China Telecom has a greater 3G burden than China Mobile

Popular opinion has it that China Mobile has been saddled with a major burden because it has to roll out a 3G network using TD-SCDMA technology. China Unicom and China Mobile, by contrast, are seen to be lucky in that they can roll out 3G networks using established global standards.

This couldn’t be further from the truth. In fact, it’s China Telecom that bears the biggest burden, because it has to build a network using 1xEV-DO technology. Although EV-DO is well established and is an excellent technology, CDMA operators that would be expected to choose it are turning against it in droves.

Verizon Wireless and Telus are just two of the high-profile names that have decided not to pursue a CDMA future, opting for LTE instead, to be part of an ecosystem that has the economy of scale that GSM and WCDMA do.

China’s government has therefore boxed China Telecom into a corner, where it has a dwindling number of operators for company. Ultimately, China Telecom will have to spend more on building its network than China Mobile or China Unicom will.

As widely anticipated, the government finally awarded 3G licenses to the country’s three incumbent operators – China Mobile, China Unicom and China Telecom – on Jan. 7.

China Mobile will offer services using China’s homegrown TD-SCDMA standard, China Unicom will use WCDMA, and China Telecom will use EV-DO, according to the Ministry of Industry and Information Technology.

In December, the MIIT announced that it expects spending on equipment by carriers to total US$41 billion over the next two years.

Although TD-SCDMA is expected to take about three years to achieve scale – at which time it will be nowhere near full national coverage – ultimately, it doesn’t matter.

China Mobile is already planning its LTE network and will integrate TD-SCDMA into the global LTE standard. TDD-LTE, which Ericsson demonstrated in January last year, is already part of the 3GPP LTE standard.

Tang Jianfeng, general manager for business development at the China Mobile Research Institute, says China Mobile is not alone in pursuing TD-LTE, with support coming from Vodafone, TIM, T-Mobile, AT&T, Orange, NTT DoCoMo and Verizon Wireless.

And Joachim Horn, chief technology officer at T-Mobile International, says the industry might require a combination of FDD and TDD modes in the future, because it will become difficult to get duplex bands for FDD with adequately spaced uplink and downlink channels.

Bill Huang, China Mobile’s CTO, says that TDD will become more important and that future mobile broadband or mobile Internet services will require TDD technology to complement the use of FDD.

China Mobile started a 10-city trial of TD-SCDMA in March 2007 and had installed 18,000 base stations by end-September 2007, and it is rolling out the network in 28 more cities.

The operator is upgrading the service to HSDPA, and as of Sept. 5 it had 300,474 TD-SCDMA subs, of which 7,337 were using HSDPA data cards. China Mobile’s TD-SCDMA product range includes 39 R4 terminals and seven HSDPA data cards.

Huang has said that he expects field trials of TDD/FDD LTE equipment in 2Q09 and precommercial trials by end-2009. He said that he foresees large-scale TDD LTE trials by 2Q10, potentially using as many as 15,000 base stations. “China Mobile is the most ready operator for LTE,” he said at Informa Telecoms & Media’s LTE World Summit in December. “We’ve actually chosen cell sites for LTE.”

So China Mobile doesn’t have to build a TD-SCDMA network. In 2010 it will launch commercial TDD-LTE services and will be in a position to export its knowledge in deploying the technology to operators worldwide.

Vodafone and China Mobile plan to begin field trials of TD-LTE in Beijing in 1H09, in line with targets for LTE set by the Next Generation Mobile Network Alliance, which aims for trials this year to ensure terminal-interoperability testing and commercial equipment availability by 2010.

While China Mobile and China Unicom enjoy the benefits of a thriving global LTE business, China Telecom will pay dearly for EV-DO.

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