China's $100 Billion 4G Card
Just as the economic crash has amplified China's role in the financial markets, it has also massively increased its influence in the telecom sector. Tucker Grinnan, who heads HSBC Asia-Pacific telecom research, argued at the Carriers' World conference in Hong Kong yesterday that the center of telecom gravity is swinging to China. He says China will be responsible for about 50% of global telecom capex over the next two years, spending roughly $50 billion a year. "This is a remarkable shift in the nature of spending, a slowdown in developed markets and this incredible acceleration in China." He reminds that a good deal of the spending is driven out of China's own stimulus program, and comes not from the listed vehicles but from the parent companies; in other words, state subsidies. A portion of this is spending that has been delayed by the industry restructure and because of the continual deferment of 3G. Nonetheless, the result is that China's views will hold even more sway in global telecom forums. That means 4G and of course that means TD-LTE. Not even China Mobile and Huawei are enthused about the prospects for 3G TD-SCDMA, says Grinnan. Both agree that its future lies in 4G, and there's no doubting the MIIT's determination to have that adopted as a global standard. The sheer scale of the capex program means China will have a huge role in determining 4G. The biggest problem may be the government's own expectations. China Mobile expects at best 145 million 3G TD customers by 2010, with an extremely aggressive rollout. The MIIT is forecasting 200 million, Grinnan says.