Alcatel, the world's fastest-growing mobile infrastructure solutions provider, said it is in contact with a Chinese company to talk about a possible partnership on the development of the domestically produced TD-SCDMA (Time Division Synchronous Code Division Multiple Access) 3G standard.

"There will be partnership with a Chinese company and the discussion is ongoing," said Alcatel President and CEO Philippe Germond.

But he declined to reveal more details about the possible deal, such as which company Alcatel is talking with and when an agreement is expected to be reached.

Buoyed by the huge market potential in China's 3G market in the next few years, Alcatel is determined to push for a bigger share of the market, according to Germond.

"We see China as a strategically important market for our global growth," he said in an interview with China Daily.

Alcatel is now serving more than 300 mobile operators worldwide.

According to Germond, Alcatel has made a strategic shift from a traditional role as a carrier equipment supplier to that of a communications solutions provider.

The company's overall strategy is to promote value-added, end-to-end multimedia applications solutions in fixed, mobile and private networks, a strategy that is gaining considerable momentum.

Within the mobile sector, one of the company's major objectives this year is to leverage its leadership in broadband access, maintain its momentum in the mobile market and expand its application solutions business.

Germond said 2004 will be an important year for the company.

To target double digit growth in China, he said the company will increase its momentum in 3G development, maintain its leading position in this growing market and build up the application solutions the company is offering in China.

He pointed out that the 3G development in China is quite different from that in Europe.

Besides China Mobile and China Unicom, there will be new operators like China Telecom and China Netcom which will boast mobile licenses.

Germond assumed that 3G licenses will be issued at the end of this year.

"The issuance of 3G licenses will play an active role to further boost the development of the 3G market in China," he said. "However, the timing for issuance is up to the Chinese Government to decide."

Sources close to the Ministry of Information Industry, the watchdog for China's telecom industry, said the government is likely to issue the licenses early next year. The group is currently conducting field tests for 3G.

Germond emphasized that applications will be one of the major elements that determines the progress of the 3G standard worldwide.

Analysts believe that the market for mobile phones is undergoing fundamental changes, with operators moving from their traditional roles as voice and data carriers to a new business of providing packaged solutions.

Current market trends show voice services will continue to be the cash cow, with revenue remaining more or less flat.

Data services will continue to increase in importance, with short-term revenues coming from messaging and chat applications.

Today, it is the end-user who drives the mobile telephone market, through needs that have evolved from simple voice services through short messaging services to today's advanced capabilities, which include a heady mixture of communications, information and commercial services.

In their purchasing behavior, end-users are moving from a handset focus to a "my world" orientation, seeking ways to make the mobile telephone experience center around their needs.

Moreover, end-user confidence and familiarity with handsets and service features are improving.

Together, these factors provide an excellent opportunity for multi-service providers to develop new revenue streams from innovative services that end-users find compelling.

To better tap the market, Alcatel last month teamed with SK Telecom, the largest mobile operator in the Republic of Korea (ROK). They jointly introduced the world's first photo-music-video (PMV) service at the 3GSM World Congress 2004 event last month in Cannes, France.

With the service, end-users can produce and send personalized video content to mobile phones or an e-mail address.

In just a few clicks, end-users can combine self-made digital photos with music and videos they choose, as well as text and desired effects.

This new possibility is encouraging the usage of the service by users, and mobile operators can expect to maximize profits by offering this differentiating mobile service.

SK Telecom launched a trail PMV service in the ROK in December of last year, and plans to launch the service commercially in April, as one of its key multi-media messaging services.

"The jointly developed multimedia messaging solution will be a key differentiating service for mobile operators, especially when introducing 3G," according to Germond.

In the Chinese market, Alcatel's operation is through its joint venture in Shanghai.

Last week, Gerard Dega was appointed as ASB President.

He told a Beijing press conference that ASB is dedicated to providing end-to-end telecommunications solutions, which are suitable for any type of handset.

Analysts predicted that 3G investment in China will reach 1 trillion yuan (US$120 billion) within five years.

Alcatel set up a 3G Reality Center in the ASB headquarters in Shanghai in August of last year in order to tap into market demand.

The center provides a fully featured and interactive 3G environment to test innovative applications and services with local partners.

The center has already conducted laboratory and field trials on 3G infrastructure equipment and new mobile applications for Chinese users.

(China Daily March 22, 2004)