China Mobile set timetable in procuring TD-SCDMA equipment

February 21, 2007

China Mobile will set the timetable for procurement of TD-SCDMA system equipment and terminals this March.

According to the network construction schedule, provincial branches shall identify demand for main equipment and report to the headquarters before March 5, and concentrated procurement will start on March 6. The deadline for main equipment procurement will finish before May 31, that for terminal procurement, October 31, and that of network construction and optimization, October 31 as well.

Guangdong Mobile, the local unit, will take charge of technical testing and equipment procurement. The new round of TD network testing will include Beijing, Shanghai, Tianjin, Shenyang, Qinghuangdao, Guangzhou, Shenzhen and Xiamen.

Though China has not granted 3G licenses and the real 3G grand banquet has not staged, equipment manufacturers have been expecting investment returns after years of heavy investment and waiting.

China Mobile will implement the principles of uniform investment, uniform management, independent accounting and construction by provinces. Specifically, the headquarters will be responsible for overall investment and management, telecom service branches in each province for implementation, provincial branches for organization of network construction, and fixed assets so formed will be owned by each provincial branch.

Meanwhile, construction and operation of the pilot commercial network will be independent of the existing network in accounting.

The enlarged network testing will be fully based on commercial practices. Equipment and terminal manufacturers will not have to provide equipment for free, and China Mobile will buy any equipment provided by manufacturers, with the price completely determined through negotiations.

China Mobile will build 8,602 TD outdoor base stations and 3,772 indoor distributed systems so as to fulfill full coverage of the newly included cities, and network coverage rate of 95%.

To ensure the uniform TD service, the number segments will be united into 188 and 189, and the previous 157 number segment used in the earlier testing will be switched to 188 and 189 as well. The coverage scope of each city has basically been determined.

China Mobile will make an aggregate investment of roughly CNY 15 billion for the new round of network construction and testing, based on the forecast that a base station is priced at CNY 500,000 and an indoor distributed system, CNY 200,000.

The procurement is most likely to become the start of a new round of market reshuffle, industry experts forecast. Different equipment manufacturers take varying attitudes toward China's homegrown 3G standard TD, and thus their investments in the TD field are also diverse. Commencement of China's TD network construction and investment will probably trigger changes in market strength and shares among equipment manufacturers.

Datang Group and ZTE Corporation, major developers and supporters of the homegrown standard, will definitely become the biggest winners, while those manufacturers failing to grasp TD opportunity will confront severe challenge in China's 3G era.