China, long anticipated to become the largest market for TD-LTE, is sending mixed signals about when that future will arrive. China Mobile staged a public LTE demonstration in Hangzhou in March after more than a year of internal testing, aiming to impress media and government officials. At the same time, Shenzhen in southern China is reportedly preparing a limited LTE launch for a small group of customers in late May.
Despite those public demonstrations, China Mobile maintains that more testing is necessary—particularly for dual-mode handsets and chipsets—and there is no sign a commercial license for LTE services will be issued imminently.
Those uncertainties cloud the near-term outlook for LTE deployment. Although the technology has shown promise in isolated trials and demonstrations, large-scale rollouts are unlikely before late 2013. Extended testing and delayed commercialization are eroding public expectations and undercutting China Mobile’s credibility as a global TD-LTE leader, a position the operator emphasized when it took the lead of the Global TD-LTE Initiative (GTI) last year.
China Mobile appears to be trying to navigate between careful testing and limited service trials. The company has suggested it may operate “pre-commercial” LTE services in select cities—including Hangzhou, Shenzhen and Beijing—but it has not provided a clear timetable.
At the same time, China Mobile plans substantial network expansion, with targets to install tens of thousands of base transceiver stations (BTSs) across nine cities and reach a total of roughly 20,000 BTSs by year-end to prepare for commercial services. Shenzhen is set to be a focal point with plans to increase from about 220 BTSs to roughly 3,000, with equipment supplied by major vendors such as Huawei and Ericsson. Meanwhile, China Mobile’s TD-LTE launch in Hong Kong in late April reportedly produced strong performance results.
The primary bottleneck appears to be terminals and chipsets. In recent tests, companies including Leadcore (a Datang Telecom subsidiary), ZTE Microelectronics and Innofidei joined a group of about a dozen chipset vendors to trial their solutions across various terminal devices, mostly data cards. Leadcore, a key supplier of TD-SCDMA chipsets, identified unstable performance and high power consumption as major weaknesses. While Huawei and ZTE have produced TD-LTE handsets, those devices are not yet regarded as commercial-grade products and are not available for broad shipment.
China Mobile has attempted to present a positive narrative despite the slow pace of deployment. In March the operator showcased an LTE-linked service on a Hangzhou bus route that delivered peak speeds up to 80 Mbps and averages near 30 Mbps downstream. However, that performance relied on a Wi-Fi gateway mounted on the bus, allowing non-LTE phones to access the high speeds rather than demonstrating native handheld LTE performance.
These technical and market challenges come at a difficult time for China Mobile. The company has faced slowing growth in recent years: profit growth fell to just over 5% in 2011 from 32% in 2007, and the pace of adding new customers has dropped from about 23% annually to roughly 11%. China Mobile is also losing higher-end users on its 3G TD-SCDMA service because of relatively inferior speeds and coverage compared with competitors. Those trends complicate expectations about whether and how TD-LTE will reverse the company’s slowdown.
Government policy is another important constraint. The Ministry of Industry and Information Technology (MIIT) has repeatedly said granting LTE licenses now would be premature, arguing that additional BTS deployment and improved terminal performance are required before moving to full commercial licensing.
In the short term, these factors push China Mobile back to the immediate task of strengthening and growing its existing 3G services—an already difficult challenge—while continuing cautious, phased approaches to TD-LTE testing and limited trials.