The Restructuring of China’s Telecom Industry
Compilation of recent articles
July 10, 2008
Shanghai. July 10. INTERFAX-CHINA – Serious problems exist with key TD-SCDMA services, according to test results released by China Mobile’s Shanghai subsidiary on July 9.
Shanghai Mobile said its parent company asked it to perform tests on 10 of 18 TD-SCDMA services. The tests showed that several feature services, including mobile TV, video conferencing, multimedia color ring back tone (CRBT) and Push to Talk over Cellular (POC) services, have serious problems.
The tests recorded an 83 percent success rate for creating video conference calls, 7 percentage points lower than China Mobile’s acceptable standard. The success rate for inviting people into conference calls came to 84 percent, six percentage points lower than acceptable, while the success rate for users entering a video conference was 75 percent, 15 percentage points lower than acceptable.
In turn, video conferencing calls did not always commence when programmed on a terminal to do so at a certain time, like an alarm clock, according to the report.
The report said that POC services sometimes could not support basic communication needs due to platform instability, and communication could not be sustained for longer than five minutes.
In CRBT tests, the successful play rate came to only 84 percent, 11 percentage points lower than acceptable standards.
Specific problems with TD-SCDMA terminals also plagued the tests. New Postcom and Hisense terminals often froze during testing, and Hisense terminals could not accurately display CRBT multimedia, the report said.
In addition, New Postcom and Hisense terminals had difficulty downloading videos during mobile TV tests. Shanghai Mobile said other problems included unclear images, long buffering times and mismatches between sound and image. The report said the poor mobile TV service was mainly due to handset quality issues.
When attempting to play mobile TV, some Lenovo terminals showed a black screen, some New Postcom terminals froze and some Samsung terminals cut off the video feed after 62 seconds, the report said.
The report said similar problems have been reported in almost all China Mobile-appointed testing cities, and that such problems are the reasons behind low TD-SCDMA customer satisfaction rates.
China Mobile kicked off commercial trials of the home-grown 3G mobile telecommunication standard in eight cities on April 1.
-ZDW
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June 30th 2008
China Mobile Pressed About TD-SCDMA, Gives Out More Handsets
Ministry of Industry and Information (MII) director Li Yizhong has ordered China Mobile (NYSE: CHL, 941.HK) to report daily to the MII on the development of TD-SCDMA projects, reports IT-Times citing unnamed sources. According to the report, Li has asked China Mobile to provide specifics including exact timelines and names of people involved in solving any problems that are discovered. China Mobile is expected to purchase a total of 200,000 TD-SCDMA terminals in the second round of TD-SCDMA equipment purchases that began on May 23.
China Mobile intends to donate 100,000 TD-SCDMA terminals complete with UIM cards, RMB 180 in mobile fees, and six Olympic functions to volunteers serving at the Beijing Olympics, reports The Beijing News quoting China Mobile chairman and CEO Wang Jianzhou. The mobile operator has invested around RMB 15 billion in TD-SCDMA trial network construction, building 14,688 base stations in eight cities including Beijing and Shanghai, said the report. China Mobile plans to build more than 500 additional base stations before the Games begin in August.
Wang said 20,000 TD-SCDMA terminals will be reserved for foreign traveler experience, and details on TD-SCDMA handset rentals, targeting foreign Olympic spectators, will be released in July. China Mobile partnered with Samsung to donate 15,000 TD-SCDMA handsets and RMB 3 million in mobile fees to the Beijing Organizing Committee for the Games of the XXIX Olympiad (BOCOG) on April 28.
June 27th 2008
Beijing To Have 3G Mobile Service But With Hiccups
China has long promised that third-generation mobile phone technology will be available at theBeijing Olympics, but international travelers shouldn’t expect seamless service.
The two 3G standards widely available in the rest of the world are unlikely to work in Beijing, experts say, meaning visitors will be faced with the choice of either getting a new phone that uses China’s homegrown technology, or putting up with significantly slower Internet connections than they’re used to.
