The bustling shopping streets of Shanghai drive home the image of a country glued to mobile devices, often at the expense of passers-by shouldered out of the way by workers hurrying past with smartphone in hand.
The Chinese telecoms market was equally as urgent for the 75,000 people who descended on a bustling Barcelona last week for the industry’s biggest annual conference.
While Europeans and Americans have had superfast 4G services for several years, the close to a billion people signed up to China Mobile, the world’s largest mobile carrier, are only now being given their first sight of so-called 4G or LTE technology.
But such is the scale and speed at which China’s telecoms industry moves, driven by state policy, that there are already more 4G mobile masts installed in China than in the whole of Europe. This gap will widen with a further wave of large tenders expected by the leading equipment makers in the next few months.
China’s adoption of 4G is not just a story about bringing faster internet speeds to the most populous nation. The type of 4G technology – a standard called TD-LTE – used by China Mobile and its rivals means there are wide-ranging ramifications for device makers such as Apple and Samsung and telecoms equipment makers such as Ericsson and Nokia. Not to mention homegrown technology champions such as Huawei, which is benefiting more than most from the country’s telecoms boom.
“The telecoms industry has been the poster child of the Chinese economic boom. A global standard based on a Chinese design is a prestige thing, and also an economic boon to the Chinese telecoms vendors,” says Tom Mowat, lead analyst for Analysys Mason’s Asia-Pacific team.
Need for speed
4G technology is capable of delivering the internet over mobile phones almost instantly, opening up a host of services and applications as well as a vast market for western technology groups such as Apple, which will finally be able to sell its iPhones to China Mobile’s 750m customers.
“By 2016, we estimate that China Mobile will be used for one in ten handsets globally,” says Mr Mowat.
The rapid adoption of superfast internet technology underscores the country’s economic and social development. While Chinese companies were previously seen as cheap imitators of western groups, the introduction of superfast networks has meant new web-orientated businesses such as WeChat and Alibaba are already competing with Silicon Valley rivals.
If at first you don’t succeed
This is not the first time China has sought to take a lead with its telecoms networks. The battle for the 3G market has been fought with unblinking perseverance between GSM and CDMA standards over the past decade. China Mobile, which favoured the TD-CDMA standard, lost. Most global networks now conform to GSM.
This is why there was no iPhone on China Mobile’s network for so many years and why visitors to the Beijing Olympics complained about the poor mobile service at such an important event.
“The government had to force it down the throat of China Mobile and even then the company could not really make it work,” says Duncan Clark, chairman of BDA, an inward investment group.
With 4G, China’s TD standard is not necessarily a competing technology to the more common FDD-LTE technology, since both can coexist in handsets. Equipment makers will not be forced to choose between competing technologies – and as such will give the TD standards a far higher chance of success. The Chinese market is also more mature now, and the sheer scale of the rollout this time involving all three of the country’s telecoms groups means there is a much higher chance of putting the TD technology at the heart of the global telecoms market.
The scale of the 4G programme gives the adopted standard momentum – and China the opportunity to take the lead in the next generation of global broadband technology.
In a growing battle over future technology standards, analysts say China is sponsoring the less popular form of technology through widespread domestic take-up. There are only about 17 TD-LTE mobile networks commercially available worldwide – or one in 40 LTE connections globally.
“The world’s largest operator running this sort of network immediately turns [TD-LTE] into a very successful global standard,” says Mr Mowat.
Division of the spoils
There are some ironies in China’s bold ambitions for the introduction of superfast mobile broadband, given the internet can be incredibly slow because of the “Great Firewall” that blocks or filters foreign sites.
But the speed of the rollout needs to be seen in the context of a telecoms industry largely controlled by the state.
“China Mobile has $65bn on its balance sheet so it can afford to build out very quickly. The government sees its balance sheet as a useful tool,” says Tucker Grinnan, regional head of telecoms for HSBC in Asia.
Much of the work to build the 4G network has been won by Chinese groups such as Huawei and ZTE, which deny direct links to the state.
Western groups such as Ericsson, NSN and Alcatel-Lucent have won sizeable contracts, but some of their executives have expressed dissatisfaction about China Mobile awarding all three western manufacturers a seemingly arbitrary 11 per cent each of its Rmb20bn ($3.25bn) 4G contract.
Chinese technology groups are not stopping at 4G in the race for industry leadership, with Huawei committing significant resources to the next generation of so-called “5G” technology.
CCS Insight, a UK-based research group, predicts China will become the leader in next-generation mobile technology in the next two years, leaving behind a Europe where authorities are belatedly pushing the industry to invest “to regain former glory”.
Huawei said that by 2018 it would invest at least $600m in research into 5G technology capable of speeds more than 100 times faster than 4G.
That investment is far more than has been claimed by any western rival.
Indeed, this has now become a battle of regional interests to seek an edge in next-generation technology.
The march towards superfast mobile internet in China has been speeded by government efforts and the desire to create a market to benefit its technology champions.
China consumers will enjoy world-class network quality, with resulting benefits to the internet groups already growing rapidly in the country, though censors will probably continue keeping a close tab on content.
咨询公司Analysys Mason亚太团队首席分析师汤姆?莫厄特(Tom Mowat)说：“电信业是中国经济繁荣的有力例证。基于‘中国设计’的一个全球标准，是很有影响力的，也会给中国电信商带来了经济利益。”