China - 3G

China's 3G Failure

After a troubled development process, China's flawed homegrown 3G mobile standard gets an unofficial commercial launch

China Mobile will start selling heavily subsidized TD-SCDMA phones in eight cities from April 1. Officially it's a trial, because 3G licenses have not yet been issued. In reality it marks the commercial launch of 3G in China.

Coming six years after the first commercial W-CDMA network launched, it's hardly the advertisement for innovation that senior officials intended.

It means that 3G will be available to Olympics visitors only if they buy a TD handset. According to the International Olympic Committee, the inability to offer a widely-supported 3G network was the only infrastructure target Beijing failed to meet.

China Mobile has shown its confidence in the domestic technology by putting the business under its unlisted parent company. The China Mobile Group will give away free TD-SCDMA phones to 20,000 selected customers, laying out a monthly subsidy of 800 yuan ($114) each.

For all the happy talk about "China's own 3G", the experience has been a disastrous one for China's telecom sector. Vendors and operators alike have been unwilling participants in the whole exercise.

The upside is it's been a learning process, especially for the officials at MII and industry think-tanks who dream up these grand schemes.

It's worth noting that the main pretext for a home-grown technology—the cost of paying foreign license fees—in this case is void; Nokia-Siemens and Alcatel-Lucent own the biggest chunks of TD IPR.

Standalone 3G TD-SCDMA has been a commercial failure. But 4G TD-SCDMA will be LTE-compatible. A lesson learned.