Telecommunications: Primacy of Power and Regulatory Battles for Promoting National Standards - Part 11

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Evolution of wireless telecommunication technology and the emergence of 3G technologies

Over decades of development, the mobile telecommunications industry has undergone tremendous technology innovation from first generation (1G) analog to second generation (2G) digital, to today's third generation of advanced digital technology. After the advances of pure voice services of 1G technology, both 2G and 2.5G are now able to provide a number of more advanced services including short message and single image. But with a data transmission rate ranging from 144kb/s to 384 kb/s, the current technology cannot keep up with growing demand, especially recent efforts to integrate mobile telecommunications with the Internet. This can only be made possible with broadband capacity and the speed of 3G technology.

During the 2G era China's mobile market has been dominated by foreign companies. For example, Nokia, Motorola, and Ericsson have been the winners in China's handset market and the same has been for the high-end telecom equipment market, including switcher, fiber networks, cellular base stations, etc. More than 90% of China's 2G products is dominated by foreign suppliers (Li, Xie, & Zhu, 2005, p. 38). Being both the biggest cellular phone market and the biggest handset production center in the world has not brought much benefit to China's profit margin. As a latecomer to 2G cellular services, China does not own important patents associated with the 2G standards. Consequently, Chinese handset makers have had to sign license agreements with U.S., EU, Japanese, and South Korea telecom companies and pay various royalties fees. Since the 1990s, China has spent billions of dollars purchase equipment. One study shows that during the 1G era China paid foreign patent holders a total of US $30 billion (RMB 250 billion) and during the 2G era China paid about US $60 billion (RMB 500 billion) (Shu, 2008).

Since China lagged behind in previous telecom standard activities, it presently lacks intellectual property in core technologies, resulting in a loss in the current market. Today Beijing is hoping to exploit the “latecomer's advantage” and leapfrog to the frontline of the 3G era with its own TD standard. TD-SCDMA stands for Time Division — Synchronous Code Division Multiple Access. TD-SCDMA is a third generation mobile telephony standard developed by China Academy of Telecommunications Technology (CATT) in collaboration with the Chinese company Datang Telecom Technology Co.

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