"China Unicom Ltd., the country's No. 2 mobile phone service operator, said it will expand a recently acquired cellular network that uses a Qualcomm Inc. standard to ensure its success.
"Chairman Yang Xianzu said upgrading the code division multiple access, or CDMA, network was essential to bringing in more revenue and repaying debts. Unicom took control of the network from the People's Liberation Army as part of reforms in the military.
"Unicom will, of course, restructure and upgrade the technology as well as expand it," Yang said. "It's very clear that there won't be good coverage if the scale of the network is not big enough."
"Yang's statement could mark a reversal for Unicom, which last year called off talks with Qualcomm on using CDMA. It also indicates that the European Global System for Mobile Communications, or GSM, standard used by nearly all of China's cellular phone subscribers will face more competition as the government urges local manufacturers to enter the phone business.
"At the Beijing venue where Yang made the announcement, China's Information Industry Minister Wu Jichuan underscored the government policy on opening the market to the CDMA standard. "China's policy for developing CDMA has never changed," Wu said.
"Unicom's takeover of the network may be hindered by some of the debts assumed from the previous operators.
"Still, Chairman Yang expressed confidence. "The debt issue can be resolved," said Yang. "We are working on it."
"Qualcomm officials are reluctant to make predictions. "It's anybody's guess what's happening in China," says Steven Sivitz, senior CDMA product manager with Qualcomm. "We're always reading the newspapers to find out what's going on."
China is also developing its own standard for so-called third- generation cellular phones providing high-speed access to the Internet, which it has submitted to the International Telecommunications Union, the world's governing body, for acceptance later this year.