At the same time, it is looking likely that the Chinese government will choose the country's largest carrier, rather than a second-tier one, to launch the technology. That is welcome news to the small group of chip companies that have bet their future on TD-SCDMA.

"The logic is that China Mobile is the strongest carrier and so if anybody can make TD-SCDMA successful, then they are the most likely to pull it off," said Ted Dean, a principal analyst at BDA China, a Beijing telecom consultancy.

Analog Devices Inc said Tuesday that the trial networks were now able to hit speeds up to 384Kbps. A year ago, only 64Kbps links were possible; by last summer, up to 128Kbps was stable but not up to 384Kbps. Data rates hitting a stride on par with 3G specs is a big boost for the technology.

"It is a little early to say that in every nook and cranny in every city that we can guarantee 384Kbps, but I can say with certainty that this is not just ideal conditions in a laboratory environment. This is real world stuff on a live network," said Doug Grant, director of business development for RF and wireless systems at Analog Devices, which has been a key chipset provider in the trials.

Although the latest milestone is good news for TD-SCDMA backers, the technology still lags the more mature wideband-CDMA and CDMA2000 1X, which will also be licensed in China. Both of these technologies have been upgraded since their release so that they can hit downlink data speeds meeting or exceeding 2Mbps. TD-SCDMA chip designers are working on similar upgrades, which are expected late next year.

China has more than 400 million mobile users, with millions more signing up every month. Spending on its 3G market will easily run into the tens of billions over the next few years as networks are fully built out. But China has held back on issuing licenses because of the immaturity of its local standard, and that has confounded chip and gear makers waiting with baited breath for the spending spree to begin.

In a related development, TD-SCDMA will make its first overseas debut in South Korea early next year. According to the TD-SCDMA Alliance, SK Telecom will set up a trial network to test the technology and to develop value-added services. It will set up a similar test network in China and said it will also begin to explore 4G services in the country.

The deal is a good one for SK Telecom, since it allows them to operate in and possibly profit from the Chinese market, said Frances Guan, an analyst from In-Stat. SK Telecom operates both W-CDMA and CDMA2000 networks in South Korea. There was no indication that the TD-SCDMA network would be for domestic introduction.

Note: Cai Yan in Shanghai contributed to this report.