Telecommunications: Primacy of Power and Regulatory Battles for Promoting National Standards - Part 17

Second, unlike WAPI, which was just a national standard, TD has long been accepted by ITU as one of the three 3G international standards. By adopting one of the international standards, China to a large degree is immunized from possible criticism that TD standard serves as another nontariff trade barrier to prevent foreign competition in its domestic market. As long as China is not giving up the other two international standards, its support for the TD standard is tolerated by the leading markets. In addition, so far China is the only country that will formally adopt the TD standard, but over 104 countries have allocated their TDD spectrum (Phoenix TV Online, 2006a). This at least provides some possibilities that Chinese manufacturers can export their TD equipment and products in the future.

However, the TD standard also leads to some serious concerns. The biggest difficulty facing the TD standard is that it is likely that only China will deploy this standard. Because there is no market for TD-SCDMA handsets or equipment anywhere else in the world, the costs of developing phones for consumers and infrastructure for operators are higher. WCDMA and CDMA 2000 have the advantage of large-scale international production. Thus foreign equipment providers and cell phone manufacturers are cautious about investing in this home-grown Chinese standard. Chinese operators also worry about their own future development, apart from the maturity of the technology itself. According to Lu Tingjie, Dean of the Economic Management School of Beijing University of Posts and Telecommunications, Chinese operators will have to shoulder the risks in future market scale, international cooperation, and international roaming service once they have adopted the TD standard (Tan, 2006). In the future, China might be able to penetrate into a few emerging markets in Africa and Latin America with the help of government policy support, such as aid, export credit, preferential loans, etc. China is more likely to follow the EU GSM expansion model by penetrating into developing markets which may not have standard of their own or a choice of preference. In November 2006, Romania conducted its first field test using the TD-SCDMA standard. But the limited adoption will definitely constrain further R&D investment on the standard's application, compared with the two dominant standards.

Another concern from the point of view of the Chinese network operator is real market demand. As a developing country, how many Chinese mobile phone subscribers will really have need for the complicated data processing and Internet access services? Due to large population of lowend subscribers (low-mobile services including “little-smart service” and personal handy-phone service) and the decreasing price of both GSM terminals and service prices, it will be difficult for TD-SCDMA to attract basic voice service subscribers with a much higher 3G subscription price.

Add comment

Security code

Copyright © 2019 | "The Theory of the Business"