China Mobile’s 4G LTE strategy

In the coming week, China Mobile will confirm 4G LTE vendors which is long awaited by the vendor community. One will debate which vendor got what portion of the deal but one thing is sure, Chinese vendors both Huawei and ZTE will benefit a lot from the first phase of TD-LTE rollout in the country. European and American vendors like Ericsson, NSN and Alcatel-Lucent will have to be satisfied with a small portion of the deal.

The stage is set right for the 4G LTE in the country. China Mobile has a total base of 740 billion subscribers of which 3G customer stands at 137 million. Data services presently contribute around 33.5 percent of telecom services revenue which is bound to increase with 4G LTE commercialization in FY 2013-14.

The company has opted for “Four Network” stategy where the focus is to transition from a voice model to a voice + data traffic + applications model, to provide service at a resonable network cost. The focus is to take 2G, 3G (TD-SCDMA), WLAN and TD-LTE networks for providing broadband coverage, excellent quality and high speed.

In 2G, the focus is on network optimization. China Mobile has 840,000 BTS with network utilization of 72 percent. One has to see how the company can increase network optimization once 4G LTE is commercially deployed.

3G and 4G are complimentary to each other. The company’s 3G strategy offers premium service by providing continuous coverage in areas with heavy network traffic through its 361,000 installed BTS base. With the deployment of 4G, one is expecting an increase in network utilization from the present 25 percent.

WLAN has maintained its leadership in network capability by carefully planning and optimizing the network for greater efficiency. In WLAN, the focus is on low cost carriage of traffic to achieve effective offload. By the end of June 2013, WLAN access points (AP) reached 4.10 million and accounting for 75 percent of data traffic but in revenue terms it contributes 2.7 percent of wireless data revenue.

For 4G LTE, the company has opted for TD-LTE technology. With respect to TD-LTE, China Mobile is planning to invest 22 percent of the total capital expenditure (RMB 190.2 billion) which comes around RMB 41.8 billion or $6.79 billion in 2013. In the first six months, the company has invested RMB 57 billion or $9.24 billion on capital expenditure.

The company is planning to deploy 200,000 LTE base stations in 2013 by providing continuous coverage in the main districts of 100 major cities in China. The company is also rigorously promoting VoLTE (voice over LTE) solution to drive industry development. On the transmission side, the company is strengthening its network resource by enhancing capacity on metro, long distance and international long distance. The company presently has 420,000 km of optic fiber cables and in the last six months, the company has increased international bandwidth by 307 GB.

On TD-LTE device front, the market has seen 25 models of trial devices. In terms of device ecosystem, 100 models are under development and 15 handset is intended for commercial use. Handset vendors have launched 28nm multi-mode and multi-frequency TD-LTE smartphones in China. In 2013, China Mobile is planning to procure more than 1 million TD-LTE devices which is bound to increase multi-fold in 2014.

The company is making vital progress on Internet of things by establishing standardized and modularized product bank and is also working on an open platform for wider acceptability.

Having done well on 3G, China Mobile will find it easy to move to 4G as sole focus is on setting up 4G LTE network. With content ecosystem in place for 3G, it would come handy for 4G but the company is accelerating deployment in areas such as intelligent voice, payment, cloud, location-based services and unified communications and also focusing heavily on mobile reading, videos, games and animation.

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