China Mobile Moves Ahead on 4G, Broadband 中国移动提前推进4G、宽带业务

By newsdoug on June 20, 2012

China Mobile challenges regulator China Mobile (HKEx: 941; NYSE: CHL), the nation’s largest mobile carrier, is forging ahead with a couple of new initiatives in the broadband and 4G spaces, even as it neglects its 3G mobile business that continues to lose market share. I’m happy to see that the company seems determined to move ahead with broadband, which could become an important new revenue source. But I worry that the telecoms regulator will soon clamp down on China Mobile’s aggressive 4G drive that is increasingly looking like an unlicensed commercial service.

All this comes against the backdrop of a slowing 3G market, where the latest data shows that China Mobile’s share slipped to 38.5 percent in May, or less than 6 percentage points ahead of the second largest player, China Unicom (HKEx: 762; NYSE: CHU). (English article) The 3G story isn’t really new, so let’s look quickly instead at China Mobile’s latest developments in 4G and broadband.

On the 4G front, the headlines have been buzzing in the last few days about what looks like a rapid commercialization of China Mobile’s experimental 4G network in Hangzhou, one of 6 such trial networks it is setting up as it tests the technology, known as TD-LTE. (English article) The reports say China Mobile has been popularizing the service in the city, and may be preparing to start charging subscription fees for it, even though it is still technically experimental.

This latest move comes after China Mobile took similar steps for another one of the 4G trial networks in Shenzhen, and follow comments by a top executive earlier this year that the Shenzhen and Hangzhou networks could be ready for commercial service by the end of this year. (previous post) The only problem is, the telecoms regulator has shown no signs of issuing 4G licenses for at least a couple of years, and these increasingly vocal signals that China Mobile wants to commercialize 4G much sooner could soon result in a clash between the company and the regulator.

Meantime, another top executive, new Chairman Xi Guohua, is also challenging the regulator by saying that China Mobile is determined to offer a fixed-line broadband product, even if it doesn’t receive a license for this new service. (Chinese article) I’ve said before that the regulator should give China Mobile the license to break the current duopoly in fixed-line broadband held by Unicom and China Telecom (HKEx: 728; NYSE: CHA). (previous post)

But this kind of brinksmanship by Xi and China Mobile may not be the best approach, and could ultimately end up damaging relations with the regulator, as could China Mobile’s aggressive 4G approach.

Bottom line: China Mobile’s aggressive moves in broadband and 4G could soon raise the ire of the telecoms regulator, causing problems for both of these new initiatives.

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