Beijing may have a lot riding on a successful Olympics, but for the telecoms industry the stakes are also high, as China's home-grown 3G technology takes prime billing with the eyes of the world watching.

China's standard, known as TD-SCDMA, has been so long delayed by assorted glitches that it's become something of a standing joke for industry analysts knocking its over-sized base stations and clunky handsets.

But China is not for giving up on its "indigenous technology" drive. Instead, the rest of the industry must wait. The result is equipment vendors have so far missed out on the bumper contracts that upgrading a 600-million-plus subscriber market promise.

Proponents would surely have to admit the game was up if the technology missed China's date with the Olympics. After all, it's flagship sporting events such as the World Cup or the Olympics where latest technologies, as much as sporting prowess, are showcased -- be it Korea's Wibro, 3G or its souped-up HSPDA version, or high definition television pictures.
So late last week, I was interested to receive a press release from mainland Chinese telecom vendor ZTE about a slick new TD-SCDMA phone, with which the Olympics could be watched anytime. China Mobile , one of the game's sponsors, has built TD-SCDMA networks in six key Olympic host cites.

The Olympic handsets will be reserved for athletes, officials, volunteers and VIP guests. And with just 40,000 available, they could become collectors' items.

Reading further, the release explains the phones are in fact dual mode GSM handsets which also come with chips for satellite TV signals known as CMMB (standing for China Mobile Multimedia Broadcasting). That means if you were to venture outside the limited base station coverage, you can rely on trusty 2G voice networks to keep talking. As long as the TV pictures work, viewers will be happy -- although the content will be delivered by a satellite broadcast network, not China's new TD-SCDMA wireless broadband.

All in all, it appears there is enough in this smart looking handset to keep users entertained. One question is how much gets added to the cost by the multiple mode functions, to which there was no answer just now.

While we may not get a definitive answer to the success of this new technology, as long as it's not a complete flop, it should be enough to keep momentum going towards commercialization.

This matters not just for China, but the vendors of the two established 3G standards -- CDMA2000 and WCDMA -- as its believed government regulators are reluctant to license these standards until China's own technology is in good enough shape to compete.

Expectations are that post-Olympics China will finally issue 3G spectrum and licenses, following on from the restructuring of operators announced in May of this year that saw China Telecom buy Unicom's CDMA business, and Unicom's GSM mobile business merge with China Netcom. The schedule is for the new Unicom to list new shares sometime in October.

Already there are signs of change as China Telecom announced big capex plans to support 100 million subscribers on an expanded CDMA network. This is potentially good news for the likes of Qualcomm , Nortel and Alcatel- Lucent , as it should give a boost to a faltering CDMA standard. By putting 3G investment on hold for so long, it has been a frustrating time for vendors peering into this potentially huge market.

China Mobile is expected to carry the responsibility to make China's TD-SCDMA standard commercially viable. If it gets an official license as expected, this should help to get foreign handset vendors involved. That matters irrespective of China's national technology ambitions -- the majority of its people still like to buy Nokia and other foreign handsets.

One obstacle on the TD-SCDMA path is an argument that China has really missed the boat on developing a 3G technology and should now put all its efforts into the next generation in wireless broadband. Hence, China is also developing Long Term Evolution, but based on TD-SCDMA, to be known as TDD LTE.

The problem with this approach is time. Can China wait until 2010 or 2011, when it's expected to be ready?

This all means a host of vendors will be watching the Olympics with keen interest. In a world of capped capex for telecom operators, China is likely to be one key bright spot, as its newly restructured operators upgrade fixed and mobile networks. The low dollar should be an added help for U.S. vendors seeking contracts, although the lion's share of those contracts may well goes to domestic firms.

So it's worth watching the Olympic performance of TD-SCDMA -- here just completing the race, rather than winning gold, might be enough for now. 

Source:MarketWatch