Report: 12 companies bid for China Unicom CDMA deals

China United Telecommunications Corp. (China Unicom) last week began taking bids to supply elements of its planned 70 billion renminbi (US$8.5 billion) CDMA (Code-Division Multiple Access) mobile-phone network across China, and the bids have flooded in from 12 domestic and joint-venture vendors, the official China Daily reported Thursday.

Lucent Technologies Inc. and Motorola Inc. of the US, Nortel Networks Corp. of Canada, L.M. Ericsson Telephone Co. of Sweden and South Korea's Samsung group all are bidding to supply gear for the network, and are competing with China's own ZTE Corp., Huawei Technologies Co. Ltd., Datang Telecom Technology Group and GDT, the report said.

Not included in the bidding is US-based Qualcomm Corp., which developed many key CDMA technologies and late last year signed a memorandum of understanding with China Unicom saying China's Ministry of Information Industry (MII) supported the carrier's deployment of a CDMA network. That deal followed at least a year of negotiations over the issue and some apparent reversals of the government's position. Unicom will announce the results of the bidding in mid-April, China Daily said.

China Unicom plans to bring more than 300 cities across the country into its CDMA coverage area over three years. The state-owned carrier, which is the only full-service competitor to China Telecommunications (Group) Corp., will be building out a pilot network it recently acquired from military-linked Great Wall Telecom. The company expects to attract new users to the CDMA service at the rate of 10 million per year; the Great Wall network had 550,000 customers. China Unicom already operates a nationwide GSM (Global System for Mobile Communications) network.

CDMA will provide lower-cost mobile services, according to the report, with rates of approximately 0.20 renminbi per minute vs. GSM fees ranging between 0.40 renminbi and 0.60 renminbi. CDMA's proponents also say it uses radio spectrum more efficiently, provides a clearer signal and is more easily upgraded to third-generation (3G) broadband technology.

In the bidding, China Unicom will consider domestic companies first, said China Unicom vice president Wang Jianzhou, according to the China Daily report. The Chinese government has placed high priority on the country building up its own telecommunications vendors and technology as China grows into one of the world's largest telecommunications markets. Last year a Chinese-developed protocol for 3G, called TD-SCDMA (Time-Division Synchronous Code-Division Multiple Access) was approved by the International Telecommunication Union as one of four international standards for 3G. China intends gradually to open its telecommunications sector to greater foreign and domestic competition, aided by its upcoming admission to the World Trade Organization. By doing so, it hopes to help domestic carriers become more competitive.

On Friday, China Daily highlighted the comments of a scholar at the China Center for Economic Research, who said the government should encourage the entry of four or five comprehensive carriers, both domestic and foreign-invested. In addition, there should be hundreds or thousands of resellers and competitive local access providers, senior expert Zhou Qiren recommended in a recent speech, according to the report. Zhou also said China Telecom has applied to MII for a license to offer its own mobile services. They would compete with those of China Mobile Communications Corp., a spinoff of China Telecom that is now China's biggest mobile operator.

China Unicom's Hong Kong-listed affiliate, China Unicom Ltd., can be reached in Hong Kong at +852-2126-2018 or via the Web at http://www.china-unicom.com.

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