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China’s handset-makers plan home-grown platforms

Apple, Android takedown on the cards as 4G roll-out looms

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Analysis China’s mobile phone market is about to hit an epic milestone of one billion users, but experts are split over whether the country’s 4G plans will succeed, while opportunities for non-local tech companies could become increasingly limited in the region as homegrown mobile platform players emerge.

With official figures from the end of 2011 putting mobile user numbers at around 950 million it’s widely expected that the all-important one billion mark will be passed some time during the first quarter of 2012.

However, only a quarter of these are smartphone users, with just 13 per cent on 3G networks while the remaining number are on 2G and therefore mainly use their phones for voice calls and texting.

The latest update from the government – which in Communist China owns all three mobile operators – is that it will not dole out 4G licenses for another two or three years until the number of base stations in the country is doubled and the 220,000 or so existing 3G SCDMA stations are upgraded to TD-LTE.

On the plus side, this 4G standard being trialed in China will not be affected by the same problems as China Mobile’s unique 3G TD-SCDMA which Apple still doesn’t support on the iPhone.

While it does have a competitor in LTE FDD, which is favoured in the US, there aren’t likely to be any support problems with TD-LTE given that the standard is set to be deployed in several other regions of the world.

“In China, TD-LTE has formed a complete industrial chain which covers system device, baseband, RF chip, terminal product, test instrumentation, and right now is in the final stage of scale testing. However, the overall development process is a year behind FDD-LTE,” Frost & Sullivan analyst Daniel Huang told The Reg.

“FDD frequency resources are increasingly lacking which is making China's own TD-LTE technology more and more attractive, and some major carriers are starting to choose TD-LTE and confirm their commercial plans. China Mobile has started its Global TD-LTE Initiative with 60 global telecom carriers, 30 main manufactures and some important international communication institutions, which is an important step for TD-LTE in the international market.”

However, Huang added that if the high cost of installing superior quality 4G networks is passed onto customers, the country’s mobile carriers may find 4G fails commercially in the same way that 3G has.

Handsets the key

William Chou, Deloitte’s TMT lead for China, countered that users are likely to want to make the leap from 2G to 4G as long as the service quality is good – something that let 3G down – and the handset makers bring out more reasonably priced smartphones .

“I’m quite optimistic of 4G in China – it’s only a matter of time as people there always see Europeans enjoying fast mobile internet and they want it too,” he told The Reg.

“The iPhone is still very expensive by general household standards but there are a lot of local brands such as Lenovo, Xiaomi and ZTE developing cheaper smartphones, prompting people to give up their current [less advanced] mobiles.”

For Gartner analyst Sandy Shen, it will be China Mobile leading the way with 4G roll-outs. She predicted that in terms of installed base - rather than shipments - smartphone penetration would double to reach 20 per cent by 2015.

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