China Mobile delays giant 4G tender

China Mobile’s massive TD-LTE tender has been delayed because the operator can’t decide whether to build a new network or upgrade from 3G.

The tender, for 200,000 base stations and 100 cities, was originally planned to start in April. Estimates of its value range wildly from $6.75 billion to as much as $30 billion.

However, executives are said to be undecided whether to buid primarily as an upgrade from the existing TD-SCDMA network using F-band spectrum (1880-1920), or to roll out new base stations using the D-band (2570-2620).

It is more than an arcane technical issue. An upgrade would favour the incumbent TD-SCDMA vendors – Huawei, ZTE and small state-owned player Datang Mobile. A new build would put all vendors on a level playing field.

According to 21^st Century Business Herald (posted here on Sina Tech), the tender was supposed to have been issued in April, but will probably not be called until June.

Ericsson China executive vice-president Eric Feng told a briefing in Guangzhou yesterday China Mobile hadn’t yet issued tender documents because executives “still haven’t reached final consensus.”

So far China Mobile has rolled out limited scale TD-LTE trial networks in 13 cities, with contracts allocated among five vendors. The 2013 network is its major commercial-scale buildout ahead of formal launch, which is expected to be in the second half of the year.

Feng told journalists that the trials showed that an upgrade from 3G would suffer from interference and limited network functionality.

His recommendation was pretty much to script. Given these issues, and China Mobile’s tight timetable, Ericsson believed that the “new build is the best option,” Feng said. 

China Mobile iPhone deal by Q3?

Pretty much everyone who watches Apple and/or China Mobile expects the world’s most valuable company and the biggest mobile operator on the planet to stirke an iPhone deal some time this year.

Each for its own reasons needs the other more than ever, while the convergence of 4G standards means the elimination of the TD-SCDMA barrier.

This story in the respected Southern Metro Daily newspaper (Ch)  thus isn’t news, and it isn't definititive, but confirms that China Mobile is thinking along the same lines.

A China Mobile source says the company believes that with Qualcomm’s new convergence chipsets, Apple will no longer have to make standalone phones for Mobile’s standalone 3G network, enabling the pair to work together.

At the earliest, that will happen in the third quarter when the sixth generation iPhone is likely to be released. Qualcomm’s chipset offers five modes - TDD FDD LTE, W-CDMA and TS-SCDMA, and GSM/GPRS – in ten spectrum bands.

China Mobile has built out a trial TD-LTE network in 13 cities and will expand that to more than 100 cities this year. It has begun commercial trials in Hangzhou and Shenzhen. 4G licences have not been issued, but reportedly China Mobile will be the first to obtain one (Ch)  in October.

China Mobile’s TD-SCDMA network doesn’t allow roaming and offers a limited handset choice, causing it steadily lose ground to its rivals in 3G, where it accounts for just 41% of customers. Both its rivals, China Unicom and China Telecom, offer the iPhone.

If Apple and China Mobile do reach a deal, the signs are good. In Guangdong, China’s richest province, China Mobile already has almost as many iPhone users plugged into its 2G network as China Unicom has on its 3G network.

Nokia appoints fourth China CEO in three years

Nokia China and Huawei have both swapped out the heads of their handset operations – but that’s where the similarity ends.

Gustavo Eichelmann, Nokia’s China chief since the beginning of 2012, has left the company for “personal reasons”, Nokia announced Monday. He will be replaced by Erik Bertman, the head of Nokia Russia, effective June 1.

Eichelmann’s departure follows the collapse of Nokia’s share of China’s smartphone market last year – from market leader, with a 29.9% share in 2011, down to seventh with just 3.7% share.

Bertman, a Swedish national, is the fourth head of Nokia’s China business since the beginning of 2010.

He has the job ahead of him. Nokia’s global devices sales were down 32% year-on-year in Q1. Handset shipments were off 25% and smartphone shipments fell by a scary 49%.

As he wings his way to Beijing Bertman may cross paths with Wan Biao, Huawei’s terminals group CEO, who has just been sent to Moscow. In a promotion for Wan, he will head up all of Huawei's operations in Russia, one of the Huawei’s target ofshore markets.

