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September 12, 2000

China Unicom: looking to the 3G future

This is good news for US mobile operators and manufacturers who now have better opportunities in the Chinese mobile market. Although this was undoubtedly a political decision, designed to maintain good Sino-American relations, it paves the way for subsequent 3G networks later in the decade. In the meantime the competition between GSM and CDMA will be fierce.

By CBR Staff Writer

China Unicom will adopt CDMA technology for its mobile networks.

Mobile phone adverts often boast that their technology can bring the world closer together. However, whilst Europe uses GSM mobile telephony technology the US uses narrowband CDMA, developed by the US company Qualcomm. China however has so far relied on GSM, the technology used by China Mobile, the dominant state operator. In the past, promises to employ CDMA have been retracted by the state, much to the chagrin of US mobile companies.

News that China Unicom, the state’s second largest carrier, is to adopt narrow band CDMA technology may go some way towards improving Sino-American relations. The decision is partly a political one – by allowing Unicom to roll out both a CDMA and a GSM network China keeps both European and US vendors, not to mention the politicians, happy.

But Unicom also has one eye on the future: 3G networks will be based on a new form of CDMA technology – wide band CDMA – which has already been accepted as standard in Europe and Japan. Unicom can leverage some of its CDMA expertise when it comes to rolling out its 3G network.

Unicom’s adoption of CDMA is good news for US mobile phone companies, as it opens up the huge Chinese mobile phone market. The second-generation networks are still being built, so revenue growth is forecast to be high. If China had stuck with GSM only, opportunities would have been limited for US companies, but now there’s the potential for fierce competition, which the Chinese government will undoubtedly exploit.

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