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China to launch trial of 3G phones

By JOE McDONALD, AP Business Writer Fri Mar 28, 7:43 AM ET

BEIJING - China's main mobile phone company said Friday it will launch trial service of the homegrown Chinese next-generation standard next week, possibly moving the huge market closer to the long-anticipated rollout of new services. ADVERTISEMENT

Companies expect a multibillion-dollar wave of spending on equipment once China awards licenses for third-generation, or 3G, service. But Beijing has delayed a decision while it tries to develop its own system to compete with global standards.

China Mobile Communications Corp. said in a statement it will test the standard, known as TD-SCDMA, by issuing 20,000 phones and 5,000 data cards on Tuesday in Beijing and seven other cities.

The statement gave no indication how long the test would last, whether it would be expanded to other areas or when licenses might be awarded.

China has the world's biggest population of mobile phone users, with some 520 million subscribers, and standards decisions could have a far-reaching impact on the equipment market.

Third-generation mobile phone standards are meant to support features such as video and Internet access.

Beijing has been trying to create its own standard since 2001, hoping to create opportunities for its telecoms companies and reduce the need to pay license fees to developers of the global standards, known as WCDMA and CDMA-2000. China also has approved those standards for use.

The 3G decision comes as regulators are believed to be preparing to restructure China's telecommunications industry. The overhaul is expected to reassign mobile and fixed line assets among the main state-owned phone companies in an effort to create healthier competitors. The government has given no time frame for the changes.

The government said previously it hoped to have a 3G network in place before the Beijing Olympics open in August.

Suppliers such as Nokia Corp. and Motorola Inc. say they are ready to produce equipment based on the Chinese standards once the government picks carriers to receive 3G licenses.

TD-SCDMA has failed to attract users abroad, but industry experts say regulators are pressing Chinese carriers to use it alongside the global standards.

Chinese Mobile and its main rival, China Unicom Ltd., have declined to comment. Chinese news reports say they are reluctant to use TD-SCDMA because it doesn't work as well as the global standards.

U.S. officials say China has promised to let carriers pick their 3G standard but express concern they are being pressed to use TD-SCDMA. They say that would violate Beijing's free-trade commitments.

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China Mobile (in Chinese): http://www.chinamobile.com

China Unicom (in Chinese): http://www.chinaunicome.com