Forget competitive pressures. The one thing that’s weighing on China’s big three telecom operators is the cost of building infrastructure.
So they’re setting aside competition and joining forces to slay the beast.
And if plans don’t miscarry, they should be joint owners of China’s first network infrastructure company to be called National Tower Co., National Business Daily reports, citing the Ministry of Industry and Information Technology.
There’s no question such a joint effort is needed to overcome the massive cost of building base stations that will serve three existing technologies — 2G, 3G and 4G.
A base station can have a small footprint but the site on which to build it could cost an operator an extortionate price.
In one instance, a small telecom operator that rented a site in Shanghai found that the lease turned out higher than the cost of building the base station. When the contract expired, the landlord wanted to triple the rent.
The big three — China Mobile, China Telecom and China Unicom — have two million base stations collectively.
But each is straining at the leash building and operating these facilities individually. But because of the high frequency of 4G networks, they are forced to build high-speed infrastructure to ensure connectivity.
From a cost-benefit perspective, it makes sense to bring the big three together to develop a common platform. They will be responsible for building and restructuring telecom infrastructure such as base stations, telecom towers and tunnels.
One million 4G base stations are needed to cover the country. Smaller operators can rent these facilities instead of building their own, according to National Business Daily.
Media reports say China Mobile (00941.HK) will hold a 40 percent stake in the joint venture while China Unicom (00762.HK) and China Telecom (00728.HK) will each have 30 percent.
But is a venture the likes of National Tower Co. even necessary?
Some experts doubt that a unified infrastructure will function seamlessly given that the three incumbents have different business interests.
Tao Xujun, an associate director of Nomura Research Institute’s communications strategy department, said each of the three operators has at least three to four network standards and bandwidths which might interfere with each other.
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