Wireless infrastructure spending by the mainland's three telecommunications network operators is primed for a solid increase next year, following Beijing's decision to award 4G mobile licences by the year-end.
The State Council, in a meeting chaired by Premier Li Keqiang, announced late on Friday that the government would accelerate plans to upgrade the nation's internet and telecommunications infrastructure, which will include the granting of 4G licenses in the fourth quarter.
David Dai Shu, a director at ZTE, the world's fifth-largest telecommunications equipment supplier, said: "The development of the country's 4G market over the next three years will provide an important opportunity for all the major telecommunications systems vendors, including ZTE."
Market research firm IHS has predicted that 4G initiatives will help spur total wireless infrastructure spending by China Mobile, China Unicom and China Telecom to US$11.2 billion next year, from an estimated US$10 billion this year and US$10.7 billion in 2011.
Next year's projected expenditure tops the more than US$6.3 billion spent by the three network operators in 2009, when they made massive 3G equipment purchases a year after receiving their respective 3G licences.
Dai pointed out that 4G investments this year will be dominated by China Mobile, which launched last month a equipment tender for its plan to install 207,000 new 4G base stations across the mainland. "Over the long term, the scale of 4G network expansion in mainland China will be greater than that of 3G networks," he said.
Milly Xiang, an analyst at technology research firm IDC, said the government was expected to first grant a licence to run a network built on time-division duplex long-term evolution (TDD-LTE) technology, the 4G mobile standard backed by Beijing and adopted by China Mobile.
Next up would be licences for the other, more widely adopted 4G standard called frequency division duplex long-term evolution (FDD-LTE), which are expected for China Unicom and China Telecom.
Gene Cao, an analyst at Forrester Research, said the new 4G network capacity could be initially focused on the nation's largest, or first-tier, cities, "which would support the explosive growth of 3G users in those markets". Forrester principal consultant Charlie Dai added that the next stage of 4G coverage would filter down to the second-, third- and lower-tier cities. Advanced 4G networks have theoretical internet download speeds of up to 100 megabits per second. The fastest existing 3G networks run at 42Mbps.
IHS has forecast the number of 4G subscribers on the mainland to swell to about 439 million by 2017 from an estimated one million this year.