Beijing has thus far only made arrangements to offer 3G – which allows high- speed Internet surfing and video downloads – through a locally produced standard called Time Division Synchronous Code Division Multiple Access, or TD-SCDMA. The other 3G technologies -CDMA2000 widely used in North America and South Korea and Wideband CDMA, used in Europe and most of Asia – have been offering users high speed mobile Internet for years.
But Beijing has never licensed mobile operators to use them in China, opting instead to wait years for the development of TD-SCDMA.
China Mobile Communications Corp., parent of Hong Kong-listedChina Mobile Ltd. (CHL), said it will offer TD-SCDMA during the Olympics in partnership with South Korea’s Samsung Electronics Co. (Korea:005930) (005930.SE), the world’s No. 2 cellphone maker by shipments.
A China Mobile spokeswoman declined to give further details of the collaboration, but the official Xinhua News Agency reported in May that the two companies have provided the Beijing Olympic Committee with 15,000 handsets running on the technology.
There has been no announcement on other 3G technologies during the Olympics, and analysts say it is unlikely they will be provided.
Tucker Grinnan, head of Asia telecoms equity research for HSBC in Hong Kong, says it would be technically possible to erect temporary base stations offering international 3G standards in a few places, but he doubts that it can be done in such a short time before the Olympics.
“With everything else that’s going on, it’s not clear that facilitating international 3G roaming is a priority of the Chinese government leading up to the Olympics,” Grinnan said.
The Beijing Organizing Committee for the Olympic Games declined to comment on what 3G standards would be available.
Duncan Clark, head of Beijing-based research firm BDA China, said the problem will extend to visitors’ laptops as well as their phones. Especially in Europe, consumers use WCDMA-based data cards in laptops that give them fast Internet access from anywhere. Those cards run at 3.5G speeds, even faster than 3G.
If reporters or other professionals bring those cards to Beijing hoping to use them, they will automatically shift down to EDGE, a 2.5G technology offering much slower connection speeds, Clark said.
“It will be a disappointment to Olympic visitors and it’s a missed opportunity for China,” Clark said.
Even those who manage to acquire a TD-SCDMA phone or a data card may find problems with the service, some say.
China Mobile has been testing TD-SCDMA in eight cities, but the results are less than stellar. BDA China said in a report they tested some TD-SCDMA phones and found problems including “erratic service quality, expensive and immature handsets, weak transmission signal, and limited coverage.”
A China Mobile spokeswoman declined to comment on the report, but said that the company is adding more TD-SCDMA base stations to improve signal strength.
Long Wait For 3G Licenses
Any inconveniences faced by visitors during the Olympics pale to the frustrations faced by China’s mobile carriers and equipment makers that have been waiting for years to cash in on 3G but are constricted by Beijing’s focus on promoting local technology.
China Mobile and China Unicom Ltd. (NYSE:CHU) (CHU) would have moved to offer 3G services to users long ago if it was up to purely commercial factors, said Grinnan.
“People think of these as private companies, but they are actually instruments of state policy,” he said.
China Unicom (NYSE:CHU) and China Telecom Corp. (NYSE:CHA) (CHA) hope to grab market share from near-monopoly China Mobile by offering international 3G standards once they are allowed to do so, people familiar with the companies’ plans told Dow Jones Newswires.
The two operators declined to comment on what 3G standards they plan to offer.
China Mobile, meanwhile, has been saddled with the responsibility of developing TD-SCDMA. To date, its parent company has spent CNY15 billion ($2.2 billion) developing the technology, according to a China Mobile spokeswoman.
For years, China’s innovative telecom equipment makers like Huawei Technologies Co. and ZTE Corp. (HongKong:0763) (0763.HK) have been selling 3G handsets and network equipment around the world, but so far not in their home market.
