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By Kirby Chien

Written by: Staff
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BEIJING, Apr 25 (Reuters) China's plan to promote a domestic third generation (3G) wireless telecommunications standard could backfire and isolate domestic vendors from global markets, as a similar scheme did in Japan, executives said on Tuesday.

China is the world's largest telecoms market, with almost 400 million cell phone users and about 350 fixed-line users at the end of January, according to official data.

But the government is widely believed to be delaying issuing 3G network licences in order to give its unproven TD-SCDMA standard a fighting chance against the more established WCDMA and CDMA 2000 technologies currently being used around the world.

''It is very dangerous for vendors like Huawei and ZTE, which must divide their R&D effort between ... CDMA 2000 and TD-SCDMA,'' Sachio Semmoto, the chairman of Japan's eAccess Ltd., told Reuters on the sidelines of a technology conference on Tuesday.

''That is crazy,'' said Semmoto. ''You cannot find a TD-SCDMA product outside of China.'' Semmoto's company is a broadband service provider which recently secured a 3G licence in Japan.

The TD-SCDMA networks would be built mostly by China's Datang Group, Huawei Technologies, the mainland's largest telecoms equipment maker and ZTE Corp..

Japan adopted the PDC (Personal Digital Cellular) wireless standard for the previous generation (2G) of mobile phone technology, to protect the domestic industry, but ended up isolating them from the rest of the world.

Semmoto said Japan paid for that protection in the form of higher prices for telecommunications services and difficulty in exporting wireless technology to the world.

''Japan made a mistake in 2G by deploying PDC technology which was only used in Japan and the whole industry suffered,'' Jing Wang, the head of Qualcomm's operations in Greater China, told the conference.

''I certainly hope it will not be translated into a Chinese version,'' said Wang.

DELAYING 3G Analysts say China could issue 3G licences immediately based on the commercially viable WCDMA or CDMA 2000 standards, both of which suffered through long teething problems before the kinks were resolved in the technologies.

Even companies committed to the development of TD-SCDMA admit that off-the-shelf technologies would be much easier and cheaper to deploy than untested ones.

''It would be easier for us to deploy WCDMA or CDMA 2000,'' said Dominique de Boisseson, the chairman of Alcatel China.

''TD-SCDMA has to mature and in any case we still don't know what the Chinese government will decide.'' The hope is that the government will offer some form of dual licences so that no one company would be saddled with trying to deploy TD-SCDMA on its own.

Alcatel is working with Datang on TD-SCDMA.

Third generation mobile phone services promise faster Internet access and better multimedia features such as videoconferencing, but the initial launch of the much hyped service has been dogged by high costs, the lack of handsets and technical glitches.

State media said earlier this year that China had developed a citywide testing plan for TD-SCDMA, paving the way for the long-awaited issue of licences as soon as mid-year.

China Telecom Corp., the mainland's top fixed-line operator, and smaller rival China Netcom, are banking on 3G services to bring new sources of income as more and more customers migrate to mobile services.

China Mobile (Hong Kong) Ltd. is the nation's top mobile carrier.

REUTERS ARB GC1636

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