In the film Groundhog Day, Bill Murray plays a smug weatherman condemned to relive February 2 over and over again.
For China Mobile, it must feel like it is reliving 2009 all over again too.
This month Nanfang Daily reported that the telecoms regulator, the Ministry of Industry and Information Technology (MIIT), looks set to hand out licences to operate China’s homegrown 4G technology, TD-LTE (Time-Division Long-Term Evolution) soon. China Mobile, the largest of the country’s three carriers, has been developing the technology for the last three years, following up with 4G trials in more than 300 cities. Receiving the licence should mean that it can launch services and finally start earning revenues.
Good news then? “To be honest, apart from China Mobile, no one really wants to see the deployment of 4G so soon,” an industry insider admitted to Southern Metropolis Daily, adding that all three of China’s operators have yet to recoup their investment in 3G technology.
The insider adds that China Unicom and China Telecom simply don’t have sufficient capital to launch a new round of large-scale network construction.
That sounds like the 4G launch might offer China Mobile an advantage, then?
Then came the Groundhog Day moment, when it emerged that MIIT also plans to award licences to China Mobile’s two rivals to operate a 4G network based on FDD-LTE technology.
Foreign-developed, the standard is regarded as more stable than its Chinese counterpart, which means that less trialling is going to be required before commercial roll-out.
So China Mobile finds itself in a similar situation to 2009. Back then it was the only telco responsible for deploying the homegrown 3G standard – which was also inferior to the foreign 3G technologies licenced to its rivals.
Likewise it has again had to shoulder the cost of developing China’s domestic standard, TD-LTE. This year alone the carrier has spent as much as $7 billion on preparing for launch and it is likely to plough in even more as it ramps up investment after the licence is granted.
Worse, some analysts say the launch will fall short of commercial expectations, after a survey from Strategy Analytics suggested that only a small percentage of Chinese smartphone owners are looking to upgrade to 4G. The telco operator has also reported its worst month this year for upgrades to the current 3G network. In October, the number of 2G users upgrading slowed dramatically, falling to 6.5 million from an average of 9 million between January and September. There might be an argument that people are waiting for the new standard to be launched. But if not, the slowdown in upgrades wouldn’t seem to bode well for transition to the more advanced 4G.
At least this time around China Mobile won’t have to wrestle with another Groundhog Day problem. Unlike the advent of 3G, there will be fewer concerns about a shortage of handsets capable of supporting the new network. This time there will be more options on offer, especially after Sony announced in the summer that it is developing TD-LTE-compatible smartphones – including its latest model the Xperia Z Ultra – for China Mobile.
Sony will start selling them immediately after the telco obtains a 4G licence, says Japan’s Nikkei Business Daily. It will be hoping that the launch helps to resuscitate its smartphone business in China, where its market share was a puny 0.5% in the third quarter. Apart from the new handset ploy, Sony has also hired Huang Guoqiang, former chief of Nokia’s sales unit in China, as head of its mobile business. Huang, a native of Fujian province, joined Nokia in 2000 and was instrumental in devising the Finnish company’s marketing strategy at a time when it became the industry leader. “Huang knows the game better than almost anyone else,” an industry executive told Nikkei.
Sony’s other hope will be that Sino-Japanese diplomatic relations don’t worsen next year. The last thing it needs is patriotic Chinese consumers chosing to boycott its phones, just as they did Japanese cars last year.
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