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China Business News (via the Pacific Epoch folks) is quoting an unnamed inside source at China Mobile (ticker: CHL) saying that China Mobile may delay its TD-SCDMA outdoor trials because it hasn't chosen a test site. (Editor: TD-SCDMA -- Time Division Synchronous Code Division Multiple Access -- is a 3G mobile telecommunications standard being pursued at the directive of the Chinese government in an attempt to both develop a home-grown technology and avoid dependence on technology from the West.)

This reeks of passive-aggressive behavior.

China Mobile has been playing the role of the little boy from "The Emperor's New Clothes" when it comes to TD-SCDMA. Very early on in the TD-SCDMA process, a China Mobile engineer told a friend of mine "you GIVE me a TD-SCDMA network, and I wouldn't take it." The carrier has been increasingly public about its displeasure with having TD-SCDMA foisted upon it, and has made public statements to the effect that they'd have to take a huge network write-off on their current networks if they had to roll out TD-SCDMA instead of WCDMA.

It's possible that Mobile is angling for some subsidies, and if they are I'd say they've got a pretty good chance to get them. A recent wire-service article running in the China Daily quotes an ABN-Amro analyst, Helen Zhu, as saying that the government will make "drastic moves to ensure TD-SCDMA's success."

But I think this goes deeper. Frankly, China Mobile probably decided a long time ago that it wanted WCDMA, and it's been making plans accordingly ever since. Their case makes real sense.

• Phones: There are 126 different WCDMA devices available right now around the world, most (if not all) of which could be readily available to local carriers. This includes a dozen models sold under Chinese brands and an untold number actually made in China.

• Infrastructure: Over 80 operators worldwide have built WCDMA networks, meaning that base stations, antennae, etc. are all in mass production and are falling in price. TS-CDMA? ZERO.

• Global Roaming: Want to use your TD-SCDMA phone outside of China? Forget it. There is not a single TD-SCDMA carrier outside of China, nor is there a single carrier planning to deploy TD-SCDMA anywhere else in the world. Oh, it may happen in some horribly poor African country where genocide is a major government activity, but it won't happen without heavy Chinese subsidies.

• Local Roaming: TD-SCDMA signals don't go very far. Want to use it outside of a downtown area? Good luck. I can hear the customer complaints already. I'm sure the China Mobile boys can as well.

• Cost: The above-mentioned signal-propagation issue means that if China Mobile DOES deploy a TD-SCDMA network, they're going to have to deploy more base stations to cover the same area.

So it's not difficult to see why China Mobile is dragging its feet on deployment.

Nonetheless, I think we'll see China Mobile get dragged kicking and screaming into the TD-SCDMA swamp. It would be far too huge a loss of face for the government and for the TD-SCDMA Forum (whose horribly Chinglish website makes them look like a government organization) if the country's biggest carrier doesn't join the party.

But China Mobile can extend its passive-aggressive behavior into the deployment. It can drag its feet on deployment, do the absolutely minimum necessary, and bide its time until it gets the go-ahead for WCDMA.

And that, folks, would have the effect of consigning TD-SCDMA to an early grave.

CHL 1-Yr Price Performance:

Source: China Mobile Might Want TD-SCDMA Dead (CHL)