Why Chinese operators plan to share towers?

Unlike Indian service providers, Chinese operators have not been sharing towers either for 2G, 3G, 4G or Wi-Fi operations. So, all the three operators, China Mobile, China Telecom and China Unicom had to set up their own infrastructure for providing voice and data coverage to their consumers irrespective of technology. Being a large country, this was a good strategy for last 20 years.

But things are changing with the advent of 4G technology. China Telecom have notified the stock exchange that they are in preliminary discussions with two mainland operators regarding the joint establishment of a tower facilities company aiming to promote sharing of resources for basic telecom facilities and to lower the network construction and operating costs. This is a good move by all the operators as they have a very aggressive 4G plan in 2014 and tower sharing will help them conserve their resources.

Presently, sharing of resources are in the initial stages of discussion and things will be unveiled in due course of time as it is the need of the hour for all operators to minimize their capex and opex and to provide more value to their consumers as well as investors.

Let’s look at how things have unfolded in China. In December 2013, China’s Ministry of Industry and Information Technology (MIIT) issued 4G licenses to three Chinese telecom operators- China Mobile, China Telecom and China Unicom based on TD-LTE technology. China Mobile was granted permission to operate LTE/fourth generation digital mobile telecommunications (TD-LTE) business, as well as the approval for CMCC to authorize the company to operate fixed-line telecommunications business.

China Telecom was granted by MIIT the permit to operate the LTE/4G digital cellular mobile service (TD-LTE). Meanwhile, China Telecom will apply for the permit to operate the LTE/4G digital cellular mobile service (LTE-FDD) as soon as practicable. China Unicom was granted the license to operate LTE/4G digital cellular mobile service (TD-LTE) by MIIT. MIIT has also granted approval for Unicom Parent to operate LTE/4G digital cellular mobile service (TD-LTE) nationwide in China.

Now let’s look at the operators and how they are placed on the infrastructure front in terms of existing deployment and future deployment of towers. China Unicom has a total of 280.98 million mobile subscribers and presently, 3G base stations is around 407,000. With the deployment of 4G, the number of 4G towers will be at least twice the number in the initial stages.

The company’s outlook for 2014 is two pronged. First, to realise 3G nationwide coverage and build mobile broadband network with synergy between 4G and 3G. Second, further reform on investment management to optimize capex structure and increase capex effectiveness.

China Telecom has a total of 185.58 million mobile subscribers and plans are to deploy LTE network appropriately with regard to government policy and business development, building a nationwide integrated 4G/3G high speed network to enhance operating return. The company is looking at both TD&FDD LTE accesses, with most of the LTE capex supporting both TD&FDD LTE services (inclusive infrastructure, tower and core network) and flexible deployment of more spectrum resources for enhanced return.

China Mobile has a total mobile customer base of 767.21 million and plans are to deploy 500,000 towers by 2014. Presently, total base stations have reached 1.4 million which includes: TD-SCDMA with 446,000 base stations and GSM with 881,000 base stations. The company is planning to strengthen its four network coordination be it 2G, 3G, 4G and WLAN. The company is planning to use 2G for maintaining coverage, 3G for enhancing carriage capability, 4G for commenced scale of construction and commercialization and WLAN for effectively diverting traffic.

So, all the Chinese operators are planning to conserve resources and plans to strengthen its network by optimizing its capex infrastructure and increasing its capex effectiveness. Sharing of towers will help them to set up their 4G network at a lower cost, faster deployment and finally pass these benefits to end consumer who can avail quality wireless broadband service in the country.

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