China Unicom to Launch 4G Services

China Unicom to Launch 4G Services

China Unicom will introduce 4G service on 18 March, following its competitors China Telecom and China Mobile. Unicom’s TD-LTE services will initially launch in 25 cities across China and will expand to 100 cities by the end of 2014, according to reports. The operator, which earmarked RMB 10 billion (US $1.63 billion) for 4G investment this year, plans to launch FDD-LTE, as well, after the Chinese government issues licenses for that technology.

Tarifica’s Take

In December 2013, the Chinese government granted the country’s three operators licenses to implement LTE (4G). China Mobile, the largest of the three, was the first to launch the high-speed service, followed by China Telecom, the third-largest. It was only a matter of time before China Unicom followed suit, as it had to in order to remain competitive. The eventual outcome for the three operators in this competition will likely be a tale of two technologies, TD-LTE and FDD-LTE. Bucking the worldwide trend, China authorized TD-LTE (Time-Division Long-Term Evolution) rather than FDD-LTE (Frequency Division Duplex Long-Term Evolution), the standard adopted by most of the rest of the mobile world. China Mobile aggressively backed TD-LTE and is building it out throughout the country, while China Telecom, proceeding more cautiously, is implementing TD-LTE with plans to eventually create a hybrid network combining both protocols. China Unicom is moving ahead now with TD-LTE so as not to lose time in the data speed race but, like China Telecom, looks forward to FDD-TE in the future.

In addition to the general desirability of integrating Chinese LTE with that of the rest of the world, FDD-LTE is attractive because current 3G devices can easily pick it up, which is not the case with TD-LTE. Until FDD-LTE becomes a reality in China, operators will probably do better at adding new subscribers via LTE than they will at moving existing 3G subscribers over to LTE. It seems to us that the most data-hungry users will be willing to buy relatively expensive new devices and sign up for new LTE plans, while those who have been content with their 3G service will have less incentive to upgrade their technology just to get LTE. If the Chinese government green-lights FDD-LTE soon, that will open up a much larger pool of potential subscribers. At that point, China Unicom and China Telecom will be better positioned than China Mobile to get that business, and if China Unicom can launch pure FDD-LTE rather than a hybrid, it may end up the LTE leader. Otherwise, China Mobile’s big bet on TD-LTE will pay off and solidify the operator’s number-one position.