Chinese regulators said last month they will issue 3G licenses after the restructuring of China’s telecommunications industry, which will merge six operators into three. There is uncertainty, however, as to when exactly the restructuring will be completed. The series of mergers are to be closed at the capital level by the end of the year, but operational integration will take longer. Grinnan estimates it could take 12 to 18 months.
Beijing is expected to grant a TD-SCDMA license to China Mobile, a CDMA2000 license to China Telecom (NYSE:CHA) , and a WCDMAlicense to China Unicom (NYSE:CHU) .
The ambiguity over timing gives Beijing the flexibility to further delay the introduction of international 3G standards, giving China Mobile more time to develop TD-SCDMA, analysts say. They note investors counting on 3G to boost China’s equipment makers and mobile carriers shouldn’t hold their breath.
“Technology policy does really matter to the Chinese government,” said Grinnan. “They have a very long time table, and they’re not really concerned what foreign investors think in the short term.”
Update: March 16, 2008
Adding further credibility to the scenario outlined below is a March 16 report via China Trade Information – China Telecom seeking CDMA sales, technical staff
This report notes China Telecom is continuing to make active preparations for the acquisition of Unicom’s CDMA business.
The carrier’s recently-established CDMA network office is recruiting mobile industry talent, Sohu IT reported. A source said technical and sales staff from handset manufacturers are now sending in their resumés. The office, headed by a marketing vice-president, has also heard from China Unicom employees making discreet inquiries about terms of employment.
China Telecom has had close contact with vendors and CDMA service partners on how to integrate the CDMA network and business lines with its existing fixed-line and xiaolingtong operations.
According to Telecom’s own timetable, it expects to close the deal over the next five months, in anticipation of the mergers going taking place in September. A Lehman Brothers report last Friday predicted the merger would not be completed until early 2009.
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China Mobile pessimistic about TD-SCDMA
China Mobile is pessimistic about the development of TD-SCDMA, China’s homegrown 3G standard, because of handset problems and the relative strength of other standards, an industry insider said today.
The source also said that operators are already preparing to compete over who will develop a network for WCDMA, the European 3G standard, after the TD-SCDMA network is in place. “Inside China Mobile, most people are actually not optimistic [about TD-SCDMA development],” the source, who wished to remain anonymous, told Interfax.
The source said that China Mobile is working to ensure TD-SCDMA is ready in time for the Olympics in August, despite problems with the network and with handsets.
“China Mobile employees have been using TD-SCDMA handsets since November 2007 for testing purposes. They can use some 3G functions, such as video telephone and high-speed download. However, due to quality problems with TD-SCDMA handsets, the results of the trials have not been good,” the source said.
“However, even though there are many problems, the TD-SCDMA network will be put into use before the Olympics,” the source said.
The source said that TD-SCDMA handsets are encountering difficulties. “One reason [China Mobile is pessimistic about TD-SCDMA] is that TD-SCDMA handsets, which are produced in China, have serious problems.” The source added that the earliest that phone numbers for TD-SCDMA handsets will be released to the general public will be in May of this year.
Compared with handsets supporting the WCDMA network, TD-SCDMA handsets are much weaker in both quantity and quality, the source said.
Another problem with TD-SCDMA is that the network is unstable, and does not operate well in cities with many tall buildings, such as Shanghai, the source said, since the buildings obstruct the signals.
WCDMA appears to be the preferred choice among Chinese operators. According to the source, competition is already heating up over who will be permitted to develop WCDMA in China after TD-SCDMA is in use.
“In fact, China Mobile prefers WCDMA, and was actually less willing [to construct a TD-SCDMA network than a WCDMA network],” the source said.
Analysts have speculated that following the reshuffle of China’s telecom industry, which is expected to happen in the near future, China Telecom will be responsible for WCDMA network construction after it receives a license to operate in the mobile industry. In addition, China Unicom’s CDMA business will be taken over by China Telecom, China Unicom’s GSM business will be taken over by China Netcom, and China TieTong will be merged with China Mobile. These three reshuffled operators – China Mobile, China Telecom and China Netcom – will therefore all have fixed-line, mobile and broadband businesses, as well as 3G licenses, according to industry insiders.
