By staff reporter Ming Shuliang

Supporters of China’s homegrown, third generation (3G) mobile devices standard TD-SCDMA have been riding a commercial rollercoaster for several years, but overall they’ve enjoyed a steady ride with the government.

Indeed, the government remains an ambitious backer of TD. And recent pro-TD development signals from Beijing make its future look even brighter.

Just a few months ago, TD appeared to be dying. The standard became a target of consumer complaints after network and service flaws surfaced during a commercial trial launched by China Mobile in April. In addition, companies tied to the standard’s development were upset when TD chipmaker COMMIT went bankrupt.

China Mobile and other companies betting on TD’s future may have wondered whether government support would waver.

“If the government insists on developing TD, it must create a profitable outlook for companies,” said a staffer at a TD research company. “At least, let’s see it try.”

Beijing Responds

Then Li Yizhong, from the Ministry of Industry and Information Technology (MIIT), tried to silence pessimistic speculation about the standard’s future. “TD must be successful,” he declared in June.

After Li’s statement, Deputy Minister Xi Guohua held a series of meetings with telecom experts to discuss a development strategy. A participant told Caijing, “It is very clear that the government will support TD development.”

Li took another step July 2 – apparently aimed at expanding commercial use of TD during the second half of this year – by requiring mobile operators to improve their TD networks and prepare to offer services during the Olympics in August. That gave the industry a shot in the arm.

Some sources said MIIT has set a target to increase TD users to 100 million within three years, although a senior manager at China Mobile balked at the claim, calling the market too immature. 

Meanwhile, industry leader China Mobile has continued pushing for TD. Telecom expert Li Jinliang said the company “is accelerating promotion of TD.”

“In the past, the signal for my TD cell phone was weak when I was home,” Li said. “But it has been improved a lot recently.”

China Mobile’s Effort

It’s clear that China Mobile plans to operate a national TD network. The company in June took over China Netcom’s TD network in Qingdao and China Telecom’s network in Baoding. A source told Caijing that China Mobile will launch commercial services in those cities by the end of July. 

At the same time, China Mobile has started accelerating hardware investment. Surprising equipment makers, the company bought 200,000 TD terminals in June. In its first-phase purchase in February, China Mobile only bought 60,000 TD mobile phones and 15,000 data cards.

China Mobile plans to expand the TD network to 28 major cities and invest 15 billion yuan by the end of 2008, a TD development source told Caijing. Another round of TD terminal purchases was expected in late July.

Since the network trial in April, however, customers complained about network quality and a lack of special services on their TD cell phones. But the situation should change following China Mobile’s announcement July 4 that it would buy around 40,000 TD phones tailored for the China Mobile Multimedia Broadcasting (CMMB) system, and offer mobile TV services to TD customers by late July.

To bolster its TD leadership, China Mobile recently joined with Vodafone and Verizon Wireless to develop the next technological step called TD-LTE as a major international standard. The company also reportedly applied to join the council of the TD-SCDMA Industry Alliance.

Winning the Market

Nevertheless, some experts remain cautious about TD’s future. They question whether it can compete on the market against the more mature 3G technology WCDMA.

A senior manager at Datang Mobile told Caijing that consumer buying decisions will determine whether TD succeeds and its industry players profit.

Li Mofang, a former chief engineer at China Mobile, noted that although Japan launched commercial use of WCDMA in 2000, it was not until 2006 that 3G development began accelerating in that country. “As a brand new technology, TD will also need time,” he said.

Moreover, some experts see trouble ahead for the TD network, at least in its early stages, since most Chinese consumers are familiar with the GSM network now in place.

The current TD network should be upgraded to provide market-competitive 3G services, one industry insider told Caijing.

China Mobile reportedly started upgrading its TD networks in May in eight cities, offering the High-Speed Downlink Packet Access system (HSDPA).

A TD-SCDMA Industry Alliance official said a TD-HSDPA data card is being tested and that cell phones using the standard may be released by the end of 2008.

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