Wan will be replaced by Yu Chengdong, who will retain his current title of chairman of the terminals unit.

In contrast with Nokia’s declining fortunes, the Huawei’s devices team is on a roll. Of course, the popularity of Huawei's affordable smartphones is one reason why Nokia is struggling.

Huawei boosted devices revenue 8.4% to $7.9 million last year and shipped 32 million smartphones. It’s aiming for 60 million this year.

Another China cyber-security flap

The Pentagon’s purchase of bandwidth on the majority Chinese-owned Apstar 7 satellite has prompted another bout of Washington handwringing.

Mike Rogers, the GOP Congressman who led the inquiry into Huawei last October, has complained that it “exposes our military to the risk that China may seek to turn off our ’eyes and ears’ at the time of their choosing.”

The US Defence Department’s Africa Command tapped Apstar 7 through a satellite contractor, Harris CapRock Communications, last May.  The contract expires on May 14, with an option for a three-year renewal.

HKSE-listed APT Satellite is 61%-owned by the state-owned China Satellite Corporation, according to Bloomberg.

Same old story. If it’s China government-linked, it’s a security threat.

Would a commercial satellite operator truly wish to threaten its business by hacking into its customers’ data?  Certainly, the Singaporeans and Taiwanese who are also investors and make up a third of the APT board would be unimpressed, as would other customers and stockholders.

If there’s a slight surprise here it is that the US military’s routinely uses commercial satellites for much if not a majority of its unclassified communications.

Steve Hildreth, a military space policy expert with the nonpartisan Congressional Research Service, said in an e-mail that U.S. officials have told him “a very high percentage of U.S. military communications use commercial satellites on a regular and sustained basis.”

“The U.S. military does not have major concerns with this arrangement,” he said.

So the Pentagon, which knows a thing or two about security, figures that it's encrypted and it's not highly sensitive, so why not take advantage of a cost-effective commercial service like we usually do?

China might be a well-documented source of network attacks, but that doesn’t mean every Chinese company is a security threat. The recent Mandiant report, for one, specifically fingered a PLA hacking team and not companies like Huawei or APT.

As this blog has argued before, such evidence-free grandstanding merely reinforces the Beijing view that the US is using the issue to bully China.

If you still think this is anything but rolled-gold BS, then how about Rogers linking it to sequestration, the budget cuts forced on the Obama Administration primarily by the recalcitrance of he and his Republican colleagues?

Referring to the sequester, he told Bloomberg that the use of a foreign commercial satellite “sends a terrible message to our industrial base at a time when it is under extreme stress.”  Right. Instead of cutting costs as the GOP demanded, the Pentagon should be ponying up to build more satellites. That's really off the planet.

Huawei's brave new world

Huawei’s abandonment of the US market and the trimming of its enterprise sales forecast are the biggest news items out of its annual analyst event in Shenzhen Tuesday.

Yet in both case there is less than meets the eye.

Huawei is not going to win any major US network deals in the current Washington environment, so the remarks by executive VP Eric Xu merely reflect reality. And it certainly has a handset business there.

It might have cut the topline forecast for its new enterprise group, but it's still aiming for a hefty $10 billion in sales by 2017 – equivalent to three-quarters of ZTE’s total revenue last year.

For me, the biggest take-outs are twofold: Huawei’s diversification looks to be on track; but to succeed it has to go where almost no other B2B company has gone in creating a global brand.

On diversification: the enterprise business unit in its second year grew 26% in 2012 and has target growth of 45% this year. Assuming that growth remains profitable, the 2017 target looks achievable.

By that time the company hopes to reduce carrier equipment sales to just 60% of total revenue, compared with 73% last year, and increase handsets to 25% (22% for the past two years) and enterprise to 15% (5%).

On the brand: In a frank presentation, Shao Yang, Huawei's devices chief, said building the brand would be harder than developing the software and hardware. The Interbrand CEO told him there wasn't a single brand on the Interbrand 100 that was big in both B2B and B2C (IBM was the closest). And Huawei doesn’t have anything like Samsung’s $12.5 billion budget.

I’ll be posting more about Huawei here and at Light Reading in the next couple of days.