Trends & Forecasts

3G in China - China Mobile all the way?

 A recent feature from Reuters compared the markets for 3G in China and looked forward towards 4G. In particular, it reviewed the successes of China’s three major players. Michael Schwartz reviews the article and adds his own thoughts...

A recent feature from Reuters compared the markets for 3G in China and looked forward towards 4G. In particular, it reviewed the successes of China’s three major players. Michael Schwartz reviews the article and adds his own thoughts.

Reuters has just reviewed the 3G sectors in two enormous markets, China and India. In fact, Reuters identifies the two countries as catalysts in the rise in wireless broadband worldwide. Millions signing up for 3G could, in Reuters’ opinion, become the Long-Term Evolution (4G) customers of the future.

 Key to this conclusion is the fact that fixed-line communication has never really taken off in either country because mobile technology has all but replaced it. This view, unsurprisingly one admits, is shared by the Chief Marketing Officer of the GSM Association (Michael O’Hara).

 While one giant, India, was adding 14 million mobile subscribers every month (with US$7.6 billion set to roll into the coffers of the New Delhi Government once the complex question of 3G auctions has been resolved) China now has 700 million mobile subscribers and a healthy 3G sector dating back to the beginning of this year.

 Add these 700 million customers to those people outside China who have signed up for the 3G-based technology HSPA (High-Speed  Packet Access) and you have a core of would-be 4G users. They are predicted to become 1 billion in number, and will have had experience of the speeds at which 4G is forecast to operate. Rather curiously, the term applied to this emerging phenomenon is Long-Term Evolution; as the total of 1 billion is due to be met in 2012, this is hardly some long-lasting Darwinian programme of subtle change!

Company rivalry

It is easy to regard China Mobile as not just the largest player in Chinese 3G, with 500 million out of 700 million mobile subscribers, but also the only player of importance. One rival counters this supposition; China Unicom currently claims an initial-stage 3G growth rate seven times (!) faster than China Mobile’s.

The rational behind this claim is that China Unicom 3G recruited over 1 million users in its first month: China Mobile only reached its first million after seven months! Perhaps the logic behind the claim is rather suspect, not least as China Mobile played its full part in convincing Chinese customers that 3G was a good way to go!

In fact, China Unicom employs WCDMA (Wideband Code Division Multiple Access) while China Mobile uses TD-SCDMA - approved by the Chinese Government. Any counter-claim that WCDMA is used outside China while TD-SCDMA is not can easily be dismissed by China Mobile’s reply that China Mobile enjoys such a dominant share of the mobile market that anyone else doesn’t matter. China Mobile has to work quickly; it has accepted a target from the Chinese Government of over 50 million TD-SCDMA users by year-end 2010. China Mobile is also criticised by China Unicom in that whereas the latter has signed people up in 285 cities in China, China Mobile has only arrived in 38.

This particular dispute should not conceal the existence of a third player, China Telecom. This company too can claim the use of a standard found outside China, CDMA-2000. In this case, China Mobile cannot just quote market share. China Telecom is “in talks” to provide handsets such as the Palm Pre and the BlackBerry (or even, dare we say it, the latter’s Chinese rival, the RedBerry). China Mobile will, in fact, be offering the Dell smartphone in the next few days. Any company that can make handsets more fashionable in their appearance is quite obviously on to a winner in China.

Onwards to 4G - and more?

Mastering 3G is no end to telecoms development. China Mobile is keen to build LTE networks in many of the cities where it operates;  LTE trials, if successful, could mean the roll-out of a fully commercial LTE system by 2011, once more in the opinion of the GSMA Association’s Michael O’Hara.

In fact, China Mobile’s plan is, more specifically, to build a mobile broadband TD-LTE (Time Division-Long Term Evolution) trial system for the World Expo 2010 in Shanghai next year, with 20MHz bandwidth. As this article is being concluded, Developing Telecoms has learnt that Alcatel-Lucent has been selected to deploy this very network. Claimed to be the first anywhere, it follows Alcatel-Lucent’s first TD-LTE call on a third party terminal achieved earlier this year.

In Guangzhou, in southern China, Ericsson is promoting TD-LTE technology. Ericsson’s achievement has been to prove that end-to- end interoperability in TD-LTE is possible in line with the latest global specifications. Their demonstration of this took place in Sweden, using an Ericsson LTE/Evolved Packet Core (EPC) network and user equipment provided by Aeroflex.

The presence of these major global players shows that LTE will be big business for all three Chinese operators mentioned in this article. A great deal of R&D has gone into ensuring all areas of the LTE system work efficiently and seamlessly, and that includes consumer hardware, Radio Access Network (RAN), and the Evolved Packet Core network. Look out for major customer trials planned for the middle of next year.

And two further points...

Firstly, this report has already mentioned a rise in the number of smartphones due to a parallel rise in wireless broadband: corresponding applications include video downloaded over mobiles and TV streaming. And as if the rise of the smartphone is not enough, the smartbook is hot on its tail. Smaller than laptop but larger than a smartphone, the smartbook will be a test case of the power of the consumer. It may establish itself as an accepted product in its own right or it may fail to find acceptance, being to big for the smartphone buyer and too small for those who use laptops. Customers have the smartbook’s fate in their wallets.

Secondly, the last word is for the ecologically minded: according to Huawei’s Terminal Division CEO Kevin Tao, his colleagues have sold 1,500 solar or wind-powered base stations, in turn integrated with electric networks and not relying solely on natural power to keep going.

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