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Chinese telecoms operators are expected to start building pre-commercial 3G (third generation) mobile networks soon, based on the home-grown technology standard TD-SCDMA.

The pre-commercial networks will likely be a major boost for TD-SCDMA development, which is playing catch-up with rival foreign standards WCDMA and CDMA 2000.

The 3G networks provide faster service and combine both phone and online functions.

Work on the networks is expected to begin at the end of this month at the earliest, said Tao Xiongqiang, vice-president of state-owned telecoms equipment maker China Potevio Company Limited.

Regulators have not yet decided which operators will be allowed to build the pre-commercial networks, he indicated.

"Regulators are still discussing with operators about the planning of the network build-up," Tao said.

"It's more likely that more than one operator will build the pre-commercial network."

Rumors have been swirling that fixed-line incumbent China Telecom will get the country's first 3G licence, based on the TD-SCDMA standard, to build 3G networks.

Industry observers expect the regulators to give China Telecom some preferential policies and financial aid to speed up the maturity of TD-SCDMA.

If China Telecom secures the nod to solely build the pre-commercial TD-SCDMA network, it could increase the possibility that the fixed-line will get 3G licence first.

Tao expects the build-up of a per-commercial TD-SCDMA network to last at least three months.

If the test of the pre-commercial network is successful, that could greatly speed up the development of TD-SCDMA as well as the licensing process. Telecoms equipment makers have been eagerly awaiting the licensing, which could unleash big purchase orders.

A nationwide 3G network is expected to cost at least 200 billion yuan (US$25 billion) and China is expected to build three nationwide networks based on TD-SCDMA, WCDMA and CDMA 2000.

Tao was reluctant to predict the timing of the 3G licensing, but some industry executives and analysts expect it to happen in the second half of this year.

"The licensing process has become too complicated (in the past months), due to a number of factors such as a possible restructuring of the domestic telecoms industry and involvement of a number of government agencies," said Tao.

(China Daily January 6, 2006)