TD-LTE won't take hold in China, India in 2012

BANGALORE, INDIA: Without a doubt, transition to LTE is the way to go for all markets eventually. However, TD-LTE is not going commercial in China and India in 2012. Sure, there are a lot of news about trials and network contracts going on, however, the idea that TD-LTE will be up and running for consumers by 2012 seems overly positive.

Although there was an initial spurt of 3G marketing during service launches, this has fizzled out. This lack of consumer interest has led to mobile operators scaling back their future investments in 3G, which has resulted in inadequate coverage and capacity in metros, spoiling the experience for existing and potential 3G customers.

Also Read: Is India ready for TD-LTE?

The primary use case for mobiles in India remains to be voice, with ARPU levels being one of the lowest and most attractive in the world at $3-4. Unless subscribers see massive benefit of using data, or have access to cheap 3G smartphones or tablet devices, we are unlikely to see mobile broadband really take off.

Over two years into India’s 3G launches, the number of 3G customers does not seem encouraging. ABI Research estimates the figure to be less than five per cent of the 900 million or so subscriptions. With the sky-high license fees that operators are forced to pay after intense bidding, none of the private operators are entitled to nationwide spectrum.

Operators have slashed 3G tariffs due to slow adoption, and are barely making any profit due to high infrastructure and operational costs compared to customer revenues. Adding on to that, the government has deemed the 3G roaming pact among the top three Indian operators illegal.

With the chaotic state, lack of enthusiasm for 3G adoptions, and current limited profitability, it is unlikely that any LTE network will commence commercial operations in India in 2012.

However, we may expect to see a soft launch of the 4G service in late 2012 to test the markets, after the recent contracts that were awarded to Ericsson and Huawei. If that happens, the network coverage will be very limited as well.

China’s 3G services have just encouragingly crossed 10 per cent of its 940 million subscriptions market in 3Q 2011, after operators introduced price cuts on in its 3G services. It is now on its way to growing its 3G customer base, and just wrapped up the first phase of its TD-LTE trials and expected to complete stage two by June 2012.

It is a step closer to commercialization, however, the actual launch will be subject to government approval and Chinese operators are likely to want to continue building 3G momentum during 2012 before commencing intensive 4G investment and marketing campaigns.

With Reliance Industries Limited (RIL) having secured a pan-India license for 2.3 GHz BWA spectrum in 2010, there are plans afoot for launching 4G services in India in mid-2012 using TD-LTE technology. While the vendors for the RIL roll-out have yet to be announced, there is much speculation about the scale of the TD-LTE roll-out. If 3G’s lack of success in India is anything to go by, 4G deployments are likely to be muted.