China’s entry into the 3G market via the recent licensing for
three major Chinese telecoms – China Mobile, China Telecom and
China Unicom – is expected to ripple the wireless waters on a global scale.
Six years after many developed countries began their commercial use of 3G networks, the three newly licensed Chinese telecoms will invest about $41 billion in building their 3G infrastructures, with billions of additional investment dollars expected to flow into applications and terminals/handsets.
|
BIG OPPORTUNITIES
In today’s rough economic times, that’s good news, especially for equipment and handset manufacturers around the globe. “There will be significant opportunities for all mobile technology market participants. We believe global vendors will focus more resources on the China market as this is one of the major mobile opportunities worldwide,” said David Sullivan, managing director and CEO for Alliance Development Group, a China-focused market development and investment advisory firm.
Opportunities exist indeed, particularly for manufacturers such as Alcatel-Lucent, Ericsson, Huawei and others in the 3G manufacturing space that stand to gain the most from the 3G deployments. “The 3G announcement is very good for equipment manufacturers like Alcatel-Lucent, which was one of the earliest providers of 3G network equipment. Manufacturers like Alcatel-Lucent have invested lots of money in the technology and put parts of their companies in China. The infrastructure manufacturers could certainly use the business,” said Allen Nogee, principal analyst for the research group In-Stat.
Alcatel-Lucent couldn’t agree more. With its presence on the ground in China via Alcatel-Lucent Shanghai Bell, and thousands of engineers currently in-country doing R&D, the company sees itself as ideally positioned to compete for a chunk of the $41 billion 3G network business. “We’ve been waiting for this moment for years. It’s a significant opportunity in the largest wireless market in the world. We deliver all three of the 3G technologies and can ensure there is an evolutionary path to 4G. We plan to leverage our relationships with customers in China,” said Mike Iandolo, president of Alcatel-Lucent’s wireless product group.
For Huawei, a leading Chinese manufacturer that has invested heavily in all three 3G standards, competing for a slice of the 3G investment pie is now a top priority. “It’s a great opportunity for Huawei. Our sophisticated CDMA 2000 and UMTS solutions are mature with a strong worldwide track record, and we plan to increase our R&D investment in TD-SCDMA. This announcement will have a great impact on increasing domestic demand and gives China’s medium and small-sized enterprises in areas of electronic components, PC, cable, cabinets, et cetera increased opportunities,” said Eric Xu, senior vice president of Huawei technologies.
The 3G network deployments by the three Chinese telecoms are expected to raise the tide among global manufacturers such as Ericsson as well, which according to company President Mats Olsson “will inevitably generate a new wave of growth for China’s telecom market. Our proven 3G products and experience from deploying 3G networks positions us well in providing the strongest support for the Chinese operators.”
Plenty of support will be needed in these tough economic times. For example, total China wireless industry subscriber additions for December 2008 were 2 million below Pali Research’s estimate of 9.5 million, and wireless subscriber growth in China is predicted to drop below 15 percent for the first time since pre-Olympics days. And, according to ABI Research, global handset shipments are expected to drop by about 5 percent, with only the increased shipments of GPS-enabled phones keeping the number from dipping lower.
Alcatel-Lucent Shanghai Bell’s assembly line in
Shanghai, China, is where the company’s TD-SCDMA products are assembled. |
GOOD TIMING
Still, the deployment of 3G networks, which is expected to happen in phases during the next 12-18 months, is welcome news. “It’s an important milestone in the development of China’s wireless market as now all three carriers can offer a new array of products and services, and has far-reaching implications for equipment vendors. The licensing could not have come at a better time,” said Marc Einstein, senior industry analyst at Frost & Sullivan.
It’s a good time for Motorola as well, which is expected to be a major player in the competition. “The 3G launch is in accordance with convergence and innovations happening in the networks today. Combined with the industry-wide reconstructing that happened in China last May, these changes bring new opportunities for equipment and service suppliers like Motorola in fields like mobile broadband technologies, personal media experience and tri-play and multifunctional mobile terminals. Motorola is fully prepared in these fields,” said Chin Chuang, president of Motorola China Technology.
For those competing for the 3G network business from the three Chinese telecoms, 2009 could be a very good year. Concluded Sullivan: “Vendors are aggressively positioning now with the three carriers across the mobile solutions spectrum – via trials and evaluations, RFPs and strategic partnering. This includes networking infrastructures as well as handsets, applications and platforms. The competition will be fierce.”