Latest Signs Show 4G Finally Coming
I’ve largely ignored most recent reports speculating on the imminent awarding of 4G wireless telecoms licenses, which has been rumored for most of this year but never seems to happen. But the latest flurry of news seems to indicate that licenses are finally on the cusp of coming, with one report saying they could even arrive on Thursday, which is today. (Chinese article) I won’t comment too much on the exact timing, though this particular set of reports does seem more credible than previous ones, leading me to predict we could see some news either this week or next.
China is already years behind the rest of the world in 4G, a wireless technology that will offer mobile Internet speeds significantly faster than the current 3G. The long delay was partly due to the fact that China was also well behind the rest of the world in 3G, with the result that most of the nation’s 3G networks are just 3 years old. Thus the telecoms regulator wanted to give the nation’s 3 telcos time to recoup some of their billions of dollars in investment on those networks.
But the Ministry of Industry and Information Technology (MIIT) has come under growing pressure to launch 4G, with leading telco China Mobile (HKEx: 941; NYSE: CHL) lobbying the hardest. Even the nation’s other 2 carriers, China Unicom (HKEx: 762; NYSE: CHU) and China Telecom (HKEx: 728; NYSE: CHA), are lobbying strongly for 4G now, as the nation gets set to open up its highly protected telecoms market by offering virtual network operator (VNO) licenses to a dozen or more new domestic carriers.
With all that pressure building, the MIIT finally appears ready to offer the 4G licenses, based on the sudden flurry of new media reports. Those reports are led by the one saying license awards could come as soon as Thursday, citing an unnamed source. According to that report, the upcoming licenses will only allow the nation’s 3 telcos to launch commercial 4G service over networks using a homegrown technology called TD-LTE. That report adds that licenses for networks using the more globally accepted 4G technology called FDD-LTE will come at an unspecified later date.
In addition to that news, another report says the MIIT will call the 3 big telcos to its offices today to discuss the formal issue of 4G licenses. (Chinese article) Another report says China Mobile plans to formally launch commercial 4G service on December 18 (Chinese article), while yet another says China Telecom has started accelerating its plans to build a 4G network based on FDD-LTE technology. (Chinese article) All this comes after I reported back in late September that China Mobile had begun advertising for pre-orders for 4G service in a number of markets around China, including here in Shanghai. (previous post)
I’ve been in China long enough to know that this kind of flurry of reports often indicates that big news is coming, and I suspect we’ll probably get a big formal announcement soon. So the next question becomes: What are we likely to see when this long-awaited development finally comes, and how will it impact the business of China’s big 3 telcos?
The answer is that China Mobile will be the biggest beneficiary of these initial license awards, and will probably report up to 10 million new 4G users in its first month or two of commercial service. The company has been building up its 4G network for the last 3 years, and now has relatively strong coverage and a wide range of handsets for the service. It could even potentially launch an Apple (Nasdaq: AAPL) iPhone for its 4G network before Chinese New Year. Meantime, Unicom and China Telecom will have to stand by and wait while China Mobile gets this head start, as they won’t be able to become serious 4G players until the MIIT issues FDD-LTE licenses probably sometime in the second half of 2014.
Bottom line: China is likely to announce limited 4G telecoms licenses within the next 2 weeks, with China Mobile likely to sign up as many as 10 million subscribers in the first 1-2 months of service.
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