With the first phase of China Unicom's CDMA (code division multiple access) network completed at the end of October, equipment vendors have begun vying for a stake in the second phase project, according to Today's Chinadaily.

According to Lu Jianguo, vice-president of China Unicom, the second phase of construction will be larger than the first, with a capacity expansion of 20 million subscribers.

He said the second phase of construction will start after the CDMA network starts operation early next year.

With a first-phase capacity of 15 million users, China Unicom's network will have the ability to support 35 to 40 million users by 2002. The network will be able to support 50 million CDMA users by 2003, Lu said.

Ten equipment vendors from home and abroad shared the first-phase construction contracts worth a total value of 12.1 billion yuan (US$1.46 billion).

As the network is to be upgraded from the second generation to the so-called 2.5 generation, the vendors expect the second phase of construction to bring them even larger contracts.

US-based equipment manufacturer Lucent Technologies said it hopes the CDMA expansion will help the company recover some of the devastating losses it has suffered in the global economic downturn.

Lucent signed a 4-million-customer contract with China Unicom in the first phase of construction. About 27 per cent of CDMA subscribers will be supported by Lucent equipment.

As many telecoms carriers prefer to use equipment from the same provider for continuity, Lucent aims to maintain its current market share with plans to enlarge it in the future.

"The contract with China Unicom brings Lucent a surviving opportunity - the contribution from China would help the group walk out of the losses," said Michael Kwan, chief executive officer of Lucent (China).

He said the Chinese subsidiary is among the best performers of the group. The revenue from China grew by 40 per cent during the fiscal year ending in September than the previous year, according to Kwan.

To display its technological advantages in the 2.5G CDMA technology, or the CDMA 1X, Lucent (China) made the first live CDMA 1X call in Shanghai earlier last month.

Its major competitor, Motorola, who also won a 4-million-user contract from China Unicom, also announced that it had made its first CDMA 1X live call in mid-October.

"Winning China is winning the world," said P Y Lai, president of Motorola China.

He said the company is fully prepared for Unicom's network migration from 2G to 2.5G.

Motorola's advantages in the Chinese market are its high brand recognition and good relationships with the government.

Motorola was the only foreign brand recently chosen by the Ministry of Information Industry (MII) as one of the 19 licensed CDMA mobile phone producers.

Samsung, the South Korean CDMA equipment vendor, did not appear on the list of the original 10 winners for Unicom's first phase of construction.

However, it announced recently that it was selected by Unicom to provide the equipment needed for a test CDMA2000 1X network this year, with full-scale service scheduled to begin in 2002. The test network will have a capacity of around 3 million lines and be worth some US$500 million.

But the biggest winner is Qualcomm, the major patent owner for CDMA technology, since it earns royalties from every company that produces CDMA-related products.