3G – The Natural Follow-up to China’s Olympics

Six years ago when we launched Current Analysis’s wireless infrastructure practice, Chinese 3G license allocations were talked about on a weekly basis; 3G allocations and deployments, we heard (from many different sources) were imminent. Those sources were wrong.

Yet, realizing that Chinese 3G licensing was “imminent” five years ago, we can say one thing with certainty: even insiders find it nearly impossible to predict what will happen with wireless in China. This problem isn’t limited to the People’s Republic; worldwide, operator and regulator plans are often a mystery until they’re announced. Yet, in a market where the government, regulators and operators are so closely linked, China presents a particularly difficult market to predict.

Regardless, many people now believe that Chinese 3G is, indeed, forthcoming. And, with a wireless industry that has changed much over the years, this raises no shortage of questions.

• When will licensing actually take place? People smarter than me are suggesting this fall is the time to watch. Why? It’s the confluence of multiple events: TD-SCDMA’s maturation; China’s recent telecom reorganizations; growing wireless usage; China Telecom’s plans to spend $12 billion on its newly acquired CDMA network. More important, however, is the maturity of China’s telecom vendors. Had China moved on 3G allocations years ago, Huawei and ZTE would have had trouble delivering solid products. Today, they’re in a much better position, making it easier for the government to justify moving forward.

• Which vendors stand to win? Not surprisingly, Huawei and ZTE stand the most to gain. Again, they’re now ready to support 3G launches with proof points ranging from ZTE’s CDMA and TD-SCDMA success in China to Huawei’s WCDMA wins in Western Europe. Ericsson and NSN - the global WCDMA leaders with a strong history in China – may have the most to lose. Nonetheless, it’s safe to say that all vendors will be scrapping to build Chinese 3G momentum with competitive pricing, end-to-end solutions, novel R&D, etc.