China issues 4G FDD-LTE licenses

China Mobile's 4G experience center in Hangzhou, Zhejiang province.[Photo/China Daily]

China Unicom and China Telecom were awarded nationwide FDD-LTE 4G licences by the country's Ministry of Industry and Information Technology on Friday.

The ministry said it has officially granted the licenses to the country's second and third largest telecom service providers respectively in an effort to help boost Information consumption in the country.

"Fully commercializing FDD-LTE business will help China Unicom and China Telecom build bigger 4G networks and offer better services to customers," said MIIT in a statement, adding the move will also bring down the price of national 4G services.

The issuing of the licenses was viewed by analysts as good news for both firms in terms of converting their 3G users into 4G users, but added it will do little to reshape the landscape of China's 4G market, which is still dominated by market leader China Mobile.

With the licenses in hand, however, China Unicom and China Telecom are expected to move fast to expand their 4G services and customers across the country, said Peter Liu, a telecom analyst with technology research Garter Inc.

"Previous research shows that more than 40 percent of 3G subscribers are eager to convert to 4G. So if the price is the same and there is no need for them to change smartphone numbers, the two telcos can easily convert their 3G users in to 4G users," said Liu.

Xiang Ligang, a Beijing-based independent telecom analyst said the top priority now for the two is to move fast to expand their 4G service capabilities across the country.

He said he was confident they "will significantly invest to boost 4G service coverage in order to grab more market share".

But given China Mobile's huge user base and its first mover advantage in 4G, Xiang said it is unlikely for China Telecom and China Unicom to significantly shift the market landscape with the newly gained licenses.

MIIT granted TD-LTE 4G licenses to the three mobile telecom carriers in December 2013 and approved experiment of TD-LTE/FDD-LTE convergence networks undertaken by China Telecom and China Unicom in June 2014.

However, because neither China Telecom nor China Unicom adopted the TD-LTE technology - a Chinese self-developed 4G standard - China Mobile, the country's largest mobile carrier by subscriber became the biggest winner of the 4G market and for the past year it has practically been the only player in the market.

According to MITT statistics, China boasted nearly 97 million 4G users in 2014, out of which 90.06 million are subscribers of China Mobile.

The huge user base means the entire system for the TD-LTE network, the 4G standard China Mobile favors, has been completed over the past year, said Bryan Wang, vice-president and country manager for China with multinational tech consultancy Forrester Research.

"It is amazed that China has become the world's largest population in 4G with TD-LTE standard within just a year and as a result more chip makers and smartphone makers have launched products that support the TD-LTE standard."

With more smartphone makers supporting TD-LTE, the room left for China Unicom and China Telecom to fight in 4G market has shrunk, said Wang.

"The Internet speed of FDD-LTE is faster than TD-LTE, but it is only a marginal improvement in terms of consumer experience," he said.

MITT said during a conference on Thursday that China is expected to add more than 200 million 4G telecom network users this year. China Mobile said in the same conference that it aims to top 250 million 4G users by the end of 2015, which means the company itself wants to add about 160 million new 4G users in a year.