Siemens, Huawei Form 3G Venture in China

Looking to secure 3G leadership in the world’s largest mobile
communications market, Siemens Information Communication Mobile Group
Friday joined forces with Chinese telecommunications player Huawei Technologies to create a joint venture focused on the TD-SCDMA mobile communication standard.

Developed by Siemens, TD-SCDMA, or Time Division – Synchronous Code Division Multiple Access, combines an advanced TDMA system with an adaptive CDMA component in an effort to help 3G network operators manage both symmetric circuit switched services (like voice and video) and asymmetric packet switched services (like mobile Internet data flows).

The technology is complementary with both GSM , the de facto standard in Europe and Asia, and the W-CDMA 3G standard. China is essentially pushing the standard as its own.

China has 240 million mobile phone subscribers today, Siemens said, making
it the largest mobile communications market in the world. Siemens said it
intends to become the 3G market leader in China, and is looking to the
TD-SCDMA technology to do it.

The new company, with an investment of more
than $100 million, will be based in Beijing. Siemens mobile will hold 51 percent of the venture and Huawei will hold the remaining 49 percent.

The company will develop, manufacture and market TD-SCDMA technology.

Siemens said it has a small bandwidth of 1.6 MHz, allowing flexible
allocation of the spectrum, and allows for seamless hand-over between
TD-SCDMA and GSM.

The Chinese Ministry of Information Industry allocated 155 MHz spectrum to
TD-SCDMA in October 2002, and both Siemens and Huawei said they are
confident that TD-SCDMA will succeed in China and could encourage operators
outside of China to adopt the standard.

“Together, we will make TD-SCDMA a success in China,” said Christoph
Caselitz, president of Siemens mobile Networks. “Siemens mobile is able to
offer both technologies TD-SCDMA and W-CDMA to Chinese mobile operators. It
is Siemens’ stated objective to be the 3G market leader in China.”

The companies said their joint venture will initially focus manufacturing
and marketing efforts on China, placing emphasis on the market introduction
of TD-SCDMA Radio Access Network (RAN) infrastructure products. Those
products are currently undergoing field tests in China, and the companies
said they expect the first commercial products in that area to be available
in China at the beginning of 2004.

The companies claimed their joint venture’s products will help operators
attract more mobile phone subscribers, “especially in low-penetration
areas,” while also covering the need for the rollout of highly efficient
networks to satisfy existing and future demands.