2013: The Year of TD Wireless?
A flurry of new signals from the public and private sectors are all indicating that TD, a home-grown Chinese technology for third- and fourth-generation wireless mobile services, may finally be gaining momentum after several years of languishing, providing a welcome boost for China Mobile (HKEx: 941; NYSE: CHL), the technology’s main proponent. The latest news bits include word that China Mobile itself is preparing to purchase large volumes of handsets that can operate on the 4G standard known as TD-LTE, and that global smartphone chip leader Qualcomm (Nasdaq: QCOM) will roll out a highly anticipated TD chip by the end of the year. From the regulatory end, the Ministry of Industry and Information Technology (MIIT), which oversees the telecoms sector, is also reportedly preparing to finalize its spectrum plans for TD-LTE and 4G in general within the next month.
I’ll take a look at each of these news bits separately in a moment and try to decipher what they mean. But first I want to say that frankly speaking, this kind of broader push into 4G is long overdue from China. Most of the world’s other major markets announced their 4G plans years ago and have all been building 4G networks for the last 2 years, even as China’s 3 major telcos focused on developing their older technology 3G networks.
The MIIT, which had previously indicated 4G licenses could still be 1-2 years away, must finally be realizing that a major reason China lags the rest of the world in telecoms development is that the country’s telcos are constantly one generation behind their global peers due to overly conservative regulation. Accordingly, the MIIT may finally be waking up to the fact that it will need to move a bit more quickly in granting licenses and laying the groundwork for new product development if China ever hopes to become a major telecoms innovator.
Let’s look quickly at these 3 most recent news bits, starting with media reports that China Mobile will soon sharply accelerate its purchasing of TD-LTE smartphones and other devices, with plans to order more than 200,000 such terminals in the fourth quarter alone. (English article) In fact, China Mobile has been aggressively developing TD-LTE all along, after its 3G network, based on the related technology called TD-SCDMA, was plagued with problems due to its newness and lack of support from telecoms equipment makers. This latest bullish procurement plan shows China Mobile intends to move quickly ahead with its bigger plan to offer commercial TD-LTE service as soon as next year.
China Mobile’s aggressive TD-LTE plans should also get a strong shot in the arm from the highly anticipated roll-out of a high-performance TD-based smartphone chip that Qualcomm plans to roll out by the end of the year, according other media reports. (Chinese article) Perhaps most importantly, the roll-out of this chip will remove the last major obstacle preventing China Mobile from offering a model of Apple’s (Nasdaq: AAPL) popular iPhone that can run on its 3G and 4G networks.
Lastly there’s the news bit from the MIIT itself, which will has reportedly said it will issue its spectrum allocation plan for TD-LTE and other 4G services within a month, in the latest indication that China Mobile and its 2 main rivals will receive 4G licenses in the near future. (English article) With all these increasingly loud signals in the airwaves, I wouldn’t be surprised to see the MIIT issue its 4G licenses as soon as the first quarter of next year, and for China Mobile to start offering commercial 4G service soon afterwards, perhaps by June 2013.
Bottom line: The latest signals indicate the telecoms regulator may issue 4G licenses as soon as the first quarter of 2013, with China Mobile set to offer its own commercial 4G service shortly afterwards.
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