China’s 3G network spending this year nearly tripled to $6.3 billion, with another $6.1 billion set to be spent on base station transceiver infrastructure next year, according to a new iSuppli Corp. report.
“After a strong increase in purchases of wireless communications gear in China in 2009, 2010 will bring a 2.4% decline to $6.1 billion as China Telecom completes purchasing for its massive rollout of 3G cellphone base-station transceivers,” said Will Kong, analyst for China research at iSuppli. While rollout spending on base station transceivers will decline, iSuppli still forecasts a healthy $5.88 billion in 2011, declining a bit each year with the country’s three operators forecast to spend $5.2 billion in 2013, when the majority of the networks should be built out.
The carriers’ massive investments in 3G services will propel the number of 3G subscribers from 338,000 in 2008 to more than 100 million by 2013, Kong predicts.
Deploying different technologies
The nation’s three operators are deploying three different technologies to realize their 3G deployment plans. The dominant operator, China Mobile, is moving beyond its GSM technology to home-grown TD-SCDMA protocol and installed 44,000 TD-SCDMA base stations through June. The carrier is expanding its TD-SCDMA network coverage to 238 cities during its third-round tender, involving an additional 60,000 base stations and 450,000 transceivers, iSuppli said.
However, it is uncertain that China Mobile, which dominates the landscape today with more than 500 million customers, can keep the lead as it rolls out the 3G technology amid plans to move to fourth-generation TD-LTE technology in 2010 and 2011. “China Mobile’s 3G network deployment speed is much slower compared with its competitors in China. This is surprising, given the company’s reputation for capable execution. This time, company efforts have been stymied by a lack of handset terminals, unstable infrastructure equipment and the company’s hope to deploy TD-LTE in the coming years.”
Although China Mobile announced that it will deploy a TD-LTE pre-commercial network in Shanghai in 2010, iSuppli thinks it will be 2011 before large-scale deployments of TD-LTE technology. Because of this, China Mobile will lose market share in the data service to its competitors, iSuppli believes.
Motorola looks to 4G
For its part, Motorola Inc. is hoping to gain big from the China Mobile TD-LTE rollout. The equipment provider just completed a key functionalities test with China’s Ministry of Industry and Information Technology. Motorola sees a huge opportunity in TD-LTE technology, Bruce Brda, senior VP and general manager of Motorola’s Wireless Networks Business, told RCR Wireless News. “Our sweet spot over the next few years is our TDD experience.” Brda said that the scale of an operator like China Mobile choosing the TD-LTE protocol may force the industry to harmonize the standard with the FDD-based LTE protocol. Further, as more unpaired spectrum becomes available, the standard could gain traction.
Traditional technologies
Meanwhile, the China’s second-largest operator China Unicom is deploying W-CDMA networks covering 285 cities with 71,000 base stations, iSuppli said. The research firm estimates that the carrier will spend $900 million this year and another $900 million next year to build out its nationwide network. China Unicom has 142.6 million subscribers to date and should top the 200 million mark by 2013, according to iSuppli.
The nation’s smallest 3G operator, China Telecom, is deploying 3G services based on the CDMA2000 standard, and counts 48.6 million customers as of September, according to iSuppli. The company thinks this carrier will top 50 million subscribers by the end of the year.
Service providers and content providers will likely see increased revenues from the 3G deployments, Kong noted. Domestic manufacturers like Huawei Technologies Co. Ltd. and ZTE Corp. will also benefit from the network rollouts.
According to Dell’Oro Group, Huawei was the second-largest infrastructure manufacturer in the world, behind only L.M. Ericsson. Nokia Siemens Networks is third, followed by Alcatel-Lucent. All of the infrastructure providers have significant contracts with Chinese operators.
