The industry has been waiting eagerly for China Mobile to announce the suppliers for its commercial 4G roll-outs, which will be one of the biggest LTE investments of 2013-14 ‘ the European Union has even been reported to have held off on an investigation into business practices of Chinese companies to avoid hurting the chances of European vendors. In fact, the world’s largest cellco has gone its usual route of breaking its contract into a large number of chunks and including just about all the contenders in the mix ‘ nine equipment suppliers have been selected.
This approach can be complex to manage, in terms of a harmonized network deployment across China’s scattered and diverse regions. However, it gives Mobile access to the innovations and brainpower of as many companies as possible, which it regards as critical as it builds the world’s largest platform for TD-LTE.
The operator has been determined not to be left in a technology backwater as it was with its TD-SCDMA 3G network, and has been putting its considerable weight behind getting every infrastructure and device maker to support a TD-LTE ecosystem. It is also working closely with other holders of unpaired spectrum round the world to encourage build-outs and roaming deals, and so drive economies of scale.
China Mobile has already been working with a number of vendors on its trial TD-LTE build-outs, which are larger and more service-rich than many fully commercial deployments in other countries. However, it will only be able to turn on full commercial services once it receives its 4G licence, expected late this year or early 2014. Therefore this new round of contracts is the largest so far, with a total value of CNY20bn ($3.27bn), though it certainly will not be the last chance for suppliers to get a piece of the huge network.
According to Telecom Asia, the successful bidders this time were the three European majors – Ericsson, NSN and Alcatel-Lucent (via its local arm Alcatel Shanghai Bell) – as well as local suppliers Huawei, ZTE, Datang Mobile, FiberHome Technologies, Potevio and New Postcom. Perhaps surprisingly Samsung, which has considerable expertise in TDD technologies courtesy of its WiMAX leadership, does not appear on this list.
Although many reports were presenting the line-up as a vindication of European vendors’ fears they would be sidelined by local providers, in reality Mobile has been quite broad-based. Reports indicate that the three Europeans have received about one-third of the awards between them (in line with being one-third of bidders). But of course, that proportion does not reflect their weight in the global market, and the big two Chinese manufacturers, Huawei and ZTE, are thought to have cleaned up with 25% apiece, leaving about 17% for the other four Chinese companies.
Together, the companies will build a network covering 31 provinces with 207,000 TD-LTE base stations.
The other Chinese cellcos, China Unicom and China Telecom, have used mainstream FDD technologies for their 3G networks and wish to do the same for LTE, but they have acknowledged the government may mandate TD-LTE in their upgrades too ‘ partly under pressure from Mobile to encourage a massive ecosystem. Unicom recently began TD-LTE pilots in anticipation of such a ruling from the government; and Telecom has reportedly sent tender documents to 10 OEMs regarding its own TD-LTE trials.
The smaller Chinese operators may be wary of a platform heavily controlled by their rival, but they may find some upsides too, in terms of their overall costs. According to estimates from ABI Research, total cost of ownership for a TD-LTE network is 13% lower than that of an equivalent FDD system.
This is partly because the spectrum has typically been seen as a second rate option, and so has gone far more cheaply than paired frequencies’ on average at 44% lower cost. That does not look set to change in the coming year, but the prices of TD-LTE equipment will come down as the sector achieves scale, removing the current price premium for the less developed standard. TD-LTE can also be cost effective as a backhaul option, argues ABI ‘ 33% cheaper than point-to-point microwave or 43% less than fiber.
There are about 60 TD-LTE deployments underway worldwide, 21 of them commercial, and the latest to be announced was an Ericsson contract in Iraq.