The source said that after the industry reshuffle is complete, China Mobile is planning to compete with China Telecom for the right to construct a WCDMA network.
“There are many reasons for operators to compete for the WCDMA network,” the source said. “One reason is that because WCDMA is the 3G standard in Europe, many foreigners will need a WCDMA network when they are in China. A more important reason is that Nokia and Motorola, which currently enjoy large percentages of China’s handset market, mainly produce 3G handsets that support WCDMA.”
There are currently six state-owned telecom operators in China: China Mobile, China Unicom, China Telecom, China Netcom, China TieTong and China Satcom. Of the six, only China Mobile and China Unicom are currently licensed to provide mobile phone services. China Unicom provides both CDMA and GSM mobile services, while China Mobile only provides GSM mobile services. China Telecom and China Netcom both intend to enter the mobile market by obtaining 3G mobile service licenses.
The decision to develop a homegrown 3G standard, instead of using one of the existing standards available, has always been a somewhat controversial issue in China. Most analysts agree that the main reason the Chinese government decided to develop a homegrown standard was to avoid patent fees and to have more control over the technology. Other analysts have voiced the opinion that national security and national pride were factors as well.
This entry was posted on Tuesday, January 29th, 2008 at 5:18 am and is filed under China Trade News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
Telefonica raises interest in China
Spanish carrier Telefonica said Friday that it has raised its holding in Chinese fixed line operator, China Netcom, from 5 per cent to 7.22 per cent, at a cost of Eur309m.
Reports suggest that in the future, Telefonica intends to raise its stake to 10 per cent or more. A number of overseas carriers, Telefonica and Vodafone included, are taking a strong interest in China – one of the world’s fastest growing mobile markets – ahead of the allocation of 3G licences in the country.
Last month, the Chinese government lifted geographic restrictions on foreign investment and increased the ceiling on asset ownership by overseas companies from 35 per cent to 49 per cent.
The opening up of China’s domestic and international basic telecoms service was part of the country’s commitment to the World Trade Organisation, but also comes ahead of an expected change in the Chinese telecoms landscape this year.
The Chinese government is planning to shake up the local telecoms market as part of the licensing of 3G in country. One of the most likely scenarios would see second placed mobile operator, China Unicom, split up and sold to fixed-line giants China Telecom and China Netcom.
Unicom’s operates a GSM and CDMA network and has dedicated engineering teams for each. So a separation of operations could make it easier for Unicom to find strategic investors for each of the businesses.
Speculation is rife that a merged Unicom CDMA and Netcom network will roll out CDMA2000, while China Telecom will launch WCDMA or TD-SCDMA using Unicom’s GSM network.
Leading carrier China Mobile is widely expected to commercially introduce the homegrown Chinese-air-interface TD-SCDMA, but analysts are not ruling out the possibility that China Mobile will also pursue WCDMA.
However, it is likely that the allocation of 3G licences in China, whenever that happens, will be the only thing to put an end to the rumours, as it will likely be the catalyst for restructuring. The Beijing Olympics in August of 2008 are seen to be an attractive event to launch 3G services around.
3G CDMA China Mobile China Netcom China Telecom China Unicom GSM WCDMA
This entry was posted on Monday, January 21st, 2008 at 3:12 am and is filed under China Trade News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
TD-SCDMA Will Dominate in China, but Faces Tough Going Elsewhere
TD-SCDMA is expected to be the dominant 3G technology in China, due to the heavyweight government support it receives. According to ABI Research analyst Hwai Lin Khor, “TD-SCDMA is likely to face an uphill battle outside of Mainland China, even in Hong Kong.”
