China’s 4G ambition

A case in point is the evolving, all-important 4G phone technology, its own home-grown version of which China seems intent on developing and promoting, rather than adopting the relatively more established 4G deployment from the West. While it would have been much easier and hassle-free to “go with the flow” and adopt the existing 4G […]

A case in point is the evolving, all-important 4G phone technology, its own home-grown version of which China seems intent on developing and promoting, rather than adopting the relatively more established 4G deployment from the West. While it would have been much easier and hassle-free to “go with the flow” and adopt the existing 4G technology, China sees values in promoting the growth and enhancing the stability of its domestic high tech base, even if there are a few tech hiccups along the way. In a nutshell, a government’s goal is to bolster domestic companies.
The state-owned telecom company, China Mobile, is the vehicle through which the Chinese government is advancing its 4G initiative. As pointed out by Paul Mozur in the 16 August 2013 issue of The Wall Street Journal, China Mobile has earmarked over $30 billion for the capital project and has started taking bids to supply 207,000 base stations needed for the new 4G network. Moreover, it is believed that Chinese companies will own a significant number of patents as they develop the devices for their country’s 4G standard.
The 4G technology of course refers to the fourth generation of cell phone mobile communications standards, a successor to the third-generation (3G) standards. Long-Term Evolution (LTE) is one of the two wireless technologies that are used in 4G. The other type of 4G is the Mobile WiMax standard. The 4G system is attractive because it provides mobile, extremely high-broadband Internet access.  In the US, the data transfer rate associated with LTE systems is of the order of 20 megabits per second, which is quite huge when compared with the 8.0 megabits per second that is characteristic of the average bandwidth in a typical American home today. (The corresponding bandwidth figure for China is a meager 2 megabits per second.)
LTE is currently the fastest way to transmit data (as in text, photos, streaming songs, watching videos, etc.) from masts (towers) to your phones and other gadgets, like the tablets. However, the global adoption of this technology seems to have been somewhat undermined by the fact that different networks use different frequencies for LTE, so devices cannot easily be switched between operators. That is, equipment made for different networks may not always be compatible because of different frequency bands.
As it stands, only three countries in the world appear to have significant numbers of LTE customers – US, South Korea, and Japan. As Jessica Vascellaro, Sam Schechner, and Spencer Ante pointed out in their September 8, 2012 article in the Wall Street Journal newspaper, “LTE technology is much more fragmented than the previous third-generation wireless technology, making it more difficult to make LTE phones that work seamlessly around the world.” The availability of LTE in Europe is quite sketchy and, as of the beginning of this year, Scandinavia and Germany were the two countries were enjoying this technology. According to Vascellaro and her co-authors, France was also getting into the game in a handful of major cities. As of the beginning of this year, Android phones supporting LTE were being sold in only 11 countries, including the US, Japan, South Korea, Australia, and Germany. Note that support for LTE in your phone is just the first step toward having the service. The second step is having a compatible network that can take advantage of the LTE technology in your phone.
The iPhone 5, which is technically compatible with various LTE networks, is Apple’s first smartphone to use LTE. It is remarkable that rivals Samsung and HTC had deployed LTE phones as far back as 28 months ago, while Apple’s first deployment of LTE was only in March of 2012 when the latest version of iPad was released. Thus, even though your iPhone 4S might have been telling you it is connected to “4G,” this may actually not be the case. Furthermore, as of the beginning of this year, Apple’s deployment of LTE in iPad only worked with networks operated by a few companies in the US and Canada.
Two types of LTE can be identified: LTE FDD (Frequency Division Duplex), which is used in the US, Japan, much of Europe, and the Philippines, and TD-LTE (or LTE-TDD outside of China), which is the 4G product that the Chinese government and its mobile operators have been developing. The Chinese standard has been adopted by BhartiAirtel and Vodafone, and has reportedly received the backing of Japan’s Softbank Mobile and Germany’s E-Plus.
China’s LTE ambition will have very significant consequences for the smartphone business all over the world, especially for companies outside of China that want to come into China to take advantage of the huge potential market.
Also equally important, some balancing act will be required on the part of the Chinese government. That is, it cannot rely too heavily on Chinese suppliers for its 4G initiative, so as not to alienate Western companies, whose buy-in is needed in order to establish the Chinese technology as an international standard. European companies such as Ericsson (Sweden), Nokia (Finland), and Alcatel-Lucent (France) would be good to have onboard. (It’s unlikely that American companies (AT&T, Verizon) will want to be part of the 4G from the East.) At present, China Mobile has negligible presence outside China!
The bottom line in this article is that the Chinese government, through parastatals, is aggressively developing its own 4G mobile technology, to advance technology and bolster domestic companies.