China Mobile to offer subsidization to promote TD-SCDMA

China Mobile Communications, viewing that sales of TD-SCDMA (China-developed 3G standard) handsets have fallen short of expectations, has decided to subsidize purchases of such handsets in an attempt to improve the expected sales opportunities prior to and during the Beijing 2008 Olympic Games, according to industry sources in Taiwan.

China Mobile launched TD-SCDMA trial operations in early April 2008 and attracted 52,000 TD-SCDMA subscribers as of July 1, the sources cited China Mobile's statistics as saying. However, only 8,000 were substantial subscribers whereas the remaining majority were trial users provided by China Mobile with SIM (subscriber identity module) cards, TD-SCDMA handsets and subsidies for communication charges, the sources pointed out. The 8,000 subscribers had purchased only 4,000 TD-SCDMA handsets in total, the sources indicated.

For its sales promotion, China Mobile will thus subsidize purchases of TD-SCDMA handsets by 1,000-1,500 yuan (US$146-219) per handset, approximately 60% of the purchase prices, the sources indicated. In addition, China Mobile will absorb charges on TD-SCDMA subscribers' use of certain communication services during the Olympic Games, the sources noted.

Following the first procurement of TD-SCDMA handsets at 60,000 units, China Mobile recently finished a second procurement of 200,000 handsets and may additionally order 40,000 TD-SCDMA plus CMMB (China mobile multimedia broadcasting) – the China-developed mobile TV standard – dual-mode handsets, the sources pointed out. China-based makers/vendors, including ZTE, Postcom, Amoi and Hisense, together landed orders for 170,000 handsets and international vendors including Samsung Electronics, LG Electronics and Motorola accounted for the remaining 30,000 units, the sources indicated. Taiwan-based Dopod offered its S700 to win a small order for 3,000 handsets, the sources noted.

In comparison with the situation that CDMA2000 1x EV-D attracted four million subscribers in its operation for the initial year and WCDMA reached three million subscribers also in the first year, Taiwan-based handset makers are dubious of the prospect of TS-SCDMA, the sources pointed out.

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