4G’s National Day Arrival: Cause To Celebrate?

4G TD-LTE licenses coming in October

Mobile telecoms fans who have been waiting for years for China to issue 4G mobile licenses may finally have reason to celebrate, amid the latest media reports that say licenses will finally be awarded around the upcoming Oct 1 National Day holiday. But the awards will be somewhat bittersweet for true mobile fans, since only users of a homegrown technology called TD-LTE will be able to sample the super-high speeds offered by 4G for at least the next few months. People waiting for service based on more mature western-developed technology called FDD-LTE will probably have to wait at least another half year, and I wouldn’t be surprised if the wait is even closer to a year or more.

In many ways, the period around Chinese National Day seems quite appropriate for the long-delayed release of China’s first 4G mobile licenses in this kind of staggered approach. After all, the patriotic Oct 1 holiday, which celebrates the establishment of the People’s Republic of China in 1949, looks like a very suitable time to showcase such a nationally-developed technology like TD-LTE. In all fairness, China should be proud of developing such technology, even though its determination means that local consumers often have to suffer with inferior products to those used by western consumers.

Media have been writing about 4G in China for most of this year, with the expectation that licenses would be given out sometime in 2013. That would make China several years behind the west and even many other developing markets, which gave out 4G licenses much earlier and already have working commercial services. China’s regulator, the slow-moving Ministry of Industry and Information Technology, has also indicated it would give out licenses this year. Now the latest reports are giving the period around the Oct 1 holiday as the official time when licenses will be given out. (Chinese article)

The newest reports also confirm what many were already expecting, namely that all 3 of the country’s wireless carriers will initially receive licenses that only allow them to offer 4G service over TD-LTE networks. Anyone who wants to offer service over a network using the globally developed FDD-LTE standard will have to apply separately for such a license. There’s no indication of how long such an application will take to get approval, but I would suspect the MIIT won’t be in any hurry to consider such applications.

For anyone who doesn’t follow this topic closely, dominant mobile carrier China Mobile (HKEx: 941; NYSE CHL) is planning to offer TD-LTE service, and has already built a network that is largely operational and ready for commercial use. The nation’s other 2 carriers, China Unicom (HKEx: 762; NYSE: CHU) and China Telecom (HKEx: 728; NYSE: CHA) both would like to build FDD-LTE networks, which would be more compatible with their 3G networks.

Unicom surprised people last week when it indicated it would build its own TD-LTE network to give it more flexibility in its 4G service offerings. China Telecom has indicated it would rather lease capacity on China Mobile’s TD-LTE network, and then build its own FDD-LTE network if and when it gets a license. On that front, media are reporting that China Telecom has already submitted its leasing request to China Mobile, and won’t build its own TD-LTE network if the 2 sides can reach an agreement. (Chinese article)

It will be interesting to see what kind of reception China Mobile’s TD-LTE service gets when the first 4G licenses are finally issued in October. I suspect the initial reception will be quite chilly, as the technology will still have many issues to be resolved when commercial service finally begins. In the meantime, the MIIT will be watching closely and delaying its consideration of FDD-LTE licenses as long as it can, forcing Unicom and possibly China Telecom to develop their own TD-LTE offerings.

Bottom line: TD-LTE 4G mobile service will get a chilly reception when it launches in October or November, but FDD licenses might not come until a year or more later.

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This article was first published in the online edition of the South China Morning Post at www.scmp.com.

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