China CDMA networks already being deployed

Foreign mobile-phone network companies have already begun manufacturing and deploying infrastructure for CDMA (code-division multiple access) networks to be operated by China United Telecommunications Corp. (China Unicom) in mainland China, company officials said on Tuesday in a news conference at the 3G World Congress here.

Contracts have been signed for Chinese operations of Nortel Networks, Lucent Technologies, L.M. Ericsson Telephone Co. and Motorola to begin making switching, transmission and other equipment for a series of provincial networks that are intended to serve about 13 million customers across China by the end of this year, executives of the companies said. CDMA is a second-generation digital mobile-phone system and can be upgraded for higher speed digital services.

Other foreign and domestic manufacturers also have been awarded contracts. The agreements came after a long series of delays that some observers linked to trade and political tensions between China and the U.S. over the past few years. China Unicom divided contracts for different networks in different provinces among the vendors.

"There have been any number of things that have caused perturbations," said Paul Jacobs, executive vice president of Qualcomm Inc. Qualcomm developed much of the technology underlying CDMA and earlier this year completed a framework agreement with China Unicom for use of that technology. In an interview Wednesday at the conference, Jacobs expressed hope and relief at the progress of Unicom's rollout.

Lucent Technologies Inc. has begun full-capacity manufacturing of network equipment at a factory in Qingdao, in China's Shandong province, and has already put more than 1,000 CDMA base stations in the field, said Scott Erickson, senior vice president of Lucent's Mobility Segment.

"It's been a long time coming, so it's nice to be able to sit up here today with my colleagues and be able to say that we're already in full deployment of the network in China," Erickson said.

Lucent's contracts cover more than 4 million potential customers in 10 provinces and 9 major cities, Erickson said.

Nortel has also started deployment of CDMA networks for Unicom and looks to start commercial operation before the end of this year, said Kenneth Pecot, vice president for business operations at Nortel, based in Hong Kong. Its Guangdong Nortel Telecommunications Equipment Ltd. unit was awarded a contract to supply US$275 million worth of equipment for bringing CDMA to 2.57 million customers in six provinces and one large city, the company announced last month.

Ericsson won contracts to build networks that will serve about 2 million subscribers in seven provinces, according to Larry Brittain, vice president of sales at Ericsson. Contracts to build networks in seven provinces were awarded to Nanjing Ericsson Panda Communications Co. Ltd. and deployment was to begin immediately, the company said in a statement in May.

Motorola Corporate Vice President and General Manager Simon Leung, also based in Hong Kong, confirmed the company has signed contracts to help build China Unicom's networks and now has staff deploying the networks in the field. Commercial services on its networks are to begin in the fourth quarter, it announced last month.

Mobile telecommunications services in China today are dominated by GSM (Global System for Mobile communications), used in incumbent China Telecommunications (Group) Corp.'s networks as well as in most of China Unicom's networks today.

Also participating in the news conference was ZTE Corp., a Chinese vendor of CDMA infrastructure products as well as handsets. ZTE will build networks for China Unicom that will cover more than one-third of China, said Lirong Shi, board member and senior vice president of ZTE. Chinese vendors Huawei Technologies Co. Ltd., Datang Telecom Technology Co. Ltd. and GDT also won contracts last month from China Unicom.

For its part, Qualcomm will receive licensing fees from the Chinese as well as foreign manufacturers for the use of its CDMA patents. To help Chinese vendors bring handsets to market, Qualcomm has been developing in China and the U.S. a reference design for handsets and an infrastructure for testing them, Jacobs said.

He thinks there is room for CDMA to succeed in China's large and rapidly growing mobile market.

"We're not going to start celebrating before actual subscribers start buying phones," Jacobs said, but he added, "It looks just on the face of it that they have the potential to be a pretty good competitor."

Qualcomm's CDMA vision in China is not limited to China Unicom's networks, or even to the expected CDMA migration path to 3G (third-generation). The company also will collect fees for the use of its patents in TD-SCDMA (Time-Division Synchronous Code-Division Multiple Access), a 3G technology developed in China that has been approved as a standard by the International Telecommunication Union (ITU).

In addition, Jacobs sees broad potential for China's CDMA equipment manufacturers.

"If they can . . . be global telecommunications players . . . that's better for CDMA as well," Jacobs said. "We see a lot bigger things than Chinese manufacturers selling CDMA into China."

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