MUCH FASTER: The TD-SCDMA handset wins applause as it allows users to surf the Internet much faster than second-generation mobile phones

PEI XIN

The third-generation mobile phone services (3G) based on China's homegrown TD-SCDMA standard finally entered commercial trials in eight cities starting April 1.

China Mobile Communications Corp., the parent company of Hong Kong-listed China Mobile Ltd., launched the trial services in Beijing, Shanghai, Tianjin, Shenyang, Guangzhou, Shenzhen, Xiamen and Qinhuangdao.

For its first batch of users, China Mobile invited 20,000 representative customers from different industries and backgrounds to participate in the testing of TD-SCDMA handsets, networks and services. The company provides these customers with data cards and handsets priced between 2,000 and 4,000 yuan ($286-571) free of charge, and 800 yuan ($114) per month in service fee rebates. They also sell TD-SCDMA handsets and launch several service packages for walk-in customers, in the hope of winning more users.

Complaint

In spite of all these efforts, recent on-the-spot interviews by Beijing Review at several service outlets in Beijing found customers complaining. Their feedback exposed a lot of problems with the 3G networks.

A selling point of the services is mobile TV, which is said to allow users to watch the Beijing Olympic Games via the TD-SCDMA handsets in a few months. But some customers failed to receive any signal on many of the handsets at one outlet in Zhongguancun in Haidian District. Zhang Guoguang, one salesman there, said the classical 3G services including mobile TV and video conference had not been introduced for the time being due to the unstable network performance.

"Even if the 3G networks get stable," Zhang said hesitantly, "I wouldn't advise any friend to buy a TD-SCDMA handset right now."

For a majority of buyers, the biggest attraction of a TD-SCDMA handset is the real-time video calling services. Some customers found the 3G networks under test caused the signal and the screen display to dither, blur or be interrupted. Besides, video calling is only possible when both sides have a TD-SCDMA handset.

Wang Xin, a college student in Beijing, bought two handsets, envisioning he will soon see his girlfriend every time he makes a call to her.

"None of my friends has such a handset," Wang explained. "It will only function as a decoration if I didn't buy two at one time."

During the trial period, every customer is allowed a maximum free data flow of 10 megabytes per month and will be charged on the overflowed services. That means there is no charge on the first three MP3 downloads, or 10 visits to an Internet portal, a far cry from supporting the powerful capacity of 3G networks.

"The restriction on data flow is largely because the imperfect 3G networks at present cannot support large quantities of customers to enjoy Internet-related services," said Zhang.

Despite all these defects, one improvement of the TD-SCDMA handsets over the second-generation (2G) handsets is that it allows the user to surf the Internet much faster. Its average download speed is 130 kbps, while that for a general packet radio service (GPRS) mobile phone is approximately 50 kbps.

The current performance of TD-SCMDA networks is far from matching what most Chinese customers have envisioned for almost eight years. In a recent announcement, the TD-SCDMA industry alliance said they hoped the users would understand problems are inevitable during the commercial trials and report problems they identified to operators or handset producers in time to help the industry and the market mature.

Immature market

"The 3G market in China, either in terms of the network operators or the customers, is not ready to host the 3G feast," said Qian Liang, associate professor of electronic engineering with the Shanghai Jiaotong University, to Oriental Morning Post.

Qian thought the TD-SCDMA networks have to be improved in many aspects. "The homegrown TD-SCDMA standard is not a mainstream 3G standard," said Qian. "The mainstream is WCDMA and CDMA2000, which account for 80 percent of the market, while TD-SCDMA takes up around 15 percent.

"Major overseas wireless communication operators have been investing on the WCDMA standard, and only several domestic enterprises are engaged in mobile hardware and software developing based on the TD-SCDMA standard," said Qian. "They are inexperienced in the design and development of mobile phone chips and antennas. "

Major services such as mobile TV and real-time video calling haven't been introduced till now, which shouldn't be interpreted as technological defects of the TD-SCDMA standard, said Qian.

"It's the problem of software design and business model in the industry if customers don't think there are complete 3G services at present in China," said Qian. "It's the operators who chose some of the services to begin with."

It's a must experience for users like Wang, the few in China to have the first taste of 3G services, but in mature markets like South Korea, it's quite different. The number of mobile phone subscribers in the country stood at 43.5 million at the end of 2007, or 89.3 percent of its total population. Of that, 13.1 percent, or 5.7 million users, subscribed to 3G services. In China, 39 percent of the country's population, or 525 million, had mobile phones in 2007, while the number of 3G users is a little more than 20,000 at present.

"Insufficient demand is the direct reason," said Qian. "I wouldn't consider buying one until one third of the GSM users switch to 3G services, because the time for large-scale 3G promotion wouldn't mature until 10 percent of mobile users choose 3G services, according to experience of overseas operators."

According to a report by ABI Research, a New York-based technology market research firm, the growth of GSM users will decrease from more than 22 percent in the financial year 2006-07 to lower than 14 percent from 2008-09 worldwide, largely due to the fact that more and more users will switch to 3G networks. The number of 3G users increased nearly 83 percent from 2006 to 2007.

Business opportunities

Immature as the market seems to be, many companies have been engaged in developing related services based on different 3G standards.

The largest Chinese search engine, Beijing-based Baidu Online Network Technology Co. Ltd., announced on April 10 that it would join the Hong Kong-listed China Netcom Group Corp. Ltd. to do the research, development and testing of 3G mobile research services. Baidu will take advantage of the experience to be accumulated during the cooperation and take the lead in the Chinese mobile search market.

Microsoft Corp., which has invested hugely in the Chinese market, also supports the TD-SCDMA standard.

"Services around mobile communications, the Internet and PC will integrate into a new industry which enjoys huge potential in China," said Zhang Yaqin, Chairman of the Microsoft China R&D Group at the Boao Forum for Asia 2008 this April.

Microsoft will avail itself of PC advantages to cooperate with mobile network operators and explore a brand-new market and more customers.

"The platform of Windows Mobile supports 3G technologies, including China's TD-SCDMA technologies," said Zhang.

Thanks to 3G technologies, shopping via mobile handsets becomes a reality. China's first large mobile business-to-consumer (B2C) e-commerce platform, the Mobile Shopping Mall platform, was launched on April 9. The platform, where small businesses specialized in clothes, food, and living and entertainment services gather, makes these useful information services accessible to mobile phone customers.

The 3G commercial trials have given impetus to the development of such a platform and more 3G applications.

"The Beijing Olympic Games will provide us with good opportunities for commercial application promotion based on 3G mobile phones," said Yang Jian, General Manager of the platform developer Beijing UFIDA Mobile Business Technology Co. Ltd. "We are going to cooperate with Alibaba and Taobao, China's two largest online marketplaces, and allow customers to finish 80 percent of their online shopping via mobile phones."

What Is 3G?

The 3G refers to the third generation technology of personal and business wireless technology, especially mobile communication.

In May 2000, the International Telecommunication Union (ITU) recognized that the mainstream 3G standard should be CDMA (Code Division Multiple Access). Thus, CDMA2000, WCDMA (Wideband-CDMA) and TD-SCDMA (Time Division-Synchronous CDMA) became the three major 3G standards.

WCDMA: It's the dominating 3G standard in Europe. Manufacturers who base their services on the GSM system in Japan and North America, such as Lucent and Sharp, also support the standard.

CDMA 2000: It's a standard developed by San Diego-based Qualcomm and has major supporters from Japan, South Korea and North America.

TD-SCDMA: The Chinese standard is cheaper for equipment upgrading compared with WCDMA or CDMA2000.