Barriers exist in the development

The rapid progress of information and communication technologies has increased the importance of TD-SCDMA. But there are still some barriers slow down its development.

1. Switching cost
Before using particular standard, consumers are free to choose alternative technologies. But after they have purchased the product with a particular standard, it will become increasingly expensive for them to switch to another. [1] For example, most of the popular use GSM, though it is healthier to use CDMA, the signal of which is also better than GSM. This is due to switch cost on equipment. GSM developed much earlier and most of people’s mobile phone is for GSM. When consumers want to change their services to CDMA, they are required to buy another mobile phone. This switch cost slow down the development of CDMA in China. Same problem may occur again when China wants to develop TD-SCDMA: lots of 2.5 G mobile phone will die out and costumers should buy 3G mobile phone. As Chinese government announced to develop 3G technology very early, most of the mobile phones making companies like NOKIA, MOTO sold 3G mobile phones several years ago. Some mobile phones can be used under 3G standards, those companies hope switching cost won’t influence too much to the development of TD-SCDMA. Furthermore, they think advanced services of TD-SCDMA like GPS and stream media, attract young people who are willing to try new technology and service. Switch cost is not so important for them.

2. high investment
To establish its own 3G standard, China spend large amount of money and the research period is long. It is still a very tough task to let consumers to accept this new standard. Large efforts and money are needed. China Mobile has already invested 44 billion yuan ($6.45 billion) on its TD-SCDMA network rollout and is on its way through a 55.8 billion yuan ($8.18 billion) program to expand coverage to 200 cities by year-end.[2] Only some famous high tech companies are able to participate the research of TD-SCDMA and afford huge research expense. For example Siemens started its development in TD-SCDMA back in 1998 and has been investing more than USD170 million so far. Today, several test networks running in China are proving that this technology is mature. Siemens will be contributing to the joint venture development know-how and products as well as 160 Siemens employees already working in Beijing. High requirements of investment and research ability make that small companies are impossible to participate the research of the new standard. High investment also leads to cautious company strategy to develop this technology. Lack of infrastructure has been a main limit to develop TD-SCDMA.

Reference:
[1] Hesser, Feilzer, de Vries, Standardization in companies and markets, p67
[2] China Mobile sign deal on 3G http://www.taipeitimes.com/News/biz/archives/2009/08/25/2003451978