The head of China Mobile, the world’s largest mobile phone group, said the country’s homegrown third generation mobile technology was “a few years behind” other international standards because of problems with handsets.

The news is a blow because China Mobile is expected to build its future 3G services on the TD-SCDMA standard, which is being developed in China. The group’s rivals are expected to adopt the European WCDMA and US’s CDMA2000 3G standards.

Wednesday’s admission comes as two other mobile groups have set out plans to contest its dominance – China Mobile has 70 per cent of the 2G market in China. China Unicom wants to become the biggest 3G operator, while China Telecom aims to win 15 per cent of the 3G market by 2010.

Wang Jianzhou, China Mobile’s chairman and chief executive, said: “[TD-SCDMA’s] network operation is normal but there are still a lot of problems. Problems remain in handset choices, quality, performance and prices, where most users complained.

“Compared with other 3G technologies, TD-SCDMA is still a few years behind.”

China Mobile has spent Rmb15bn ($2bn) on trials using TD-SCDMA in 10 Chinese cities since April, and plans to expand the trial to 38 cities by June.

China has not announced which 3G standards its operators are to adopt but TD-SCDMA is expected to go to China Mobile. China Unicom has said it should win a WCDMA licence while China Telecom is likely to switch its 2G service to CDMA2000.

China has been backing TD-SCDMA with state money and regulatory support, as it aspires to reduce the dependence of local telecoms equipment companies on foreign technology.

The government has delayed issuing 3G licences for years as it waits for TD-SCDMA to develop. This year, Beijing finally announced the reorganisation of its telecoms companies into three operators, as it prepares to award three 3G licences.

Apart from asking China Mobile to test the local standard, China is expected to announce other measures to balance the industry and make it easier for smaller competitors.

Mr Wang said the company had borne its fair share of social responsibility.

China Mobile said net profit for the first half of this year jumped 44.7 per cent to Rmb54.8bn. Revenue rose 17.9 per cent to Rmb196.5bn.

Source:Financial Times