3gphone.jpgWhile China waits for for its own third-generation wireless technology to mature, it has given the green light to the two existing standards for 3G cellular networks, WCDMA and CDMA2000, which are already widely used in the rest of the world.

China's ministry of information industry yesterday approved the use of the two foreign standards, which are rivals to China's homegrown contender, TD-SCDMA. Despite being under development for several years, TD-SCDMA has yet to be commercially deployed in China — or anywhere else.

The Chinese government has yet to formally award operators licences to build 3G networks. Once that happens, it will result in billions of dollars in contracts, and the choice of technology will largely determine what share of the spoils goes to China's up-and-coming equipment industry and how much goes to the west.

Western equipment makers like Qualcomm own many of the patents on the two better-established technologies, and while they have tried to hedge their bets by also embracing China's own TD-SCDMA technology — see this Alcatel-Lucent announcement, for example — Chinese equipment vendors would undoubtedly get the lion's share of the TD-SCDMA contracts. A lot is thus at stake.

Xinhua, the state-controlled news agency, said that by allowing the two foreign standards into the Chinese market, the government has consolidated its “technology neutral” stance and offered an open market for different technologies.

In an earlier report, Xinhua quoted Xi Guohua, vice minister of information industry as saying that operators would be free to choose from the three competing technologies. “We will let the operators make decisions on their own which standard they will use and the government will only decide how many 3G licences will be issued,” he said.

Nevertheless, many observers scoff at the idea that the China will give its state-controlled mobile operators carte blanche when it comes to choosing a technology. Chinese insiders say the chronic delay in awarding 3G licences has been done deliberately to allow China's home-grown standard to mature enough to compete with the two foreign standards.

“The government wants China to be regarded as a leading country when it comes to technology and one way to achieve that is by imposing standards that favour local technology vendors,” says Sandy Shen, Shanghai-based research director with Gartner Group, a consultancy firm.

She says China's championing of technologies makes sense in emerging areas like 4G mobile networks — the successor to 3G — where the technology is immature and so there are no obvious winners, only contenders.

China is working closely with Japan and South Korea on the development of of 4G technology and it is preparing to submit a proposal to the International Telecoms Union, the telecoms standards body, for a standard that will allow mobile networks to carry data at super-fast speeds — but not before the next decade.

Meanwhile, back in the 3G world, China Mobile is now expanding a trial of TD-SCDMA to six cities from Xiamen in Fujian province, with a budget of 30bn yuan for the expansion.

According to Shen, the TD-SCDMA trial is really a “soft launch” of commercial 3G in China. The delay in awarding licences is thus something of a smokescreen as China has effectively given China Mobile the green light to start building a TD-SCDMA network. The trials should be complete in October. “By then, we should know whether TD-SCDMA can support large-scale deployment or not,” she says.

More on China's 4G plans in this earlier story. The seemingly interminable saga of China's 3G licences has been amply documented by us, most recently here and here