China Mobile Ltd. has missed out on Apple Inc.'s iPhone and other hot smartphones because China's government forced the Chinese company to build its 3G network with a homegrown technology not used elsewhere.
Now, the world's biggest carrier, with more than 611 million subscriber accounts, is looking to improve its situation as it prepares to roll out a fourth-generation network.
China's government, which owns all three of the nation's telecommunications carriers, saddled China Mobile with TD-SCDMA, a third-generation wireless technology developed in China, because Beijing thought the company's size would help promote the technology. The government let the other two, smaller, carriers employ the foreign-developed protocols that are used in other markets.
Now, the industry is moving toward a fourth generation of mobile technologies, part of a migration that allows faster, pricier data services. China Mobile has backed a standard called TD-LTE, for time-division long-term evolution. Analysts said the company has a shot at reversing the fate it suffered with 3G, largely because the company has worked to build international support for the technology.
"One of the key lessons of TD-SCDMA is that, despite the power of China Mobile, they cannot create a global ecosystem on their own," said Tucker Grinnan, head of Asia telecom research for HSBC in Hong Kong. "TD-LTE provides the potential for a global-scale technology with a viable global ecosystem."
Behind the arcane alphabet soup is an important battle for technological influence and profits. Companies that obtain key patents for cellular technology, such as phone-chip maker Qualcomm Inc. or equipment vendor Telefon AB L.M. Ericsson, can make billions of dollars from royalties when other companies make products that use their intellectual property.
China's government has long aimed to reduce the country's reliance on foreign technology by backing technologies like TD-SCDMA. The world's most common 3G technology is WCDMA, while CDMA 2000 is used by a few carriers in the U.S. and countries such as South Korea.
China announced 3G mobile licenses for its three carriers in early 2009. China Unicom (Hong Kong) Ltd. was assigned to use WCDMA, while China Telecom Corp. got CDMA 2000. That meant they were able to sell the full range of 3G smartphones that manufacturers produced for global markets using those technologies. Unicom, for example, started offering the iPhone in 2009, and sold 600,000 units of the iPhone 4 model in less than two months last year.
But TD-SCDMA hasn't been used on any other major network in the world. As a result, smartphone makers have to adapt their handsets to work on China Mobile's network, which can be costly. Manufacturers need to swap out parts like chip sets and antennas and might have to re-engineer circuit boards. A handset redesigned to work on TD-SCDMA could cost the carrier 15% to 25% more than a standard version of the phone, estimated Phil Redman, an analyst at market-research firm Gartner Inc.
Handset makers like Nokia Corp. were slow to offer phones supporting China Mobile's 3G standard. Apple has never done so, though China Mobile has said for years that it is in talks with Apple to offer the iPhone.
China Mobile leads the country's market in 3G subscribers, with 43% of China's 74 million 3G accounts at the end of May. But that is a far smaller share than the 70% it has of China's 822 million 2G accounts.
With 4G, most carriers so far have favored a different version than China Mobile's technology, called FDD-LTE. In the U.S., Verizon Wireless introduced 4G services using the standard last year, and AT&T Inc. will do so in some cities this summer.
But there are also major carriers interested in TD-LTE, which China Mobile is using. Bharti Airtel Ltd., India's largest telecom company by users, has said it will adopt the protocol. U.S. wireless-service provider Clearwire Corp. last year said it would run tests with both versions of LTE. And in Japan, a unit of Softbank Corp. plans to introduce a service this year that it says will be compatible with TD-LTE.
China Mobile has encouraged suppliers and other mobile carriers to support the technology. Analysts said Chinese telecom-equipment maker Huawei Technologies Co. also has been a key advocate.
Analysts said development of supporting equipment for TD-LTE has lagged behind that for FDD-LTE by more than six months. But TD-LTE has advantages: It makes more efficient use than does its cousin of wireless spectrum, a scarce resource.
In part because TD-LTE has international support, it could mean access for China Mobile to a wider range of handsets and less-expensive components, analysts said. China Mobile Chairman Wang Jianzhou in May said Apple planned to use TD-LTE on the iPhone.
China Mobile also appears to be racing ahead of its Chinese rivals toward 4G. Mr. Wang in March said the company aims this year to start commercial trials of TD-LTE using wireless modems. China Unicom Chairman Chang Xiaobing in March simply said the company was experimenting with 4G technology. And a China Telecom spokesman last week said the carrier doesn't have a timetable for building a next-generation network.
China Mobile and TD-LTE still face hurdles. According to the state-run China Daily newspaper in March, China's information-technology minister said China won't launch commercial 4G mobile services nationwide until 2014, leaving unclear how quickly China Mobile will be able to move ahead.
But TD-LTE still has more potential than China Mobile's 3G standard did, said Duncan Clark, chairman of consulting firm BDA China Ltd. "People certainly can't just say it has no future, which is better than TD-SCDMA," he said.