Lucent to open R&D center in China

BEIJING: Lucent Technologies Inc would spend $50 million on a China research center to develop third generation mobile technology, hoping to snare some of the billions of dollars in contracts likely to be awarded as China expands its mobile networks.

The center would open in September 2003 with some 300 engineers, James Brewington, president of the telecoms equipment giant's mobility solutions group, told Reuters. "We'll be setting up a new center dedicated almost entirely to third generation mobility," he said, showing off a passport fattened by more than 40 visits to China. "The $50 million is almost entirely additional Chinese engineers."

The center's location had not yet been finalised, but would be near one of Lucent's other research labs, Brewington said. Lucent, with about 3,000 employees in China, has centers in Beijing, Shanghai and the coastal city of Qingdao.

Research would focus on two competing third-generation standards: European-backed WCDMA and CDMA 2000, developed in the United States, he said. The services, which will allow colorful and sound-rich downloads, are not expected to be available in China until 2005 at the earliest.

Lucent was in talks with Chinese officials about whether to include the homegrown TD-SCDMA standard in its research and product offerings, but had not committed to the fledgling technology, Brewington said.

The firm was talking with China's four major telephone operators, China Mobile, China Unicom, China Netcom and China Telecom, on future 3G contracts.

"I talk to all customers who have spectrum and hopefully money," said Brewington, who began his career in 1968 at AT&T. All four firms were keen to apply for next-generation mobile government licences, expected to be granted in 2004, he said.

Foot in Door

Lucent, one of the world's biggest telecoms gear makers along with France's Alcatel and Canada's Nortel Networks Corp, posted its 12th straight quarterly loss in April amid weak spending by telephone companies.

They suffered severe setbacks when operators, who had built too much capacity during the Internet bubble, slashed spending in 2001. Vendors are now looking to markets such as China and India to help pull the telecoms equipment business out of the red.

"We're seeing some double-digit growth in those two markets," Brewington said of their CDMA sectors.

Analysts said Lucent's decision to beef up its China operation -- after it had sold assets, cut loss-making products and slashed almost two-thirds of its employees elsewhere in the world -- was a way to position itself to win deals when China adopts 3G.

"It's a really long-term commitment," said Marvin Lo, a telecoms analyst at BNP Paribas Peregrine in Hong Kong. "They obviously want to get a head start on 3G, but I'm not sure it will pay off for them."

Lo said mobile operators, who also face a tough year, were fighting a price war for low-end users and not planning significant increases in spending for the next three years.

© Reuters