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'3G' battle lines drawn in Asia
Competing technologies, systems split providers

From Lisa Barron

HONG KONG, China (CNN) --People have long been hearing about the brave new world of "3G" or "third-generation" technology, which enables users to take photographs, play full-color games or browse the Internet, all on a cell phone.

But how much demand will there be for Internet mobility? Will users pay? Will even newer technologies reach the mainstream market first?

All questions very much on the minds of industry players.

"The status of 3G is very complicated," says Merrill Lynch analyst Alistair Scott. "At the moment you've got a number of countries claiming they're rolling out 3G -- the Koreans, the Japanese, and were waiting for Hutchinson in Europe to start rolling out in the fourth quarter of this year. But the general preoccupation seems to be more with preserving cash and cash flow so a lot of people are talking about delayed rollout."

One key issue in the emerging 3G world is the expansion of wireless communication being driven by two competing technologies; the United States-developed CDMA (code-division multiple access) system and Europe's GSM (Global System for Mobile communication) standard. In Asia, the battle lines are now being drawn.

Japan's two largest wireless carriers are split between the two camps, while Korea has adopted CDMA, but reserved the right to switch later on.

"Ultimately they're meant to come together at some wonderful point in the future, but it will be some time before that happens," says Scott. "I think there's no doubt that the CDMA route seems to be moving more rapidly at the moment."

China's No. 2 mobile carrier, China Unicom, launched a CDMA network in January, but Unicom acknowledged last week that it is off to a lackluster start.

China's 3G market overall presents more questions than answers, partly because it has added yet another standard, called TDMA (time-division multiple access), to the equation.

"The government has still not made clear announcements about what's going to be going on in the 3G space," says Christopher Slaughter, an analyst from The Yankee Group. "And to add to the confusion in a world driven by two standards, there is a third standard that the Chinese have developed for themselves."

The industry will undoubtedly be paying close attention to China's 3G aspirations, especially since with 160 million mobile phone users, it is already the biggest mobile market in the world.

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