China's efforts to develop a high-speed telecoms technology that could compete with Western standards in the world's biggest mobile market have taken a step forward with the first compatible phone.

A Chinese university said yesterday it had developed a telephone for the home-grown standard known as TD-SCDMA, a milestone that could help decide when third-generation mobile licences are introduced in the country.

How and when the Chinese government issues 3G licences will help determine which equipment makers grab billions of dollars in contracts likely to be awarded by mobile phone companies.

The Chinese technology is a competitor for the US CDMA2000 system, backed by Qualcomm, and Europe's WCDMA, supported by Ericsson and Nokia.

The new phone was developed by the Chongqing Institute of Posts and Telecommunications in southwestern China.

"The 3G mobile phone is not only the first in China, but also the first TD-SCDMA phone in the world," said Zhen Jianhong, a professor at the university.

"We plan to produce this kind of mobile phone in small scale next year and in large scale in 2005."

"Chinese consumers could buy this kind of mobile in the second half of 2005 as the network for 3G would have been set up by then," he said.

Analysts have said Chinese regulators were likely to delay introducing 3G licences until the relatively new TD-SCDMA technology matured and vendors offered viable mobile phones. China has over 250 million mobile phone users.

"The market is generally sceptical about TD-SCDMA, so having concrete equipment and handsets obviously strengthens its hand," said Glyn Truscott, a consultant at Beijing-based telecoms consultancy BDA China.

Chinese equipment makers said the government had pledged 600-700 million yuan (US$72.5-US$84.5 million) to support TD-SCDMA research this year.

Zhen said his phone was tested on a trial network set up by the Datang Telecom Technology & Industry Group and German telecoms equipment vendor Siemens, which are both trying to develop their own versions of TD-SCDMA phones.

The phone uses chips from several makers, including Texas Instruments, he said. The researchers had set up a company, Chongqing Chongyou Information Technology, to develop and market the phone.

It runs on the TSM network, a variation of TD-SCDMA that uses the same base network as the current-generation global system for mobile communications (GSM). Another version is called TDD-LCR.

Some equipment makers, such as Siemens, think the TSM network is more marketable because it is a hybrid of two systems. Others, such as Datang, work on TDD-LCR.

Denmark's RTX Telecom, Samsung Electronics, Philips Electronics and Chinese equipment vendor Huawei Technologies, in partnership with Siemens, are all developing TD-SCDMA phones.

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