China Issues LTE FDD Licenses
Full-throated 4G competition is finally coming to China following the long-awaited issue of LTE FDD licences.
Fourteen months after the allocation of TDD licences, the two smaller telcos, China Telecom Corp. Ltd. (NYSE: CHA) and China Unicom Ltd. (NYSE: CHU), were today the eager recipients of FDD operating permits.
They have a mountain to climb, as they have only a fraction of the 4G market between them. Most analysts believe they will never be able to catch up with China Mobile Ltd. (NYSE: CHL), which now has 106 million 4G subs, having added an impressive 16 million in January alone. (See Forget 3G: China Mobile Is a 4G King.)
"2015 will be a difficult year for China Telecom and China Unicom," said Strategy Analytics senior analyst Guang Yang. "They will lose high-end customers under competitive pressure from China Mobile, while they will also have to finance their 4G deployments."
The Ministry for Industry and IT (MIIT) gave no reason for the delay. Even local commentators have been critical, with one saying the market had already gone "way past the strategic requirements for nurturing" the locally backed TDD standard.
Both China Telecom, which runs an EVDO 3G network, and China Unicom, a WCDMA 3G player, received TDD licenses when they were handed out in December 2013, but have been openly reluctant to deploy extensively. (See China Issues 4G TDD Licences.)
By contrast China Mobile, eager to get off its TD-SCDMA 3G island, began building its LTE TDD network two years ago and now claims to have rolled out 700,000 basestations in 300 cities and plans to hit the 1 million mark in 2015. Last year it spent 75 billion yuan (US$12 billion) on 4G, while Telecom pumped in a relatively modest 25 billion yuan and Unicom a puny 10 billion yuan, according to research firm Qianzhan.
The new licensees are not starting from scratch, however. They were given trial licenses to build out converged TDD/FDD networks in 56 cities in the second half of last year. According to one estimate, Unicom last year deployed 100,000 basestations.
Both have set ambitious targets for 2015. China Telecom's President and COO Yang Jie has said the company is aiming for 100 million 4G subscribers this year. China Unicom has said it hopes to cover 95% of the population with mobile broadband.
— Robert Clark, contributing editor, special to Light Reading