China Unicom gives up CDMA

China Unicom has scrapped a project using current CDMA wireless telephone standards, but will build a network using later-generation CDMA technology, the official China Daily Business Weekly said on Sunday.

“The timing of construction of a narrowband CDMA system has become unfavourable, so we plan to build a wide-band CDMA network,” a China Unicom official was quoted by the newspaper as saying. “We have to minimise the risks of such a huge investment,” said the official, who was not identified.

At a meeting with analysts in Hong Kong on Monday, China’s number two state telecommunications carrier said it had no reason to use current-generation CDMA technology, marking a setback for U.S.-based Qualcomm Inc.

But later in the week some Unicom officials sent conflicting signals on the fate of plans to build a CDMA network capable of serving 10 million subscribers by the end of this year.

Unicom will use third-generation CDMA, which is likely to become widely commercially available in 2003, the newspaper said. It gave no specific timetable for the new project.

Industry analysts have said it made little sense for Unicom to deploy a second-generation CDMA network to compete with its GSM business – especially with 2.5 and 3G coming soon. Generation 2.5 CDMA allows for higher-speed data transfer, while 3G will be capable of broadband multimedia applications. Unicom’s estimated seven million subscribers now use the competing GSM wireless standard.

Questions over the future of the current project have hurt the share price of Qualcomm, which signed a royalty agreement with Unicom in February. The newspaper said that agreement “could be cancelled” but Qualcomm would benefit from Unicom’s use of more advanced CDMA technology in the future.

Unicom is preparing to launch a multi-billion dollar initial public offer to raise funds for network expansion that will help it compete with state giant China Telecom, parent of Hong Kong-listed China Mobile (Hong Kong) Ltd. Reuters