China’s TD-SCDMA ecosystem is ready. Both Chinese and international industry players are already showing off their multimode handsets with TDSCDMA/GSM/GPRS/EDGE interfaces. The deployed network infrastructure is already upgraded to an HSDPA-enhanced version. TD-SCDMA’s intellectual property rights holder, Datang Mobile, is already working towards an evolution of TD-SCDMA that will eventually incorporate LTE. The evidence suggests that the current 3G delay is due to regulatory complications rather than technical ones. ABI Research believes that the restructuring of the telecommunications industry will continue through Q1 2008. The first TD-SCDMA license will be issued at the end of the quarter. Initial TD-SCDMA services will be provided in the ten cities where China Mobile, China Telecom and China Netcom have deployed trial networks. The rest of the 3G licenses will be released six to nine months after TD-SCDMA. Hwai Lin Khor notes, “If the price points of handsets and services are attractive, TD-SCDMA may not need to fear WCDMA in the domestic market.”
China’s influence on Hong Kong’s telecommunications industry is becoming more significant. This is apparent through the recent 850MHz band spectrum auction for CDMA2000 services, to ensure continuity of roaming services for China’s visitors using CDMA handsets.
“It is no surprise that TD-SCDMA will eventually make its move into the island once the Chinese government has finalized its 3G outcome,” says Hwai Lin Khor. In fact, 5MHz of TDD spectrum was already allocated to the UMTS licensees when the license was issued. “However, the success of TD-SCDMA in a mature market such as Hong Kong’s is heavily dependent on market forces. It will face tough competition outside Mainland China.”
3G CDMA China Mobile China Netcom China Telecom GSM TD SCDMA WCDMA
This entry was posted on Monday, January 14th, 2008 at 5:10 am and is filed under China Trade News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
The dual-listed China Unicom’s share performance was mixed in Shanghai and Hong Kong yesterday, which showed investors’ different views over an industry restructure plan.
· China Unicom’s GSM (global system for mobile communications) business will join China Netcom.
· China Telecom will acquire China Unicom’s CDMA (code division multiple access) business, the South China Morning Post reported.
· China Mobile will merge with fixed-line operator China Tietong in the restructuring, which is expected to occur in March or April, according to the report. China Telecom and China Netcom are China’s top fixed-line phone operators. The restructure will help the three firms become competitive compared with China Mobile and China Unicom, the smaller of the country’s two mobile carriers, is expected to benefit from the move.
Hong Kong-listed China Unicom jumped 6.62 percent to hit $HK18.68 (US$2.40) yesterday, though the Hang Seng Index dropped 1.34 percent.
“It is possible as the regulators promised to fasten the restructure process in 2008 … the timetable will probably be set in the first half,” Chen Liang, a telecommunications analyst at Guotai Junan Securities, said in a note yesterday.
China Unicom’s Shanghai shares, however, decreased 1.17 percent to 12.68 yuan (US$1.74) while the Shanghai Composite Index grew 0.52 percent yesterday. The local China Unicom shares also surged on Thursday and have more than doubled in the past six months on the Shanghai market.
“It is another version of rumors (of an industry restructure) and we don’t take it seriously,” said Sandy Shen, an analyst at Gartner Inc, a United States-based IT research firm.
The restructure and 3G license issuances won’t happen until the end of this year, Shen said.
Chen Haofei, China International Capital Corp’s telecommunications analyst, said the restructure won’t happen in the next two quarters.
“It needs many things to prepare for the move, such as management reshuffles,” Chen said in a note delivered on Monday.
“The focus of this quarter is the annual results of the carriers.”
3G China Mobile China Netcom China Telecom China Tietong China Unicom GSM
This entry was posted on Saturday, January 12th, 2008 at 4:59 am and is filed under China Trade News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
Beijing gives final nod to telecoms reshuffle
Beijing has given the final green light to the long-awaited restructuring of China’s telecommunications sector that will include a series of mergers to create three industry giants capable of providing a full range of services, the South China Morning Post reported on Friday.
