China, the world’s largest market for cell phones, is aggressively developing a homegrown technology that can run the next generation of mobile telephone networks, challenging the traditional dominance of American and European companies. During the 1990s, as China spent $10 billion to build a national mobile telephone network, foreign companies reaped most of the rewards. Cisco Systems, Ericsson, Motorola and Nokia produced much of the equipment that runs the networks and many of the phones on them.
Now, the country is planning for what’s known as third-generation mobile services, or 3G, upgrading its networks to beam high-speed Internet connections to phones and handheld computers. If China develops its own 3G standard, it could save on the royalties it would otherwise have to pay foreign firms for their gear — a tab that reportedly runs into the hundreds of millions of dollars. And if China’s standard gained favor abroad, its companies could then collect royalties from foreign counterparts. Not least, Chinese firms would probably enjoy built-in cost advantages given the scale of their home market. Continue >>