China Telecom launches 4G service
Carrier follows China Mobile to provide the high-speed networkon the mainland
Competition in the mainland's phone market intensified with China Telecom's launch of fourth-generation (4G) mobile services yesterday on the heels of industry leader China Mobile, which introduced the service in January.
The other major player, China Unicom, which operates the mainland's second-largest wireless network, is expected to start 4G operations later this year.
The three carriers received a licence from the government in December to operate 4G services based on a home-developed standard called TD-LTE.
China Telecom had said it would prefer to use the world's more widely adopted 4G mobile standard, FDD-LTE, as it competes with rival China Mobile for high-value smartphone users.
China Mobile's TD-LTE coverage is far wider than that of China Telecom, and only when the FDD-LTE licence is handed out can China Telecom have a real competitive edge, according to Ricky Lai, a research analyst at Guotai Junan Securities.
"It can be expected that competition will increase," Lai said. "The launch of 4G services will put pressure on China Telecom for the short term as it will need to spend more on marketing and subsidies."
Barclays had forecast that China Mobile's capital spending will reach 200 billion yuan (HK$256 billion) this year, up from 190.2 billion yuan last year. China Telecom's expenditure is predicted to rise to 100.7 billion yuan from 80 billion yuan last year, and Unicom's to 89 billion yuan from 80.1 billion yuan.
China Telecom will offer five 4G packaged services to subscribers, priced between 70 yuan and 280 yuan per month, depending on the amount of data consumption. The carrier had 186 million subscribers by the end of 2013, with 56 per cent of them 3G users. China Mobile had 767 million subscribers at the end of last year, but with only 25 per cent of them 3G users.
"China Mobile will continue to increase subsidies to push users to upgrade from 2G to 3G and 4G," said Lai.
Smartphones supporting TD-LTE are supplied by domestic firms such as Huawei Technologies. American technology giant Apple's iPhone 5s and iPhone 5c can also work on the system.