At the end of October 2011, the aggregate number of mobile subscribers of the three main telecom operators (China Mobile, China Telecom and China Unicom) in China stood at approximately 951.7 million. According to the figures released by these three operators, China had 110 million 3G subscribers at the end of October 2011, China Mobile leading with a share of 41.33%, while China Unicom and China Telecom had 30.23% and 28.44%, respectively.
Figure: 3G Subscriber Market Share by Operator in China (as of October 31st, 2011)
Source: Figures released by Operators
China Unicom's 3G service subscribers account for approximately 17% of its total mobile service user numbers, while for China Mobile the figure is approximately 7%. Compared with China Telecom's CDMA2000 and China Unicom's WCDMA network, China Mobile's TD-SCDMA network did not gain the upper hand in the 3G market. Although China Mobile has over 45 million 3G subscribers currently, the company has not been successful in attracting vendors' attention to its TD-SCDMA network.
China Mobile is facing several challenges with TD-SCDMA technology. One is the smaller economies of scale associated with a weak device ecosystem compared to UMTS/HSPA resulting from the late start and limited market (China only) of TD-SCDMA. In order to address the limitations in its existing 3G TD-SCDMA services (such as handsets only addressing the domestic market, and the limitations of global roaming forcing operators to reinforce dual mode/multiple mode handset development), China Mobile has accelerated its TD-LTE development plans.
China Mobile has set up numerous trials with various infrastructure vendors, device manufacturers, and chipset suppliers to both optimize TD-LTE technology and boost the ecosystem. The operator has launched seven TD-LTE trials with seven equipment vendors: Ericsson and Huawei have participated in test in Shenzhen, ZTE in Guangzhou, Datang in Nanjing, Motorola in Xiamen, Nokia Siemens in Hongzhou, and Shanghai Bell in Shanghai.
In Q3 2011, China Mobile trial focused on single-mode TD-LTE tests, and multi- mode LTE/3G tests in Q4 2011. China Mobile has conducted TD-LTE trials using 2.3GHz and 2.6GHz frequencies in six cities. The 2.6GHz band will be used for outdoor coverage and a mix of 2.3GHz and 2.6GHz for indoor coverage. China Mobile will spend over RMB1.5bn (US$230m) in these field trials, rolling out approximately 3,500 base stations. Additional technical tests are expected to continue during Q4 2011 and the company will enter into a pre-commercial phase through Q1 2012. China Mobile will set up 10,000-20,000 additional TD-LTE base stations around China in 2012. In addition, as per China Mobile, 50% of its 250,000 TD-SCDMA base stations around China can be gradually upgraded to TD-LTE.
The exact date of the commercial TD-LTE service launch is still unknown, but Maravedis anticipates that it will not happen until the first half of 2012 at the earliest, more likely late 2012. China Mobile has decided to accelerate its investment in the technology, aiming to push commercialization one year ahead of its original schedule. To speed things up, China Mobile has been promoting international adoption of TD-LTE through cooperation with mobile telecom carriers in North America, Europe and Asia, with more than 30 TD-LTE experimental networks completed or under establishment at the end of October 2011. The initiative will foster strategic synergies among operators.
During Q3 2011, Clearwire (USA) and China Mobile announced their collaboration on the development of new TD-LTE devices. Specifically, the two companies have agreed to work together to cultivate a robust device ecosystem that supports multi-mode, multi-band devices with minimum component complexity and cost. These devices could see use in both markets and foster potentially lucrative roaming agreements. Once again, collaboration and partnership among operators is important and is becoming the dominant trend for 4G mobile operators wanting to deploy TD-LTE.
There are many other operators from countries like Malaysia, India and Australia supporting TD-LTE that will depend on the economies of scale driven by the TD-LTE deployment of China Mobile. China Mobile's TD-LTE deployment will accelerate and foster deployments of the technology in other markets. Similarly, China Mobile's deployment delays would delay the plans of other TD-LTE supporters. It makes more sense for China Mobile to deploy earlier with the support of all these operators than make the whole industry wait two more years for TD-LTE. In other words, the deployment timeline of TD-LTE by China Mobile is crucial for the success of TD-LTE globally. If China Mobile, which is the largest TD-LTE supporter, delays the deployment, it is likely that support of TD-LTE will decline globally.
Basharat Ashai is an APAC analyst with Maravedis.