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China Unicom Telecommunications Company -, China

Key Data

China Unicom is the second largest telecommunications company in China. The company runs two networks side by side, a GSM network that was completed in 2000 and also a 2.5G CDMA network.

The company currently has over 100 million subscribers, having achieved the magic 100 million mark in mid 2004. Although to put things into perspective China as a whole has nearly 400 million subscribers (early 2006 figure) according to the Chinese Ministry of Information Industry (MII).

"China Unicom runs both a GSM and a CDMA network."

Since 2001, China Unicom has been very active in establishing its second network using 2.5G CDMA technology but is still very much the second mobile telecoms provider in China next to China Mobile.


CDMA has the advantages of providing higher voice transmission quality and less radiation and would also smooth the transition to 3G at a later date.

China Unicom has, since the deployment of CDMA, run the two networks side by side and made dual band handsets available to subscribers so that they can take advantage of the exceptional coverage offered by the two networks (the company has sold over 300,000 dual band handsets although they are quite expensive).

China now has more mobile phone lines than it has landlines. Although the CDMA network is more advanced, the majority of the company's subscribers use the GSM network.


China Unicom however may be a victim of its own success. With three other companies in the marketplace as well (China Telecom, China Mobile and China Netcom) speculation is mounting that a plan to split China Unicom has been submitted to the National Development and Reform Commission (NDRC).

The catalyst for this potential move is believed to be the award of 3G licenses; all four major players have shown interest in developing independent networks but four 3G networks even in a country as large as China could smack a little of over-investment.

In early 2005 plans to undertake a split of China Unicom was denied by the State-owned Assets Supervision and Administration Commission (SASAC). A SASAC spokesman said rumours about a possible spin-off of China Unicom, the parent firm of Hong Kong and New York-listed China Unicom Ltd, had had "some negative effect on Unicom's development and stabilisation".

Rumours had been mounting about splitting China Unicom by transferring the firm's GSM and CDMA cellular networks to China Telecom and China Netcom, respectively. Although hotly denied it may still be on the cards.


One of the most eagerly awaited telecoms announcements is the award of 3G licences for the Chinese market. Although they have been promised it now looks unlikely that the awards will be announced until mid to late 2006.

One of the stumbling blocks is the continuing field testing of the Chinese home-grown 3G technology Time Division Synchronous Code Division Multiple Access (TD SCDMA).


The China Unicom CDMA2000 1X network covers an enormous country, which is split into 32 provinces or administrative regions. The initial roll out, first phase contracts were worth Ұ12.1bn ($1.46bn).

The network was established across China in two further phases since late 2001. Phase three deployments were started in April 2003 and completed by early 2004.


The phase three expansion was undertaken to boost subscriber capacity by an additional 15 million. The expansions have also paved the way for subscribers to enjoy applications including video gaming, web surfing, MMS and other high-speed wireless data services.

"Expansions have paved the way for subscribers to enjoy applications including video gaming and web surfing."

The expansion has also helped China Unicom to drive improved spectrum efficiency and reduced costs, and has positioned the carrier to migrate to an all-IP, packetised network. The deployments for phase three included Base Station Controllers (BSC), Mobile Switching Centres (MSC), 'boomer' cells and other Base Transceiver Stations (BTS).

The China Unicom market is enormous when considering mobile telecoms networks from a European perspective. The expansions are carried out in 'provinces' which are really the size of countries when applied to European scale.

Nearly all of the major players involved have some Chinese domestic involvement and have actually set up Chinese subsidiaries to aid in obtaining contracts and carrying out the work in a reasonable timescale.


Companies involved in the phase three deployments included Nortel Networks (Zhejiang, Hunan, Henan, Shandong, Chongquing and Heilongjiang – $139 million) and Ericsson (Jiangsu, Yunnan, Heilongjiang, Sichuan and Liaonong – $90 million). Each of these companies delivered a portion of the phase three expansion, supplying their own CDMA2000 1X equipment.

In late 2004, phase 3.2 was implemented by China Unicom, which was to involve more expansion and the award of contracts to Lucent Technologies (Shandong, Hubei, Inner Mongolia and Shaanxi – $120 million), Motorola (Beijing, Fujian, Gansu Guangdong, Guangxi, Hebei, Jiangsu, Jiangxi, Jilin, Shanxi and Xinjiang – $344 million), Ericsson ($57 million) and Siemens.

China Unicom estimated that the phase 3.2 expansion would enable it to increase the subscriber capacity of its 800MHz CDMA2000 1X network by more than 5.4 million. This expansion was completed by mid 2005.


China Unicom now runs a dual band service for both CDMA and GSM subscribers called GSM1X. This was officially launched in August 2004. The service allows GSM subscribers to access the high-speed data service offered by CDMA.

The company has also introduced 'voice SMS' which allows subscribers the alternative of saying and hearing short messages instead of writing them. In addition, the company has also introduced a mobile e-mail service allowing subscribers to access their e-mail via a mobile handset without accessing the internet.

The company has also embraced VoIP technology and employed Cisco Systems in 2001 to install their equipment including 12,000 series VoIP gateways, Cisco AS5800s and AS5300s and H.323 gatekeepers (Cisco 7200). VoIP now accounts for nearly 20% of packet based telephony traffic in China (60 billion voice minutes).

"China Unicom now runs a dual band service for both CDMA and GSM subscribers called GSM1X."

China Unicom has also been active in video communications, employing Polycom to install the world's largest IP video communications network, covering 320 cities in China, in two phases from 2002 to 2004 (installation of 22 MGC-100 systems as well as many hundreds of video conferencing terminals).


In April 2006, China Unicom started its rollout of a TIME program to transform its role in the value-added service business from a telecom channel provider to a wireless integrated content provider.

The company has established a UNI Strategic Cooperation Alliance with 20 VAS Service Providers (SP) and Content Providers (CP), including Sina Inc and Inc. So far, the alliance has 31 members and the number is still growing.

China Unicom hopes to join together with the partners in the alliance to jointly develop the VAS market. The company plans to enter the entertainment media business and will provide various services including music downloading, photo downloading, mobile phone gaming, mobile phone mailbox and mobile phone internet access.

The company has also introduced the Chinese push e-mail service equivalent of the RIM Blackberry and called the RedBerry.


In May 2006 Nokia announced the award of a GSM network expansion deal with Sichuan Unicom, a subsidiary of China Unicom. The contract involves the deployment of GSM radio and core networks, including the Nokia MSC Server mobile softswitch, in four cities in the Sichuan Province.

Nokia is also due to provide network planning, optimisation and rollout services. The network expansion is scheduled to be fully operational by August 2006.