Chinese Experience with Global 3G Standard-Setting

AbstractChina's growth strategy as set out in the 11th 5-Year plan in 2005 called for the upgrading of product quality, the development of an innovation society, and reduced reliance on foreign intellectual property with high license fees. Consistent with this policy, China has been involved in recent years with the development of a Chinese standard in third-generation (3G) mobile phone technology, both in negotiating the standard and seeing it through to commercialization. Most recently the allocation of licenses has been announced. In this standards-setting experience, a group of Chinese enterprises, with government support, joined forces to pursue this opportunity. This report documents Chinese standard-setting efforts from proposal submission to ITU to the current large-scale trial network deployment in China and overseas trial network operations in South Korea. We discuss the underlying objectives for this initiative, evaluate its effectiveness, and assess its broader implications for Chinese development policy.We both document and evaluate the China's experience with 3G international standards, both in terms of initial international negotiation of the standard in the ITU in 2000, and also its subsequent commercialization. This is the first case of a developing country both originating and successfully negotiating a telecommunications standard and this experience raises issues for China's future development strategy based on product and process upgrading in manufacturing. We argue that while precedent setting from an international negotiating point of view, the experience has thus far is unproven commercially. But the lessons learned will benefit future related efforts in follow-on technologies if similar Chinese efforts are made.The issues that have come with the commercialization of the Chinese TD-SCDMA standard have involved competition from parallel and emerging technologies such asWCDMA, CDMA2000 andWiMAX, financing, technology development and finding qualified labor. These are all beyond the process involved in the initial international standard negotiation. The lessons from this experience would seem to be that negotiating a standard in international bodies is one thing; seeing it through to profitable commercialization is another. Commercialization is thus far largely in the Chinese market, but if the reduction in foreign license fees is large enough this can financially justify the effort.