Having slipped in the third-generation (3G) mobile services race, mainland carrier China Mobile (00941.HK) is determined to become the leader in the 4G segment. While the telecoms giant undoubtedly has several strengths, some observers have begun to question whether its target of building over 500,000 base stations by the end of 2014 is realistic at all.
Half a million stations is a very challenging number. The United States, for instance, had no more than 300,000 GSM base stations in total in 2010. Even in the case of China Mobile, the company had just 390,000 TD-SCDMA base stations as of August last year after the carrier entered the mainland’s 3G market in 2007.
Given this situation, some industry insiders have mocked the firm’s 4G base station target as “mission impossible”.
China Mobile targeted to build 200,000 base stations last year, but according to some media reports, only less than half of them were completed during the period. And there is a good reason for the delay.
Finding suitable sites is not easy, as industry insiders told the 21st Century Business Herald. TD-LTE, the 4G technology used by China Mobile, is a format with high frequency and thus low penetration power. The distances between each station need to be shorter, which makes the process of finding suitable sites in densely populated central business districts in major cities even harder.
Competitive pressure is mounting. Authorities have not only granted TD-LTE licenses to all the three big carriers, but also officially gave the go-ahead for rivals China Telecom (00728.HK) and China Unicom (00762.HK) to build their LTE-FDD experimental networks.
That explains why China Mobile is in such a hurry. But experts warn of the possibility of the 4G station plan ending as an “aim big, miss big” story, with excess workload and heavy investments seen putting the company’s resources under severe stress.
– Contact the writer at [email protected]