Michael Cai: Speculations abound for China's 3G market outlook

Yuanzhe (Michael) Cai of Parks Associates posts at his personal The China Blog about speculation taking place over the adoption of TD-SCDMA and other 3G technologies in China. He cites an article that states the Chinese Government "is asking China Mobile, Telecom, and Netcom to build TD-SCDMA test networks, covering 3,000 people each." The article also says "the Ministry of Information Industry (MII) has tightened its control over W-CDMA network trials and ordered the three operators, particularly China Mobile, to stop the current constructions of W-CDMA pre-commercial networks.” Cai remarks that:

There are still plenty of uncertainties regarding who will get the 3G licenses first and who are likely to adopt the standard. Although China Mobile has publicly voiced its preference for W-CDMA, it’s still possible that it could operate a hybrid TD-SCDMA and W-CDMA network. I believe Siemens and other vendors have been touting the complimentary nature of the two technologies and the easy migration from GSM to TD-SCDMA. There are also companies working on dual-mode chipsets.

Cai also points out another article where Jefferies & Co. analyst George Notter prognosticates that the Chinese government "may break up Unicom and give the GSM piece to China Telecom, which will then combine it with TD-SCDMA. China Netcom, the second largest fixed line operator, will acquire the CDMA piece." Cai concludes:

There are always plenty of conspiracy theories about China’s telecom market, since the market is less transparent than western markets. Many of such theories will be proven wrong in the end but I do believe that first TD-SCDMA will happen-the government has great hope for it, has waited for so long, and won’t let go, and second, the market will become more open and Chinese companies, especially public companies. have to learn to become more accountable for shareholders, not the government.