Three Chinese mobile networks plan to spend a total of 280 billion yuan ($41 billion) over the next two years building out 3G networks, for which the government will announce licenses at the end of 2008 or in early 2009. Plans like that would normally have equipment vendors around the world salivating, but in truth it’s Chinese vendors Huawei and ZTE that will likely gain most of the yuan in this transition. The two vendors are rare among their telco equipment-making peers in expecting growth in 2009 and both have cited the Chinese transition to 3G has the reason behind their optimism.
China’s three mobile carriers will each use a different flavor of CDMA, with China Mobile (s chl), the country’s largest carrier with some 450 million subscribers, using TD-SCDMA, a homegrown Chinese standard that isn’t even finalized yet. However, Huawei is already planning data cards for the standard in 2009.
Ericsson (s ERIC) said through a spokeswoman that it will also offer TD-SCDMA products (it, too, expects growth in 2009 driven by China and India’s 3G rollouts). However a Beijing consulting firm told the Financial Times that Ericsson (s eric) would likely only get 10-20 percent of the TD-SCDMA business. Other vendors appear less interested. Nortel (s NOT) doesn’t have any products planned for TD-SCDMA. Other vendors did not respond to requests for comment.
Smaller providers (which were created through a series of mergers to provide competition to China Mobile) will use more globally adopted standards. China Unicom (s CU), with 132 million subscribers, will license WCDMA and China Telecom (s CHA), with 28 million subscribers, will use CDMA2000.
As for Qualcomm (s QCOM), the granddaddy of CDMA licensing, the company said through a spokesman, “Qualcomm supports all 3G CDMA standards, including TD-SCDMA, which is based on CDMA technology. We are dedicated to nurturing the overall development of the wireless industry. As a member of the TD-SCDMA Forum, we pay close attention to the standard’s development in China and continue to strengthen our efforts as a TD-SCDMA partner.”
Since Qualcomm doesn’t get any royalties for TD-SCDMA they’re likely not huge fans, but the fact that the smaller carriers will offer variations on CDMA that do offer some royalty fees might serve as somewhat of a balm. However, it looks like China’s transition to 3G will be provide quite the feast for ZTE and Huawei, while Ericsson and Qualcomm will pick up a few scraps.