ChinaTel set to bring WiMAX to China

Few would argue the complex nature of mobile services in China. However, most agree that the potential for return on mobile services in China make the risk worth the reward.
One company confident in that chance in U.S.-based ChinaTel Group Inc. (CHTL), which is currently working with CECT-Chinacomm Communications Co. Ltd. to deploy a WiMAX-based network using 3.5 GHz spectrum across 29 markets in China, including Shanghai and Shenzhen.
ChinaTel, which was formed in 2008 through a reverse merger of a pair of Nevada-based companies, one of which had experience building out wireless networks with Sprint Nextel Corp. and T-Mobile International AG, originally gained a foothold in China by deploying a Wi-Fi network in Beijing in support of the 2008 Olympics, a network ChinaTel said was still operating. The company was then tapped through its partnership with CECT-Chinacomm Communications, which was granted spectrum licenses by the government, to begin building out a wireless broadband network using the 802.16e WiMAX specification.
“We have 20 megahertz of spectrum now, but that could be bolstered in the future by the Chinese government,” noted Kenneth Hobbs, VP of mergers and acquisitions for ChinaTel.
Hobbs added that it was under government mandate to have 12 markets deployed by June 2011, and that it had already completed work on three network operating centers and three switches. Deployment of the network in the remaining 17 markets is not expected to begin until 2014. The company also noted that it has between 400,000 and 500,000 people currently paying for access to its Wi-Fi network that is operating in parts of Beijing, Shanghai and Shenzhen.
In a move that could help ChinaTel lock up additional support for its build out plans, it signed a memorandum of understanding this week with ZTE Corp. that will make the infrastructure provider preferred and primary supplier of equipment, operational services and financing for ChinaTel’s planned wireless broadband networks in China, Peru and other markets.
According to the agreement, ZTE will treat ChinaTel as its “preferred customer in the supply of equipment, consumer products, operational services, solutions and financing.” ZTE said it will offer ChinaTel “favorable vendor financing proposal for each project identified and use its best efforts to facilitate ChinaTel’s applications for debt financing by banks with which ZTE has relationships.” The MOU also calls for both parties to “share equal ownership of intellectual property involved in equipment, software, consumer products, services or solutions developed through their joint efforts.”
ChinaTel was quick to point out that while its current network plans are based on the fixed-mobile version of the WiMAX standard, that its equipment is easily upgradeable to the full mobile version of the standard. In addition, the company said it could also move to LTE as either a full overlay or a concurrent network choice in the future, though that would depend on gaining government approval.
“Technology for us is really irrelevant,” Hobbs explained. “Ownership of the space is most important.”
Despite having to compete with established Chinese wireless providers China Mobile Ltd., China Telecom Corp. Ltd. and China Unicom Ltd., Hobbs said the company was confident that its focus on providing mobile data services would allow it to succeed it the market.
Beyond its China operations, ChinaTel also recently acquired a 95% ownership stake in Peruvian telecom provider Perusat S.A., which holds 2.5 GHz spectrum licenses covering portions of Peru.