China starts building 3G trials

China has quietly begun building large-scale trial networks based on its home-grown third-generation (3G) mobile telephone standard, say industry participants.

Construction of the networks in Shanghai and other cities is the strongest evidence yet of China?s determination to create a central role for the TD-SCDMA standard as part of its long-awaited roll-out of 3G services.

It will also fuel expectations that Beijing plans soon to issue a TD-SCDMA licence to China Telecom, the leading fixed-line operator, which is running the Shanghai trial along with two other phone companies.

The Shanghai trial involves two core networks and 16 ?base stations? that cover commercial districts, development zones and residential neighbourhoods, one industry participant said.

?They started with Shanghai?.?.?.?and are also drawing up plans for other cities,? said another participant. ?[The trial networks] will be progressively expanded to a pretty big scale.?

BDA China, a telecoms consultancy, said by introducing TD-SCDMA, Beijing hoped to give China Telecom an edge over domestic rivals that use foreign-backed standards and to support local equipment providers.

A headstart would help to make up for the lack of maturity of TD-SCDMA technology compared with the rival European-backed WCDMA and US-supported CDMA-2000 standards.

It would be good news for local equipment vendors such as Datang Telecom, TD-SCDMA?s biggest backer, and ZTE, which makes products for the other 3G standards but is strong in TD-SCDMA and is supplying the equipment for the Shanghai trial.

Equipment vendors have been awaiting the arrival of 3G in China, the world?s most populous telecoms market in terms of subscribers, with each local operator likely to spend about Rmb50bn ($6.2bn) over two or three years to build a national network.

Beijing?s telecoms regulators remain tight-lipped about their plans, but there have been increasing signs of likely action.

State media this week quoted Xi Guohua, information industry vice-minister, as saying ?decision time? had arrived for 3G licensing policy and that TD-SCDMA must play a central role. ?Now the technology and the industrial chain for this standard has taken shape,? Mr Xi said. ?TD-SCDMA must take a place in Chinese 3G and it may be run by a strong operator.?

His remarks were seen as a signal that China Telecom would be soon allowed to build a nationwide TD-SCDMA network.

The timing of any move remains unclear amid speculation about a potential restructuring of the telecoms market.

However, BDA said Beijing would not wait to decide on industry reorganisation before moving on 3G.