Doug Young

Opinion | 4G buzz: who gets what in China

China's telecoms regulator is likely to award 4G licence in the second half of the year, allowing China Telecom and Unicom to build networks based on global technology standards

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Why you can trust SCMP

Doug Young

Published: 9:24am, 12 Mar 2013Updated: 10:20am, 12 Mar 2013

Chinese telecoms officials have been speaking non-stop these last two weeks about fourth-generation mobile networks, better known as 4G, making the roll-out of commercial 4G services look almost inevitable as early as the third quarter of this year. But amid all the buzz, the critical question and previously hot topic of which telcos will be assigned to build networks based on what 4G technology standards has quietly disappeared from the discussion.

The lack of noise on that subject leads me to believe that the regulator has abandoned previously rumoured plans that would have forced either China Telecom (0728.HK; NYSE: CHA) or China Unicom (0762.HK; NYSE: CHU) to build a 4G network based on a homegrown Chinese technology known as TD-LTE. Such a requirement would have dealt a major setback to either of these smaller wireless telcos, which have used a technological edge over the last 3 years to grab market share from industry heavyweight China Mobile (0941.HK; NYSE: CHL).

Before we go any further, let's recap some of the many comments that have come from both industry executives and top regulators attending the National People's Congress now taking place in Beijing. Those comments saw Ministry of Industry and Information Technology (MIIT) chief Miao Wei say that 4G telecoms licences would be issued this year, largely conforming with market expectation. After that major pronouncement, Miao quickly moved to temper expectations by saying the complete roll-out of commercial 4G networks will take at least a year.

Meantime, China Mobile Chairman Xi Guohua and Unicom Chairman Chang Xiaobing have also been speaking freely about the coming arrival of 4G, with Chang saying Unicom is speeding up its preparations to roll out its 4G network. Interestingly, the only person we haven't seen discussing 4G in the headlines is China Telecom Chairman Wang Xiaochu.

Perhaps that's simply because reporters haven't questioned him yet; but some might speculate that Wang's silence comes as his company lobbies aggressively behind the scenes to ensure it gets the 4G licence it wants. Some readers may recall that rumors emerged last year that China Mobile was arguing that the China-developed TD-LTE standard would progress much faster if either Unicom or China Telecom was forced to use the standard in its 4G network.

No one commented publicly on the rumors, but China Telecom moved ahead with trials for a different, globally developed 4G technology that is the natural successor to its current 3G network. I suspect the company has been lobbying non-stop to avoid being forced to build a TD-LTE network. Such a requirement would deal a huge setback to China Telecom, which would face many problems in making TD-LTE compatible with its current 2G and 3G networks.