TD-SCDMA: Tough Fights and Trough Rights

In the Hutong
Putting away the goose down, pulling out the shorts
2117 hrs

Much has been made of a recent remark by Chen Haofei, Secretary-General of The TD-SCDMA Forum, noting that China Mobile had already invited bids to supply network gear for the operator’s eight-city trial 3G networks based on the locally-developed standard.

(TD-SCDMA, of course, stands for “Time Division Synchronous Code Division Multiple Access.” In the wake of the painful development process around the standard, wags here in the Hutong have termed it the “Tang Dynasty System that Can’t Do Much of Anything.”)

It looked like most of the business – like 90% – would go to local producers, frustrating a friend of mine in the mobile communications industry in Europe.

He was steamed, but I pointed out a few important points:

1. Nothing is real until the gear is delivered, in place, tested, and working. Until then, all bets are off. Quoting my mentor Corb Donohue, in China, the longest distance between any two points is the distance between the high-five and the check.

2. This is only a trial system. There will be plenty more opportunities to get in on contracts. Frankly, what a blessing to be left out of this first mess. Trying to integrate a network using a technology nobody has ever used before in a highly-politicized environment cannot be any sales engineer’s idea of “fun.”

But most important:

3. China does not create these massive infrastructure projects in order to provide a commercial buffet to foreign companies. Whether we’re talking about the Beijing Olympics, the Three Gorges Dam, direct-to-home satellite television, railroad upgrades, airport construction, or telephone networks, regardless of the project you can be assured that the government is going to give every possible penny to local companies first. Once as many contracts and subcontracts as possible are handed to the locals, then – and only then – will they begrudgingly turn to foreigners.

And yet, the announcement of a major infrastructure project always gets a long list of foreigners drooling, and the scrambling begins.

I’d say the best position to be in with the TD-SCDMA trial network is as a close observer in constant conversations with China Mobile. Learn from the mistakes and challenges others experience, and get your people to work on second-generation projects.

Either way, be ready for a fight when the actual network is launched. The challenge in the end won’t be making the sale: it’ll be making any money in the hypercompetitive typhoon the network will create among equipment vendors.


About David Wolf

An adviser to corporations and organizations on strategy, communications, and public affairs, David Wolf has been working and living in Beijing since 1995, and now divides his time between China and California. He also serves as a policy and industry analyst focused on innovative and creative industries, a futurist, and an amateur historian.
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