Telecommunications: Primacy of Power and Regulatory Battles for Promoting National Standards - Part 3

The section on Evolution of wireless telecommunication technology and the emergence of 3G technologies discusses the evolution of wireless telephony technology and the emergence of the three dominant third generation (3G) standards. The section on Government support analyzes the implications of strong government support to the TD-SCDMA (TD) standard on the prospective development and commercialization of this particular standard and on global competition. The section on Prospect of China's TD standard: Will it succeed in global competition predicts whether TD standard will succeed in global competition. The section on Implications concludes the chapter by focusing on the policy implication of this TD case study.

Standards and the motivations behind China's national standards strategy

States have always played a role in structuring and regulating markets, and “the existence of the state is essential for economic growth” (North, 1981, p. 20). Today, in the technology sector, standards can determine the fate of an individual firm, the industry as well as the market competitiveness of a country. What is a standard? A standard is a technical specification for a product, process, or service (Mattli & Buthe, 2003). Standards are used to ensure uniformity and interoperability. It is estimated that 80% of the total value of global trade is affected by standards and related technical regulations and testing procedures (Suttmeier & Yao, 2004; Tan, 2006; Mattli & Buthe, 2003). Standards play a critical role in domestic and international markets. If a standard achieves broad acceptance in a market, it may lead to the abandonment of technologies supported by alternative standards and the domination of a market by a specific technology.

Given the growing importance of standards in the global economy as well as China's rapid integration into the global market, Chinese standards development have acquired considerable policy importance. What are the driving forces of this policy initiative? First, technology transfer and learning/absorption supported by developmental states are more and more difficult in today's knowledge economy (or what some others are calling the “new economy”). From the 1960s to the 1980s Japan and other newly industrialized East Asian countries adopted the “imitation to innovation” approach to catching up with the industrialized countries. For the last two decades China has followed the East Asian developmental model, particularly that of Japan and South Korea.

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