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HONG KONG (Reuters): China and India, the world’s biggest mobile phone markets, are building fourth-generation (4G) networks based on the long-term evolution (LTE) technology although it will be years before it takes off as both countries are still ramping up 3G services.
Since Asia’s first commercial LTE network went live in Hong Kong in November last year, there are only a handful of operators in other Asian countries such as Japan and Singapore that have launched commercial 4G networks.
Many more in the region – including China Mobile Ltd., India’s Reliance Industries Ltd and Bharti Airtel Ltd – are building high-speed networks to cash in on growing demand for mobile data that promises to lift margins as voice services become increasingly commoditised.
“It is a cost-optimisation strategy that is quite clearly on a number of operators’ radars, given this is a tough market where margins continue to remain under pressure,” Nicole McCormick, a senior analyst at research firm Ovum, said on the sidelines of a mobile conference in Hong Kong.
LTE was a main focus at the conference, with China Mobile, the world’s largest operator by subscribers, and China’s No.2 telecommunications equipment maker ZTE Corp were presenting what they have to offer.
China and India were late in rolling out 3G networks, but are trying to catch up with Western peers in 4G rollouts.
Operators in both markets are planning networks based on the time division duplex (TDD) variant of LTE, which differs from frequency division duplex (FDD) technology used in many networks in the United States and Europe.
TD-LTE is gaining momentum, with the market for handsets, equipment and semiconductors totalling $98 billion from 2012 to 2016, said Goldman Sachs analyst Donald Lu.
Ovum projected that LTE would be used by 19 per cent of mobile broadband users in Asia Pacific by 2016.
For China Mobile, the adoption of 4G technology is key as it struggles with a 3G network based on a home-grown standard that is incompatible with popular devices such as Apple Inc’s popular iPhone.
Apple had promised to make an TD-LTE-compatible iPhone when its next-generation model came out, China Mobile said last month.
China Mobile had conducted a first-phase trial of TD-LTE with 850 base stations in six cities, and expected to complete the next phase of tests by June next year, executives said.
“With the growing popularity of mobile Internet and smart devices, data consumption is increasing at an explosive speed ... under such a situation, the need to speed up the commercialisation of LTE is more compelling,” said China Mobile Executive Vice-President Li Zhengmao.
In India, all eyes are on Reliance Industries, the country’s most valuable company.
Reliance made a dramatic return to the telecoms sector by buying Infotel Broadband, the sole winner of bandwidth in all of India’s 22 zones in a state auction last year, and is expected to launch services on the TD-LTE platform next year.
Indian media reports have said Reliance will also launch cheaper LTE-compatible tablets.
“We are hopeful that before the end of this (fiscal) year, we’ll have some commercial activity,” said Bharti Airtel Chief Executive for India and South Asia Sanjay Kapoor of the planned LTE launch.
Hong Kong’s CSL Ltd, a unit of Australia’s Telstra Corp , was the first operator in Asia to launch a commercial 4G network in November last year, followed by Japan’s NTT DoCoMo Inc last December.
In South Korea, top mobile carrier SK Telecom Co Ltd and smaller rival LG Uplus Corp launched commercial LTE services in some parts of the country in July. SK Telecom said on Tuesday that it planned to deploy LTE networks nationwide by April next year, eight months ahead of schedule, hoping to boost sales with faster services.
China launched 3G services in 2009, while Indian mobile operators rolled out 3G just this year. Pick up has been slower than expected so far, and planned 4G buildouts may put further pressure on carriers. In China, only 10 per cent of 939.5 subscribers use 3G, while in India, the level is less than two per cent of 866 million subscribers.
“The markets are still very much in 3G ramp-up mode. 4G is one big step away,” said an analyst in Hong Kong, who declined to be named.
Another hurdle for the growth of LTE is a lack of compatible smartphones, but industry executives are optimistic of wider availability of such devices.
“Major smartphone makers like HTC Corp and Samsung Electronics Co Ltd, maybe 50 per cent of their advanced smartphones next year will be LTE compatible,” said Goldman analyst Donald Lu at the conference.
