Viable 3G business case for China rests on TD-SCDMA

The Chinese government's adamant efforts to push its home-grown TD-SCDMA 3G standard looks like they are beginning to pay off. Of course, in any free-market society, the technology would have long been dead given the enormous head start WCDMA and CDMA EV-DO have had. But the Chinese government took some drastic measures to make sure this technology succeeds and that it positions China as a leader in technology. Consider some of the results so far: ZTE, that low-cost vendor everyone is afraid of, is targeting emerging markets with TD-SCDMA technology and trials are reportedly pending. Japanese wireless licensee now wants to flip from TD-CDMA technology to TD-SCDMA (see story No. 2), citing better costs since some 20 vendors have developed more than 100 kinds of handsets. That's pretty good for technology that hasn't been commercially rolled out yet.

Early last year, regulators ordered China's operators to stop work on WCDMA trial networks presumably so that TD-SCDMA could get a head start. It's also requiring that at least one major operator, China Mobile, deploy the technology. The 2008 Olympics are also expected to play a big role in TD-SCDMA's future, as the country looks to showcase its 3G capabilities there and demonstrate to the the world how modern it is.

Right now China's tune is that it has no timetable for issuing 3G licenses because it believes there is not a viable business model for 3G (huh?). That tune may change when the Olympics are over. If TD-SCDMA performs beautifully, Chinese regulators may very well declare that there is indeed a business model for 3G.--Lynnette