TD Tech Ltd, the JV set up by Siemens and Huawei to further develop and commercialise China's indigenous time division-synchronous code division multiple access (TD-SCDMA) 3G technology, has formally started business. The Hong Kong-registered US$100mn enterprise, in which the German company has a 51% stake and its Chinese partner 49%, now says it aims to launch commercial TD-SCDMA product in Q2 or Q3 2005.

Historically TD-SCDMA is a technology that most non-Chinese wireless vendors probably wish hadn't have happened. However, given the potential size of the local market and the seeming strength of Chinese sensibilities that now attend its successful introduction, an increasing number of these vendors are rallying to the TD-SCDMA standard. As well as the Siemens/Huawei JV, last November saw Alcatel and China's science and technology enterprise Datang Mobile announcing a partnership agreement to foster the introduction of TD-SCDMA in China, and a €25mn investment by the former in the latter. In January this year Nortel Networks and China Putian Corporation signed a Joint Venture Framework Agreement (JVFA) to establish a JV for research and development, manufacture and sale of 3G mobile telecommunications equipment and products to customers in China. China Putian and Nortel agreed to prepare and negotiate with each other on a definitive JV agreement by 30 June, 2005. When established, the new company - to be named Putian-Nortel Networks Telecommunications Equipment Co Ltd. - will likely be headquartered in Wuhan, Hubei province, and will focus on TD-SCDMA along with wideband-CDMA (W-CDMA) products and solutions. China Putian will own 51% percent of the JV, Nortel, the remaining 49%.

Korea's Samsung is also pushing out the TD-SCDMA product boat.

The less than positive TD-SCDMA news from last year was that performance was then not as good as anticipated (click here), and that there might be a shift in China to a non ITU-mandated 3G operating frequency (click here).

On the upside, a recent report - 'TD-SCDMA: The Chinese 3G Standard' - from ABI Research reckoned that, present concerns aside, a national TD-SCDMA network will be built in China eventually. "We expect production of TD-SCDMA equipment to start in mid-2005", according to ABI Research’s Asia analyst Junmei He. "Chipsets in 3Q 2005, and handsets in 4Q 2005. 3G licenses should be issued in the third quarter of 2005".

China's TD-SCDMA network will first be established in urban areas, ABI Research believes, while the GSM network will complement TD-SCDMA for nationwide coverage. The research company reasons that if they choose TD-SCDMA, China Telecom and China Netcom will initially focus on signing more voice subscribers to the network, and they will have strong policy support from the Chinese Government. These favorable policies will be more important in attracting subscribers than service quality, as was the case with PHS.

As icing on the TD-SCDMA cake, reports suggest that there is now overseas operator interest in TD-SCDMA from the like of France Telecom, Nextel and SK Telecom.
John Williamson