China set for issue of 3G licences

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China may issue third-generation mobile telecoms licences one at a time next year, with the first permit likely to require an operator to use the Beijing-backed TD-SCDMA standard, according to Christoph Caselitz, president of Siemens’s mobile networks division.

The Chinese government is widely expected to clear the way for the creation of 3G networks in early 2006, but many industry observers have predicted that up to four licences would be issued at the same time and that TD-SCDMA would play only a minor role.

However, Mr Caselitz said Beijing was likely to stagger the issue of licences throughout the year.

“I can imagine from the public discussions that we are having in China that TD-SCDMA may be the first licence to be issued,” he said at the 3G World Congress in Hong Kong.

Siemens, the German telecoms equipment vendor, is the China-backed standard’s biggest international supporter.

He said Siemens would invest hundreds of millions of euros in the Asian mobile market, in an attempt to overtake Nokia as the world’s second biggest provider of wireless telecoms equipment. “The key market in this endeavour is Asia . . . This fiscal year alone, we will be investing triple-digit millions of euros in Asia.”

The investment will help Siemens stake its claim for an “above-average share” in a market where the number of mobile subscribers is expected to soar from the current 820m to 1.2bn in the next five years.

Mr Caselitz stressed that his view on the 3G licences was speculative, but such an approach by China’s opaque and unpredictable telecoms regulators would be a huge boost to TD-SCDMA, which is commercially unproven and is far from a favourite among mobile telecoms
operators.

Mr Caselitz’s comments come amid other indications that the prospects for widespread use of TD-SCDMA in China are improving.

Lucent Technologies is forming an alliance with China’s Datang Telecom Technology to make TD-SCDMA equipment, Reuters reported on Tuesday.

Nokia, the Finnish mobile phone and network company, last month announced a Rmb900m ($111m) joint venture with Chinese counterpart China Putian intended to allow it to offer products based on TD-SCDMA.

Nokia and Siemens executives have previously said that TD-SCDMA would not be used as a national standard, but that it could play a complementary role in networks based on the rival European-favoured WCDMA technology. TD-SCDMA is an internationally accepted standard, but received relatively little attention until China adopted it in an effort to reduce dependence on
telecoms technology developed abroad.

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