China issues 4G licences

The Chinese Ministry of Industry and Information Technology (MIIT) has issued the country’s first round of 4G licences to China Mobile, China Telecom and China Unicom.

It is currently unknown if the three largest operators are obliged by the licence terms to meet any rollout deadlines, or if they have had to pay any part of the fee upfront. All three of the licences are for TD-LTE, with FDD-LTE licences expected to be issued next year.

While China Mobile is basing its main LTE network on the TD strain, both China Telecom and China Unicom are planning on deploying both technologies. China Mobile is planning on launching 4G services on December 18.

Market leader – and world’s largest operator – China Mobile reportedly snapped up 130MHz of spectrum across several frequency bands (1.9GHz, 2.3GHz and 2.6GHz). Meanwhile, China Telecom and China Unicom each won 40MHz of spectrum in unconfirmed bands.

The licence issue will be a welcome opportunity for China Mobile to offer services outside of its home-grown TD-SCDMA network. The “inferiority” of this technology compared to other global 3G standards was deemed an impediment for China Mobile by ratings agency Fitch.

While one potential problem with TD-LTE is the lack of compatible devices, the sheer scale of China Mobile’s operation presents manufacturers with a significant opportunity. Apple is one major device maker reportedly considering a deal with China Mobile, with the country’s Telecommunications Equipment and Certification Centre believed to have approved an Apple handset that supports the TD strain.

MIIT has dismissed concerns that the comparatively brief gap between the issue of 3G and 4G licences will see operators unable to recover their 3G investments, claiming that the technologies will overlap for several years. In the West, the gap between 3G and 4G was typically around 10 years.

However, while China Mobile may be able to “smoothly evolve” its base stations from TD-SCDMA to TD-LTE via revisions to software and hardware, China Telecom and China Unicom may be worse off, warned Fitch. The two operators will essentially each have to run 4G networks based on the two different strains in tandem, resulting in “Capex inefficiencies”.

MIIT has claimed that it can alleviate this by encouraging operators to share resources, which is part of the reason for the delay in the FDD licensing process. The Ministry wants to ascertain how easily the two LTE strands can interwork.

 

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