By Beijing correspondent Dr. Lin Sun
In a recent interview, Yang Hua, Secretary General of the TD‑SCDMA Alliance, urged China Mobile to launch a “pre‑commercial” LTE service in 2012—China’s term for offering service to a limited group of customers before opening it to the general public. Despite this call, many in the industry fear those hopes may not be fulfilled.
Analysts estimate it could take three to five years before LTE sees wide commercial deployment in China. The delay is driven less by technical barriers than by the need to balance the interests of existing 3G services and a smooth migration path to LTE. Recently, China Unicom and China Telecom have accelerated their 3G rollouts, while TD‑SCDMA has struggled.
China Mobile understandably wants to move quickly to gain a competitive edge, but regulators are cautious. They do not want LTE to disrupt the development of WCDMA and EV‑DO networks—services whose operators have no immediate plans to migrate to LTE.
For now, China Unicom and China Telecom say they are watching LTE developments closely while focusing on maximizing returns from their recent 3G investments.
TD‑SCDMA has been a problematic project from the start. Launched with structural limitations, it received heavy government support driven by national pride and the desire to foster a homegrown standard. Despite substantial investment, it has not met expectations.
China Mobile Communications Corporation (CMCC) reluctantly embraced TD‑SCDMA as a state‑owned enterprise, yet customer choices revealed the technology’s shortcomings. The consequences for CMCC include losses in 3G subscribers—especially in the higher‑spending segment that generates most profit—together with reputational damage. Limited handset availability and modest data speeds have dampened smartphone adoption and mobile app usage, reinforcing perceptions that TD‑SCDMA is essentially an advanced label on a legacy 2G experience.
TD‑LTE presents a more promising path. It aligns with global LTE standards, and operators such as SoftBank in Japan and Bharti Airtel in India have already deployed TD‑LTE. Dozens of operators worldwide have run trials, and equipment vendors broadly support the TDD variant of LTE, seeing potential gains from China’s vast market and CMCC’s scale.
Importantly, TD‑SCDMA’s core network can be reused for TD‑LTE because both technologies employ a TDD transmission scheme, offering a partial salvage of earlier investments.
In 2011 CMCC made steady progress with TD‑LTE testing. Trials in six cities reported no major technical obstacles, and a second phase of testing—focused on various terminal models across different network conditions—was scheduled to begin in January. CMCC planned the second phase to run through June if all went smoothly.
Beyond those tests, CMCC has not publicly outlined immediate commercial plans. Analysts caution that further evaluation, potential re‑testing, equipment procurement and negotiation processes could extend timelines considerably. Ultimately, the decision to move to commercial service is a regulatory and political matter, not one CMCC can determine unilaterally.
Proceed with Caution
Despite positive early test results, TD‑LTE still faces significant technical and market challenges. The TD‑SCDMA Alliance secretary general highlighted unresolved issues across networks, chipsets, testing equipment and multi‑mode handsets. A senior industry expert singled out three major hurdles ahead: spectrum allocation, terminal interworking, and viable business models.
CMCC acknowledges it lacks ready solutions and intends to rely on extensive testing to resolve remaining problems. After the struggles with TD‑SCDMA, the company cannot afford another high‑profile setback that would further erode public confidence and market share.
LTE places CMCC in a complex position. The company effectively lost the 3G customer race after adopting an inferior standard; recent figures showed China Unicom adding more monthly 3G subscribers than CMCC for the first time—3.4 million for WCDMA versus 2.7 million for TD‑SCDMA in November—signaling a likely shift in market leadership for 3G.
For CMCC, LTE represents a potential turning point. The operator has quietly moved past TD‑SCDMA in its marketing, favoring more neutral messages about quality and price. Given its market share, operational experience and financial resources, CMCC is the most qualified Chinese operator to lead an LTE rollout. Still, the telecom sector is dynamic, and no dominant position is guaranteed.
The central uncertainty is whether LTE will lift CMCC to renewed growth or deepen its challenges. The technology and industry backing exist; the real question is whether Chinese consumers will demand and pay for higher‑speed services at the price points required to make LTE broadly profitable.
Many analysts overlook an essential reality: China remains economically different from wealthier markets, so success depends not only on technical superiority but on affordability for the majority. Technologies and services that flourish elsewhere can falter in China—not because consumers resist adoption, but because cost barriers limit uptake.
The slow start of 3G was mainly due to high prices. Once service fees fell and low‑cost smartphones became widely available, 3G adoption accelerated. Pricing and consumer purchasing power are factors outside CMCC’s direct control, adding another layer of uncertainty to LTE’s prospects in China.
Beijing Correspondent Dr Lin Sun
Lin Sun, Ph.D., has 25 years of experience in China’s telecommunications industry, across switching and transmission, wireless, broadband and broadcasting. He has served as a senior executive for international companies in China and now advises on investment, technology and competition in the Chinese market.
Dr. Sun has published and spoken widely on telecom issues. He earned a Ph.D. in telecommunications in the United States. Contact him here.