China Mobile Outlines 4G Plan - Analyst Blog

China Mobile (CHL), the world’s largest wireless carrier by subscriber, has revealed its plan to commence the trial run of its 4G network during World Expo 2010 to be held in Shanghai from May 1 to Oct 31, 2010. The company’s 4G service is based on the TD-LTE (Time Division Duplex Long Term Evolution) mobile broadband technology. Roughly 200 participants and 70 million visitors are expected to assemble at the Expo.

China Mobile has recently selected Alcatel-Lucent (ALU) for the responsibilities of design, construction, installation and integration of communication infrastructure to facilitate the 4G network trial. The TD-LTE network will provide advanced wireless services (including high-definition TV and ultra-fast broadband Internet access) to the visitors at the exposition.

The three major Chinese telecom operators China Mobile, China Unicom (CHU) and China Telecom (CHA) are investing heavily in Shanghai to improve the city’s network infrastructure, thereby ensuring the delivery of smooth network coverage for Word Expo 2010. China Mobile plans to invest RMB 15 billion ($2.19 billion) over the next three years in Shanghai.

China Mobile’s TD-LTE venture is being supported by the British telecom giant Vodafone (VOD). In addition to Alcatel-Lucent, the company has also selected Ericsson (ERIC), Motorola (MOT), Nokia Siemens, Huawei Technologies and ZTE Corp as the primary technology vendors for the upcoming 4G project in Shanghai.

China Mobile’s TD-LTE network will enable downlink speeds of 60 megabits per second (Mbps), which is 20−30 times faster than the average throughput levels offered by existing 3G networks. China Mobile plans to allocate approximately 60% of its capital expenditure over the next few years to develop its 4G network.

The company’s recently accelerated development plan for TD-LTE stems from the uncertainties related to the success of its TD-SCDMA technology based 3G services. China Mobile is facing challenges regarding the adaptability and performance of this indigenously developed 3G standard.

European and American 3G standards such as WCDMA and CDMA2000, which have been adopted by China Unicom and China Telecom, respectively, offer faster network speeds and already enjoy wide acceptability in the marketplace. Additionally, TD-SCDMA also suffers from certain limitations when it comes to international roaming. These issues may restrict a wider adoption of China Mobile’s 3G network.

China Mobile aims to leverage the 4G TD-LTE opportunity to offset the limitations of the 3G TD-SCDMA network. Moreover, this move will also provide an opportunity to leapfrog the company’s Chinese peers to emerge as the first carrier to deploy 4G LTE based mobile broadband network in China, representing a significant competitive advantage.