When Beijing issued in May last year the mainland's 12th five-year plan for the telecommunications sector, one of its lofty goals was to plough investments of more than US$323 billion into basic network infrastructure by 2015.
A major part of that plan is the commercial rollout of advanced, high-speed 4G mobile infrastructure, built on the mainland-developed standard called time-division long-term evolution (TD-LTE), by all three state-owned telecommunications network operators.
Technology research firm IHS forecast China Mobile, China Unicom and China Telecom to deploy a total of 1.05 million 4G base transceiver stations from this year to 2015, a massive undertaking that will increase the operators' lucrative data traffic in the world's biggest smartphone market.
"The effort is important because mobile revenue accounts for an increasingly larger share of each carrier's overall revenue," IHS analyst Zhao Hailin said in a report. "And revenue could grow even more if more next-generation wireless infrastructure were in place."
The expansion in 4G mobile services will likely help the industry achieve another big target set by the 12th five-year plan: more than US$241.9 billion in revenue by 2015. The three operators had combined revenue of US$172.9 billion last year.
Of the mainland's 1.2 billion total mobile subscribers - nearly four times the US population - at the end of August, about 360 million were 3G users "ripe for upgrading to 4G if the infrastructure were available", Zhao said.
In a report, Barclays pointed out that smartphone penetration on the mainland remained low at between 25 per cent and 30 per cent. "We expect all three operators will continue to report robust wireless data revenue growth, benefiting from both user expansion and usage increase," it said.
Advanced 4G networks have theoretical internet download speeds of up to 100 megabits per second. The fastest existing 3G networks run at 42Mbps.
The three mainland network operators anticipate the central government will initially grant 4G licences for TD-LTE networks in the fourth quarter of this year. Licences for the more mature 4G standard, frequency division duplex long-term evolution (FDD-LTE), are expected later.
China Mobile, the world's largest wireless network operator by number of subscribers, is making the biggest push this year with a plan to deploy 207,000 4G base stations in both urban and rural areas. China Telecom will install70,000 base stations and China Unicom 30,000.
IHS forecast China Mobile to run the largest 4G mobile infrastructure on the mainland with 477,000 base stations by 2015, which would cement the company's position as the biggest 4G network operator worldwide. It had 750.42 million subscribers at the end of August.
A recent HSBC report, with regional head of telecoms research Tucker Grinnan as lead author, said: "China Mobile relies on wi-fi for 75 per cent of data traffic today, but generates almost no revenue on it [because of] artificially low time-based charging."
It said that a shift to more cellular data traffic "could drive a dramatic increase in service revenue".
"A combination of strong 3G net additions and a rapid 4G roll-out provides a solid foundation for a smartphone-centric business model," it added.
IHS estimated that China Telecom, which had 178.64 million subscribers in August, will have 320,000 4G base stations by 2015. China Unicom, which counted 269.47 million subscribers in August, will have 250,000 4G base stations in the same period. For both China Telecom and China Unicom, FDD-LTE will serve as the primary standard of their 4G networks, with TD-LTE adding supplementary capacity.
Gene Cao, an analyst at Forrester Research, has said that the three operators' initial 4G network capacity would be focused on the nation's largest cities, "which would support the explosive growth of 3G users in those markets".