Abstract

Moving Current Users Is Time-consuming; Allocating 450MHz Will Not Necessarily Accelerate Network Construction

The 450MHz-470MHz band was initially used for the development of rural wireless phones, and the spectrum band was later also used for walkie-talkies and multiple unit train communications.

With the government being the guiding force of policy in China, it will not be too difficult to move rural wireless phone users through cooperation between the government and operators. Moving walkie-talkie services also should not be a large problem. However, multiple unit train communications involves nationwide communication and safety management, and coordination between different government departments will be necessary. Preparation work could take a lot of time. Furthermore, neighboring spectrum bands are used for broadcasting and TV, as well as exclusive systems of the military and public departments. Shifting spectrum bands will be extremely difficult. Furthermore, later on this will involve all multiple unit train communication systems nationwide, and cost and time required for such an operation will be difficult to estimate.

Taking the network withdrawal of PAS (Personal Access Phone System) as an example, three years of work were scheduled for moving existing users. Moving the current subscribers in the 450MHz-470MHz band could possibly be even larger in scope. Significant doubts thus remain about whether this will really accelerate network construction.

Looking at the transition to future technologies, ITU has recommended that in Asia 4G should mainly develop in the 700MHz-800MHz spectrum band. If the 450MHz-470MHz would be used to push TD-SCDMA development, consideration should be given to future alignment with international trends.

Furthermore, although China hopes to push TD-SCDMA development through spectrum allocation on the premise that it wants to forcefully develop China's own-developed technology specifications, other operators will object if too much value is given to TD-SCDMA due to the scarcity of available spectrum. This could also violate the original intention of the country's telecom restructuring, which was to balance telecom market development.

Spectrum Is Only a Catalyst for TD-SCDMA Development; Industry Chain Has to Develop As Well

Developing TD-SCDMA involves the same elements as developing other 3G communications services. Government policy, network coverage, terminal products, telecom fees and application services are all important.

Given the fact that TD-SCDMA development has been guided by China, the country's government naturally strongly supports TD-SCDMA. However, network construction is currently still in a phase of large investments to increase coverage rates. Network quality optimization is still very far away. If the MIIT allocates the 450MHz-470MHz band to TD-SCDMA, industry chain development will receive a strong boost. However, as mentioned above, much time and cost will be involved in transferring current users. In the short term, the symbolic meaning of the government's plan would be larger than the actual benefits.

Even though the addition of spectrum would help to make TD-SCDMA network coverage more comprehensive, several problems have to be taken into account, including the design challenges for terminal products and manufacturing costs. Considering ways to stimulate up- and downstream segments in the industry chain, in particular encouraging application service companies to aggressively invest in TD-SCDMA, could have even more benefits for TD-SCDMA.

If the government hopes to provide wireless transmission services for rural areas by opening up the 450MHz-470MHz band, it could indeed be able to bring communications services to remote regions through TD-SCDMA wireless fixed-phone services and competitive fees. However, if the strong ambition of the government is excluded, several issues have to be considered from the viewpoint of operators' commercial operations: whether relevant consumer groups have demand for high-speed wireless transmission, whether there is potential for revenue growth, the amount of network maintenance costs required to maintain operations, and whether it is possible to provide services with existing 2G spectrum.

Future Service Development Direction Is Core Issue in Network Construction

450MHz-470MHz is currently a common important spectrum in worldwide communications. The fact that the MIIT is looking into the possibility of allocating this spectrum to TD-SCDMA shows its strong determination to support TD-SCDMA.

As network construction is gradually completed, and with the large market foundation, China could become the world's largest wireless broadband market if suitable fee rates are introduced. However, considering all technology characteristics of TD-SCDMA and the spectrum, TDD technology has yet to prove it is able to support large-scale voice services. Also, there are no precedents for the large-scale commercial use of TDD in this spectrum band. Therefore, it is still unknown whether TD-SCDMA can perform well in this spectrum band.

Furthermore, after mobile communications move into the 3G era, data transmission will become the core item in application services. Even though the 450MHz-470MHz has several advantages, such as good diffraction and relatively limited attenuation, in terms of data transmission its performance is a notch below high-frequency spectrum. As the number of users increases, this weakness will gradually become more evident.

Looking overall at the opening of this spectrum for TD-SCDMA, its advantages and disadvantages are difficult to assess. However, characteristics of services which will be developed in the future still have to be at the core of considerations.

Appendix

List of Companies