TD-SCDMA has all the markings of success. First, it has the backing of a government that seems determined to launch the standard as a symbol of China’s self-reliance. In fact, the government poured in huge investments and passed necessary policies to speed up deployment. Next, it also already has a carrier to handle commercial deployment, as China Mobile started offering TD-SCDMA services in April 2008.

Finally, TD-SCDMA has a supply chain ready, complete with baseband chip suppliers like Commit, Spreadtrum, and T3G and a network of terminal vendors that include 19 top international and local brands—Amoisonic, Datang Telecom, Dopod, Haier, Hisense, Huali, Huawei, Lenovo, LG, Longcheer, Motorola, New Postcom, Panda, Philips, Samsung, TCL, UTStarCom, Yulong Telecommunication, and ZTE.

The Bad News

However, the standard suffered a huge setback when Commit announced that it was pulling out of the TD-SCDMA sector due to lack of funding from investors. Commit’s move shocked the industry and raised fears about TD-SCDMA’s marketability. Market watchers are speculating that otherwise, Commit’s investors wouldn’t have pulled out of the project. After all, the money was about to roll in. What then could have driven Commit to abandon the market?

This lack of confidence in TD-SCDMA is due to four main reasons. The first is wrong timing. As a 3G standard, TD-SCDMA’s biggest appeal is its robust network, offering 1-Mbit/s data bandwidth capable of supporting high-speed mobile data services such as video communications, color SMS, faster music and video downloads, Web browsing, and e-mail. Yet most consumers in China nowadays prefer to turn to notebook PC-based Wi-Fi for such services. TD-SCDMA took too long to launch and missed its chance to net would-be users.

Second is the lack of TD-SCDMA network infrastructure. Despite this, China Mobile rushed rollout of its commercial TD-SCDMA services, which led to a lot of unhappy customers complaining about call quality and limited area coverage. Most consumers are blaming the technology for what should be a network issue.

Third, China Mobile couldn’t find a selling point for TD-SCDMA. The company didn’t market any killer applications to go with the service—services that could have convinced consumers to buy TD-SCDMA phones.

Lastly, China’s government itself seems to doubt commercial opportunities in TD-SCDMA. This has become apparent by the slow rate at which supporting policies are being passed. Ping Wu, CEO of Shanghai’s Spreadtrum Communications Corp., a main proponent of the TD-SCDMA industry, firmly believes the government should give China Mobile more support to help TD-SCDMA take off. He also thinks China Mobile should work out a better timetable for developing the industry and talk to chip and terminal vendors about supply in the next five years.

Some Good News

TD-SCDMA may have many kinks at the moment, but it also has some reasons to celebrate. A carrier in Italy has announced plans to deploy a TD-SCDMA network in Italy. Also, Nokia has announced plans to start R&D on a TD-SCDMA mobile phone.

The standard still has tremendous potential within China as well. For one thing, it could take advantage of the popularity of China Multimedia Mobile Broadcasting (CMMB), China’s mobile TV standard, to promote TD-SCDMA handsets.

Also, China has a very large untapped rural market. As a local standard, TD-SCDMA requires lower patent fees that would enable China OEMs and ODMs to introduce lower-cost products. This, combined with the right marketing push, could help TD-SCDMA garner a solid following in China’s rural areas. How successfully TD-SCDMA can capture this market may spell a brighter future for the standard.

Jake Chen is an editor with Electronic Design China (www.ed-china.com). He has a master’s degree from the University of Electronic Science and Technology of China, Chengdu. He can be reached at jakechen@globalsources.com.