Fixed-line giant China Telecom will jump straight to 3G (third-generation) mobile technology rather than build out 2G networks, a senior company official suggested over the weekend.

"The 2G cellular networks have been developed for more than 10 years, so China Telecom, as a newcomer to the wireless market, is unlikely to roll-out 2G networks," said Wei Leping, chief engineer of China Telecom Group, the parent firm of Hong Kong-listed China Telecom Corp.

"Instead, as the timing is ripe for the roll-out of 3G networks, China Telecom will directly deploy the more-advanced 3G networks, once the government awards us the licence," Wei told China Business Weekly on Sunday in a telephone interview.

China Telecom is currently barred from the wireless market.

Its 3G push would put pressure on China Mobile and China Unicom, as the cellular duopoly's fledgling 2.5G services have not taken off, analysts suggested.

China Mobile is not as eager as China Telecom to roll out 3G services, as it has invested in 2.5G networks, they said.

3G is already mature worldwide, in both technology and commercialization, Wei noted.

"3G is developing very fast in the world this year, especially the 12 WCDMA networks already deployed," the industry veteran said.

European-led WCDMA (wideband code division multiple access) is a standard for 3G wireless communications. Its competitors are the US-backed CDMA2000 and Chinese-developed TD-SCDMA (time division synchronous CDMA).

Some hiccups should not thwart the development of 3G technology, Wei said.

"New problems in 3G development will take some time to fix, and will have to be addressed gradually after the roll-out," he said.

Japan's NTT DoCoMo, for example, the first operator to launch, in October 2001, a high-speed 3G service based on WCDMA, has experienced slow adoption due largely to software glitches, high prices, poor battery life and limited coverage areas.

However, the number of DoCoMo's 3G subscribers more than doubled to 480,000 in the year's first five months, as the firm launched a series of new handsets - with 200 more hours of battery life.

The company also expanded its coverage area to 92 per cent of Japan.

"We should not wait too long, otherwise China Telecom and the domestic industry will pay a high price (for the delay of 3G roll-out)," Wei said.

Next year will be the right time to start deploying 3G networks, he said.

"The deployment will take at least one year," he added.

The Chinese Government has not issued 3G licences. Nor has it indicated when the issuance might occur, keeping the industry and media guessing.

The issuance had been expected to occur late this year, at the earliest.

It appears unlikely the licences will be handed out this year, as authorities are awaiting the results of 3G tests, industry sources said.

Wei declined to comment on which standard China Telecom will choose for its 3G networks, though the company has shown increasing interest in WCDMA.

The company chose WCDMA for a public interoperability test, which started this month, Wei said.

China Telecom previously tested, secretly, CDMA2000 in Quanzhou, a city in East China's Fujian Province.

Insiders said China Telecom had hoped to choose CDMA2000 if it secured the licence this year, but would opt for WCDMA if the issuance was delayed.

That is because CDMA has developed smoothly while WCDMA has experienced several hiccups and still required improvements.

If the 3G licences are allocated next year, carriers and vendors would have enough time to fix problems with WCDMA.

Officials with China Telecom indicated WCDMA has a better prospect in a long term as it is the global mainstream 3G standard which has the most supports in the industry and more than an 80-per-cent share of the 3G market.

"We will definitely support the home-grown TD-SCMDA standard," Wei said.

But he acknowledged TD-SCMDA must rely on the 2G core networks.

He declined to say if China Telecom will discard TD-SCDMA if the company goes straight to 3G.

It is rumoured China Telecom's TD-SCDMA test failed to proceed due to a lack of mature equipment based on the standard.

TD-SCDMA has been dubbed as an "underdog" in the 3G market, due to unproven commercialization, a lack of investment and industrywide support.

"China should choose the global mainstream standard (WCDMA) as the dominant technology for the 3G roll-out, while TD-SCDMA should serve as an add-on," suggested Lu Tingjie, a renowned professor with Beijing University of Posts and Telecommunications.

"We should not expect TD-SCDMA to produce very good economic results during the commercialization. Maybe accumulating expertise and technology for the future development of fourth generation (4G) technology should be TD-SCDMA's major mission."

(Business Weekly 07/22/2003 page1)