ChinaTelephone.jpgThe long-awaited go-ahead for commercial 3G services in China could be just around the corner.

Taiwanese handset makers are preparing for production of dual-mode GSM/TD-SCDMA handsets in China, according to DigiTimes, which suggests an official announcement may not be far off.

One of the Taiwanese manufacturers, Inventec Appliance, is currently testing its handsets with China's Datang Mobile, which helped create the TD-SCDMA standard. The latter also recently announced that it had chosen US vendor Freescale to supply digital signal processors for a 3G basestation design.

Another Taiwanese firm, Foxlink, is building a TD-SCDMA handset production line in China, and the Chinese R&D unit of BenQ is also developing handsets, according to DigiTimes' sources.

Taiwanese handset makers are limbering up in preparation for the award of 3G licences that they apparently expect to heavily favour the home-grown TD-SCDMA standard.

Unlike the rival CDMA2000 and W-CDMA standards, which are now widely used outside of China, TD-SCDMA has yet to be used anywhere to offer commercial services, although it is currently being trialled in China.

The award of the 3G licences may be only months— or even weeks — away according to Barron's ($) . The paper says the results of a lengthy test of the home-grown TD-SCDMA standard is due at the end of October. In addition, a conference on 3G is scheduled for November.

If the go-ahead is given, it should mean a rush of orders for the telecoms equipment industry. China is promoting TD-SCDMA partly to boost the technological competitiveness of China's telecoms equipment makers and so one can expect the lion's share of orders to go to Chinese firms.

However, non-Chinese vendors are keen not to miss out on the feast and so they have been making encouraging noises about the TD-SCDMA technology. For example, Ericsson recently described TD-SCDMA as a “cutting edge” technology, even though Ericsson promotes W-CDMA for the rest of the world.

Analysts at BDA China believes the ultimate success of the new standard will depend on whether TD-SCDMA can expand into overseas markets and achieve economies of scale. However, the consultancy believes the standard will not gain significant momentum overseas.

BDA has an excellent analysis of the Chinese and foreign players competing in the fledgling industry that is forming around the TD-SCDMA technology. It singles out Motorola and Samsung, as the handset vendors best placed to benefit from the new standard.

More on China's 3G saga in this earlier EngagingChina report.

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