China Mobile seeks some return on TD-SCDMA investment

Iris Hong
12 Jun 2009
00:00
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China Mobile has already splashed 44 billion yuan ($6.45 billion) on its TD-SCDMA network rollout and is on its way through a 55.8 billion yuan ($8.18 billion) program to expand coverage to 200 cities by year-end.

For all that, it has signed up just 830,000 subscribers in 13 months, well short of its target of 10 million subs by the end of 2009. It has now starting to widen its discounts and to sink some of its now money into developing attractive handsets.

Right now customers are accessing the network via a dongle.

\'There are approximately 100,000 TD-SCDMA subscribers in Shanghai and over 80% use TD-SCDMA data cards for wireless internet access. Mobile phones users account for a very small portion,\' a source from China Mobile\'s Shanghai subsidiary told Telecom Asia.

The Shanghai subsidiary has a target of increasing the TD-SCDMA subscribers to 400,000 by the end of this year.

TD-SCDMA mobile phones are not selling well due to the limited choice of models, high prices and technical failures. Sales of TD-enabled netbooks are rising quickly although they just started selling in Shanghai on May 17. China Mobile\'s subsidy of up to RMB 2,100 ($307.74) for each netbook has made it a hot-selling item.

\'The sales of TD-SCDMA mobile phones will hopefully pick up once the new and enhanced models are released next month in Shanghai,\' the source said.

China Mobile aims to sell two million units of four \'deeply-customized\' TD-SCDMA mobile phone models this year, supplied by ZTE Corp, LG and Yulong, local press reports said. The ZTE U210, the first model released, began selling in Tianjin on May 20. Consumers that deposit RMB 1,500 ($220) into their mobile account can have the phone free of charge.

Nokia, which failed to launch a TD-SCDMA mobile phone last year due to the collapse of chip company Commit last year, is slated to debut a model this October.

To churn even more subscribers across from fixed-line operators, China Mobile is promoting TD-SCDMA routers for home and office broadband users and TD fixed-wireless phones that charge lower fees than wireline voice services. It is also developing a TD-SCDMA-enabled wireless reading device similar to Amazon\'s Kindle.

According to a report by China Business Weekly, China Mobile will provide subsidies totaling RMB 10 billion ($1.47 billion) for TD-SCDMA devices sold in 2009. Assuming that China Mobile subsidizes RMB 1,000 ($146.54) on average for each device, this can make the 10 million subscriber target a reality.

But Shanghai-based research firm iSuppli has forecast a more conservative 3.02 million by the end of 2009.

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