Another consequence of China's tortuous path to 4G: China Mobile has all but abandoned its massive Wi-Fi hotspot network, while China Telecom plans to build one of its own.
China Mobile has found that its network of 4.3m hotspots, presumably the world’s largest, and deployed at a cost of 17bn yuan ($2.75b), is uneconomic.
Wireless data revenue across all of China Mobile’s networks last year rose 59%. But Wi-Fi data occupied an unsustainable 74% of all traffic, and generated a microscopic 2.6% of revenue.
The operator returned just 15 yuan per month from each Wi-Fi user - “not even enough for network optimisation, let alone ROI,” a Henan Mobile official in charge of Wi-Fi told Sohu IT.
The result is that China Mobile has cancelled further Wi-Fi construction and has cut back on optimisation and maintenance.
This comes as no surprise, given China Mobile’s well-documented difficulties with TD-SCDMA. In fact it was the poor data performance of the local 3G technology that drove China Mobile into Wi-Fi in the first place.
But low-priced, widely-deployed Wi-Fi is also an attractive alternative to 4G, as early figures from China Mobile's 4G campaign suggest. To the end of April it had sold 14m TD-LTE handsets but fewer than 4m of these had upgraded to 4G.
Sohu IT also points to an unhealthy skewing of the Wi-Fi rollout to a handful of provinces. For some reason, China Mobile’s Shandong unit has installed more than 1m hotspots, Shanxi 560,000 and Henan 400,000 - three provinces with less than a fifth the population accounting for 46% of the installed base.
In light of the poor returns from Wi-Fi, China Mobile is going all-out for TD-LTE and has forecast it will have rolled out 500,000 base stations in 300 cities by year-end.
Yet while 4G has driven China Mobile out of Wi-Fi, it is an accelerant for China Telecom. Chairman Wang Xiaochu said in an interview last month that he is planning to step up Wi-Fi investment.
That’s because the operator is being held back from deploying its preferred brand of 4G, FDD, while its cdma EVDO network is no match for either LTE or China Unicom’s HSPA services.
China Telecom has been issued with a ‘trial’ FDD licence, but for just 16 cities – a long way short of the 300 it’s hoping to reach nationwide. In that light, Wi-Fi makes some sense, yet it's hard to see how China Telecom can avoid the same problems besetting China Mobile once its FDD network gets up to speed.
The best solution would be for a third party to take China Mobile's Wi-Fi network off its hands and wholesale it to the big three or any of the new MVNOs. Ranking 96th in world global broadband speed rankings, you'd think China couldn't afford to allow infrastructure to go to waste. In fact, duplication and waste appear to be the order of the day.