Ericsson enlists Datang for TD-LTE drive

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Ericsson enlists Datang for TD-LTE drive

Partnership boosts Swede's bid for greater Chinese 3G share, in blow to ALU

By CAROLINE GABRIEL

Published: 21 April, 2010

Ericsson has broadened its cooperation with Chinese vendor Datang, in a possible blow to Alcatel-Lucent, which has the closest partnership with the supplier. The Swedish giant is to integrate Datang's TD-SCDMA RAN equipment into its 3G portfolio to improve its share of the China Mobile build-out, which uses the local standard, and the pair will jointly develop systems for its next generation, TD-LTE.

Datang, a lossmaking vendor spun off from a government research institute, has a smaller share of the equipment market in China than compatriots Huawei and ZTE, but is an important partner because it holds a huge percentage of TD-SCDMA patents. Although it already has R&D collaborations with Ericsson as well as Alcatel-Lucent, the French giant has been its main partner in actual commercial sales. However, Datang has been stronger at the development stage than real world roll-outs, and some of its early infrastructure for China Mobile was replaced last year by new systems.

Under its new memorandum of understanding with Ericsson, the vendors will promote a "common platform for FDD and TDD" in order to "increase the industrialization capabilities of TDD solutions by achieving economies of scale", according to an Ericsson statement. The agreement follows the establishment of a joint TDD research center in Beijing two years ago, and the Swedish firm says this new deal takes that cooperation "to a substantially new level".

As well as seeking to ensure Ericsson a strong share of China Mobile's 3G expansion and 4G business going forward, the agreement will have a broader remit. Like all Ericsson's TD-LTE activities, the primary aim is to create a global standard that combines TDD and FDD modes, and therefore sidelines the main commercial TDD standard, WiMAX, which Ericsson does not support. TDD spectrum stands to be far more important in the 4G world than in 3G, since more of these frequencies are being made available, and operators are more interested in them, as they are well suited to data intensive and asymmetric web applications. The vendor has heavy Chinese support for its goal, as China Mobile wishes to avoid being stranded on a single-carrier technology island with a limited ecosystem, has it has with TD-SCDMA. In 2009, the cellco was joined by close partner Vodafone in calling on the device industry to support both TDD and FDD modes in their LTE products from day one.

Chen Shanzhi, CTO at Datang Telecom, as quoted by TelecomAsia, said the new pact will help "drive the globalization of TD-SCDMA and play an important role in the industrialization of TD-LTE in the long run".

In the shorter term, Ericsson will hope to strengthen its hand in bidding for the remaining Chinese TD-SCDMA contracts, even though the country's cellcos are now scaling back their spend as they approach broad coverage. Ericsson has won only around 10% of the TD-SCDMA business, and its existing local alliance for the technology, with ZTE, did not lead to a joint sales partnership. Last year, in the China Mobile contract - the largest in the world in 2009 - ZTE came out ahead on about one-third of the spoils, followed by ALU/Datang and Huawei. Ericsson also took the second largest portion of China Unicom's W-CDMA spend, after Huawei.