin, Shenyang, Quinhuangdao and Xiamen. Shangai and Beijing represent by themselves 1,400 3G base stations each, two thirds of which are indoor base stations.

The ZTE contract should be about 3.2 billion Yuan, which is about $415 million - this is just the 'trial' phase!

The interest over China moving to TD-SCDMA has been much debated. This announcement is very significant because it highlights some of the characteristics of the 3G market today.

Firstly, the IMT 2000 dream of a unified world standard is already over, as we have 3 3G standards under deployment now around the world (WCDMA, CDMA EV-DO, and TD-SCDMA). There are many reasons to explain this, but the main one is certainly that none of them have advantages over the others.

Secondly this announcement shows that the Chinese industry no longer needs a transfer of knowledge from the West.

The older readers of this comment will certainly remember the weight of the Western industry in the first GSM and CDMA rollouts in China. Today, not only has the Chinese industry selected a large majority of local vendors, but it has even developed its own technology. Western vendors didn't want to invest in this technology - and consequently have not been granted any contracts.

Finally, and maybe more importantly, the traditional 'handset advantage' doesn't seem to be working anymore in China.

Related content

No Comments Yet! Be the first to share what you think!
This website uses cookies
This provides customers with a personalized experience and increases the efficiency of visiting the site, allowing us to provide the most efficient service. By using the website and accepting the terms of the policy, you consent to the use of cookies in accordance with the terms of this policy.