‘4G’ is getting closer in China, as leading cellco China Mobile lines up its first TD-LTE devices and rival China Telecom mulls a dual-mode network.
The former says it has 15 handsets ready for use on its LTE network, which should be cleared by the regulator to go fully commercial later this year, sparking major expansion. CEO Li Yue told a recent press conference that a further 100 devices are in the works, and talks over an iPhone continue.
The world’s largest cellco by subscribers has been in periodic negotiations with Apple over the years, but these have foundered over various issues such as branding and required sales targets. With Apple losing share to Android, however, it may ease up on its usual demands to sign up high growth carriers like Mobile (it is also reported to be close to a deal with another elusive Asian giant, NTT Docomo of Japan). ‘The discussions with Apple are still ongoing,’ Xi said. ‘Most of the discussion revolves around commercial details and technology issues.’
In the second quarter, Samsung led the Chinese smartphone market with 18% share, helped by Apple being confined to the smaller carriers. According to figures from Canalys, all the other top five vendors were local- Lenovo with 12% share, followed by Coolpad, ZTE and Huawei, all of them driven by distribution deals with Mobile. Apple, lacking such an alliance, saw its share drop to 5%, its lowest since the fourth quarter of 2010.
Meanwhile, controversy over 4G spectrum and technology has dogged the progress of Mobile’s rivals in making strategies for LTE. They also have less urgent incentive to invest in new networks, since they have superior 3G systems ‘ W-CDMA for China Unicom and CDMA2000 for China Telecom, while their larger rival was forced to use the local flavor, TD-SCDMA, which lacks the ecosystem of the others. It has therefore been accelerating its efforts to move to the more powerful and internationally supported TD-LTE, and has also lobbied for the other cellcos to have to deploy TDD technology too, to improve the economies of scale and roaming opportunities.
While migrating to FDD LTE is more logical for Unicom and Telecom, and would open up a broad device ecosystem more quickly, they are likely to be forced to deploy TD-LTE in at least some of their networks. With that outcome in mind, Telecom has started testing TD-LTE in major cities, according to company chairman Chang Xiaobing. “I expect Beijing to license TD-LTE first, so we have to prepare,” he told a recent news conference in Hong Kong.
The operator will spend CNY5bn ($816.5m) this year on its trial network, which will support both TDD and FDD flavors. CEO Wang Xiaochu commented: ‘To support national technology innovation and allow flexible use of spectrum resources to meet customer demand, we plan to deploy one hybrid LTE network of integrated resources, sharing the core network with wireless access through both TDD and FDD.’ There are also preliminary talks about the potential to share or rent capacity on China Mobile’s 4G network.
China Unicom is also testing TD-LTE, though it continues to pressurize the government to let it adopt the FDD variant. Its chairman, Chang Ziebing, has said it ‘will be well prepared for the FDD-LTE network construction, and we believe that the government and the regulators have very clear requirements for us.’ Although it will trial TD-LTE, it will ‘actively promote the evolution of WCDMA to FDD-LTE’.
One reason for the authorities to favor TD-LTE is that it was largely developed in China, reducing reliance on foreign technologies and patents, and putting local suppliers in a strong position. Indeed, Huawei and ZTE secured over half of China Mobile’s initial equipment contracts for its first commercial TD-LTE networks, according to Reuters sources. The operator already has extensive trial networks and has now awarded deals worth about CNY20bn ($3.26bn) to expand these once it receives its new operating licences for 4G.
The sources indicated that the three main European suppliers, Ericsson, Alcatel-Lucent and newly renamed Nokia Solutions and Networks (NSN) each gained around 10% of the awards, while the two leading Chinese firms won about 26% apiece (though deals are still to be finalized). China Mobile plans to build out around 20,000 TD-LTE or multimode base stations this year and to buy equipment for 207,000 base stations for 31 provinces.
In the first round of TD-LTE awards, which mainly focused on overlays for TD-SCDMA, non-Chinese vendors gained a rather smaller share ‘ NSN won about 7% for instance. Politics plays a part of course. The European Union recently denied reports that it had held off from threatened investigations of Huawei’s and ZTE’s business and security practices until the China Mobile awards were finalized, to avoid disadvantaging EU vendors. And it is important to China to give a reasonable share to non-local suppliers, to keep the EU happy and to ensure the technology it supports gains global support.
Chen Haofei, a telecoms analyst with China International Capital, told China Daily: “Too small a share for foreign vendors will harm the globalization of China’s 4G technology. The official result is likely to meet the European Union’s expectations. Because Chinese telecom firms still face investigation pressure from the EU, a mild resolution would help them reduce obstacles in Europe.”