Alcatel-Lucent Makes 4G Gains in China

ZTE, Huawei, and Alcatel-Lucent have taken the lion's share of China Telecom Corp. Ltd.'s first 4G contracts, according to Chinese media reports.

Between them, the three have snared more than 80 percent of the first stage of the operator's 4G network, which will comprise both FDD and TDD LTE infrastructure.

According to the reports, ZTE Corp. was awarded the single biggest deal, with 32 percent of the order, followed by Huawei Technologies Co. Ltd. with 28.9 percent.

And in welcome news for embattled Alcatel-Lucent, its local subsidiary, Alcatel Shanghai Bell Co. Ltd. , reportedly landed 16.6 percent of the deal. (See Alcatel-Lucent to Cut 10,000 Jobs.)

By contrast, Ericsson AB and Nokia Solutions and Networks (NSN) are believed to have been awarded less than 5 percent of the total.

Neither China Telecom, which currently offers its mobile services across 2G and 3G CDMA network infrastructure, nor the vendors have confirmed these numbers and the exact size of the tender also has not been disclosed. However, as a first-stage pilot network it is much smaller than China Mobile Ltd.'s 100-city tender completed seven weeks ago, which was valued at US$3.2 billion. (See Report: Huawei, ZTE Win Big at China Mobile.)

Huawei and ZTE were the most successful bidders then too, but with just a 26 percent share each. With bidding conducted in the shadow of a possible EU probe into government support for Chinese suppliers, Alcatel Shanghai Bell, Ericsson, and NSN were awarded 11 percent apiece.

As a relatively small-scale pilot, it's difficult to gauge the importance of the China Telecom contracts. However, Chinese analysts expressed surprise at Ericsson's poor showing, given its dominant role as a supplier to CDMA operators elsewhere in the world.

The tender process began in late August and was completed in an unusually short time, but that was just the final stage in a tortuous path. China Telecom had originally planned to upgrade its CDMA EV-DO network to LTE-FDD. However, under government pressure to support the state-preferred LTE-TDD standard, chairman Wang Xiaochu announced four months ago that the operator would adopt a dual-technology strategy, with FDD to be deployed nationwide and TDD solely in cities.

But its initial tender plan specified less than 10 percent for TDD and was rejected by the Ministry for Industry and IT (MIIT). The subsequent proposal, which provided for approximately 30 percent TDD, was approved.

Among the successful bidders in this first round were specialist local vendors Datang Mobile Communications Equipment Co. Ltd. , which supplies TDD equipment, and New Postcom, which makes FDD technology.

Separately, China Telecom has also opened a tender for TDD and FDD antennas. Reportedly, tender documents specify a ratio of TDD to FDD of 3:7.

The other major Chinese operator, China Unicom Ltd., has yet to open bidding for its 4G network, which will also be a hybrid.

The MIIT has said 4G licensing will begin by year-end, but has not said which operators will receive licenses, or whether the licenses will be exclusively for TDD or FDD or both.

— Robert Clark, contributing editor, special to Light Reading

R Clark 10/11/2013 | 6:54:03 AM
Re: Sharing out the prize The precise allocations of market share tell us that CM was quite politicized. In this one CT had been forced to raise the level of TD,  but it seems they had a free hand in choosing suppliers. 

You're probably right that price kept Ericsson and NSN at the bottom, and possibly more competitive pricing helped ALU to third place. But the fact that this was a pilot probably for half a dozen cities, whereas China Mobile's was a $10b nationwide rollout means there wasn't felt to be any need to satisfy foreign critics.  We'll see what happens in CT's first large-scale tender.



James_B_Crawshaw 10/11/2013 | 5:45:16 AM
Re: Sharing out the prize Nice article Robert. Could the low share for ERIC and NOK be down to pricing? Perhaps they weren't prepared to go as low as the others. Maybe CT was putting more emphasis on up front pricing while CM was focussed more on total cost of ownership. 
R Clark 10/11/2013 | 5:29:16 AM
Sharing out the prize A contrast with the China Mobile tender, where everyone got a carefully-weighed piece of the pie. It maybe because this is just a pilot stage, but it could also be because Chinese vendors are said to have complained about foreign players getting too much. No-one will own up to it, but sounds plausible.

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