China’s Ministry of Industry and Information Technology (MIIT) awarded its first batch of 4G licences to China Mobile, China Telecom and China Unicom. They are all of the TD-LTE variety. LTE FDD licence awards are slated for next year.
It’s not yet clear if any rollout conditions have been attached to the licences, or if the three operators – all of which applied for a TD-LTE concession – had to pay any money up front.
According to a report from unwiredview.com, China Mobile bagged a total of 130MHz of spectrum in various bands (1.9GHz, 2.3GHz and 2.6GHz), while China Telecom and China Unicom each scooped up 40MHz.
The 4G licence awards – long expected before the end of the year – gives China Mobile the green light to move from TD-SCDMA, China’s home-grown 3G standard.
Fitch Ratings recently described China Mobile, the largest mobile operator in the world in terms of subscribers, as being hindered by the “inferiority” of TD-SCDMA compared with “global 3G technologies”.
For its part, China Mobile looks eager to spring out of the 4G traps. According to a recent unconfirmed report in the Shanghai Daily, China Mobile is preparing to launch commercial 4G services on 18 December.
There may be some concern about a relative lack of TD-LTE handsets compared with devices for much more widely-deployed LTE FDD networks, but the scale of the opportunity in China should focus suppliers’ minds.
Speculation that China Mobile will strike its first iPhone deal with Apple is also sure to heat up.
According to a Bloomberg report, China’s Telecommunications Equipment and Certification Centre – under MIIT – has already approved for service an Apple handset that could run on a 4G TD-LTE network as well as China Mobile’s 3G network, according to a statement on the regulator’s website.
MIIT swatted aside the suggestion that a relatively short gap from when 3G licences were awarded (January 2009) doesn’t give operators in China enough time to recoup their 3G investment before having to plough more money into 4G. Western markets, generally, have had a ten-year gap between 3G and 4G.
In a statement, MIIT argued that 3G will function in co-existence with 4G for some time, while base stations on China Mobile’s TD-SCDMA network can “smoothly evolve” through a mixture of replacing hardware and software upgrades.
Fitch Ratings, however, is not convinced China’s 4G licensing process is as efficient as it might be, particularly for China Telecom and China Unicom.
While China Mobile is likely to remain focused on TD-LTE, says the credit ratings agency, it’s likely that China Telecom and China Unicom – once FDD LTE licences are awarded next year – will end up running two 4G networks. That will lead to capex inefficiencies, said Fitch.
The upside is that more network rollouts in China will give suppliers a boost.
To avoid the duplication of resources in TD-LTE rollout, MIIT said it will encourage closer cooperation between the three operators. How this will pan out in practice is unclear.
Before LTE FDD licences are awarded, MIIT says it wants to verify network interworking between TD and FDD variants of LTE.
4G economic boost
MIIT expects 4G will help spur economic growth and create jobs. In a statement, the regulator pointed to the positive economic impact of 3G.
In the three years since 3G licences were awarded, MIIT says direct investment amounted to CNY455.6 billion ($75 billion) and stimulated an enormous CNY2.23 trillion of indirect investment.
Another direct 3G economic spin-off has been the growth of the terminal business, worth CNY355.8 billion, plus the indirect stimulus of consumer consumption (CNY303.3 billion).
For good measure, MIIT adds that 3G led to direct GDP growth of CNY211 billion and an indirect GDP boost of CNY744 billion. More than one million 3G jobs have been created (and 2.6 million indirectly).
MIIT believes that the introduction of high-speed mobile broadband will be even more pronounced than 3G in terms of economic growth and creating jobs.
In separate news, according to a Reuters report, MIIT has given China Mobile permission to enter the country’s fixed-line broadband market.