Speculation that the revamp had been approved lifted shares of China Unicom by 7 percent and China Telecom by 6 percent on Thursday. Top leaders in Beijing had put the finishing touches to the industry revamp at meetings last month and this month, the newspaper quoted unidentified sources as saying.
But UBS said in a report on Thursday that the restructuring was unlikely to happen before the Beijing Olympics in August and there was an increasing chance it could be delayed to 2009.
Under the plan, China Mobile , the world’s biggest mobile telephone operator, would merge with the national railway’s fixed-line unit, China Tietong, the newspaper said.
China Unicom’s GSM mobile business would join with China Netcom Group while China Telecom Corp, the country’s top fixed-line operator, would acquire Unicom’s CDMA mobile telephone business.
China Netcom’s shares rose 3.3 percent on Thursday, while China Mobile eased 1 percent amid fears of increasing competition in its lucrative cellular business.
The restructuring would also see a reshuffle of senior industry executives, with Xi Guohua, a vice minister of the Ministry of Information Industry, replacing China Mobile Chairman Wang Jianzhou, who would soon retire, the newspaper said.
China Telecom chairman Wang Xiaochu would be promoted to lead the Ministry of Information Industry and his post was expected to be assumed by Netcom’s Chairman Zhang Chunjiang.
Chang Xiaobing, Unicom’s chairman, was expected to lead the merged China Unicom GSM and China Netcom company, it added.
China Netcom and China Tietong officials declined to comment on market speculation.
A China Telecom spokesman said the company had not received any information regarding the restructuring.
China Mobile and China Unicom were not immediately available for comment.
China Mobile China Netcom China Telecom China Unicom GSM
This entry was posted on Friday, January 11th, 2008 at 5:39 am and is filed under China Trade News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
China Telecom Firms Rise on Hopes for 3G Wireless Launch
Shares of China’s major telecommunications companies surged Thursday in Hong Kong trade after the State Council approved a plan on a new-generation broadband wireless network, raising hopes that the government might restructure the telecom sector and give third-generation wireless licenses.
China’s State Council, or cabinet, said late Wednesday the plan would “greatly promote the competitiveness and innovation of China’s wireless mobile communications.” At 0755 GMT, shares in China Telecom rose 6% to HK$6.28, while China Unicom gained 3.5% to HK$17.96. Fixed-line operator China Netcom Group Corp. (Hong Kong) rose 3.9% to HK$24.15. The benchmark Hang Seng Index was down 0.9%.
But China’s Ministry of Information Industry and some analysts downplayed the statement’s significance on Thursday.
Wang Lijian, a Ministry of Information Industry spokesman said the statement intended to express the Chinese government’s general direction and is not a specific reference to the issuance of third generation licenses or the deployment of a TD-SCDMA network.
China is currently testing TD-SCDMA, its locally developed third-generation wireless technology, in 10 cities.
China has said it will provide 3G services during the Beijing Olympic Games next year without specifying whether it will use TD-SCDMA technology or already established global 3G technologies such as W-CDMA and CDMA2000.
“This is not news,” said BNP Paribas analyst Eric Wen, who added that the cabinet’s statement hasn’t affected his expectations for the timing of a 3G rollout in China.
“There are two windows for issuing licenses and restructuring. They are March-April after the National People’s Congress, and in October after the Olympics.”
Duncan Clark, chairman of telecommunications consultancy BDA China Ltd., said the statement’s mention of “competitiveness” and “innovation” could be an indication of support for TD-SCDMA.
Media reports have speculated that China Unicom will sell its CDMA network to dominant fixed-line operator China Telecom while China Unicom will merge with China Netcom as part of an industry restructuring.
Analysts say they expect China to have three mobile operators with three 3G licenses following the restructuring.
3G China Netcom China Telecom China Unicom TD SCDMA
This entry was posted on Friday, December 28th, 2007 at 6:34 am and is filed under China Trade News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
