Chinese authorities in March will kick off a second round of field tests involving third generation mobile communications systems, which should help them decide when and how to award operators with 3G licenses.

However, a shortage of 3G (third-generation) cell phones and the sluggish development of a Chinese homegrown 3G standard is casting uncertainties on the allocation of the 3G licenses.

There are three competing 3G standards: Europe-initiated WCDMA, US-backed CDMA 2000 and China's TD-SCDMA.

The Ministry of Information Industry (MII) will start field tests of WCDMA systems at the end of March, said Wang Zhiqin, deputy director of the Institute of Communication Standards Research at MII's Academy of Telecommunication Research.

Trials on CDMA 2000 will begin in April, followed by TD-SCDMA tests in May, she said.

Wang, a key figure involved in the trials, said the inadequacy of 3G phones remains the biggest bottleneck in 3G's development.

Twelve WCDMA cell phone models will be tested, including those produced by China's Huawei and Hisense, Wang told China Business Weekly.

There are no commercial CDMA 2000 phones yet. Manufacturers specially tailored some phones for the trials.

TD-SCDMA cell phones will not be ready for testing until the middle of this year, Wang said.

Manufacturers have yet to produce a TD-SCDMA phone for the tests, as the development of the Chinese standard lags far behind its rivals.

It also lacks wide industry support.

The Chongqing Institute of Posts and Telecommunications, in southwestern China, announced in November it had developed a phone for TD-SCDMA. The phone was reportedly the first of its kind in the world.

Institute officials said TD-SCDMA phones will be produced in small scale this year, and in large scale next year.

But industry insiders said the phones are still far from "real" TD-SCDMA phones.

The mobile phone subsidiary of Legend Group, China's largest PC maker, said last week it had inked a deal with China's Datang, a major developer of the TD-SCDMA technology, to produce TD-SCDMA phones.

It is not known when Legend's TD-SCDMA phones will be on the market.

The shortage of 3G phones has resulted in repeated delays in the global rollout of 3G services.

Arun Sarin, chief executive officer of Vodafone, Europe's largest GSM mobile phone network, said last week product-quality deficiencies will delay the mass roll-out of new 3G handsets throughout much of this year.

Dependable, affordable 3G handsets will not be available in large numbers until the fourth quarter, Sarin said.

Rene Obermann, chairman of T-Mobile International, agrees.

Wang said it is not unusual for 3G handset R&D to lag about a year behind the networks and systems.

But the shortage of 3G phones makes technical trials difficult, she said.

The 3G trials are scheduled to be completed by September.

"After September, we will probably not test WCDMA and CDMA 2000 any more," Wang said.

"But TD-SCDMA might have a chance to continue being tested, due to the government's support."

Industry observers have said TD-SCDMA will definitely find a niche in China's future 3G market, and that the government will not allocate 3G licenses until it makes sure the homegrown standard is viable.

"Several breakthroughs must be made in the TD-SCDMA technology," Wang noted.

Compared with WCDMA, which has been already put into use in some European countries, TD-SCDMA is an unproven technology. It has never been used to form a stand-alone network.

How and when the Chinese government issues 3G licenses will help determine which equipment makers snatch billions of dollars in contracts from the 3G network deployments, analysts said.

The 3G technical trials are crucial to the allocation of licenses, they said.

Industry insiders expected the issuance to occur before the end of last year.

Now, most observers believe it will not take place before the completion of the 3G trials, most likely in the first half of next year.

Wang said many uncertainties remain.

"I believe it's very unlikely that the government will award operators with 3G licenses before September. But it's still hard to predict, as there might be surprises," she said.

Rumors surfaced last week that China Netcom, the smaller fixed-line carrier, might gain the 3G licenses before year's end, ahead of other telephone service providers.

Netcom Vice President Zhang Changsheng said at a recent MII internal policy briefing that Netcom will actively participate in the 3G trials to prepare fully for operations of 3G services.

"China Network Communications Group, since its launch, has been eager to offer all the telephone services to customers," he said.

(Xinhua News Agency March 2, 2004)