It’s been a couple of years since we specifically reviewed the status of Small Cell adoption in China. Time to revisit and look at how the industry has moved on in that time. The scale of the operation and high adoption levels of 4G are substantial. While residential small cells haven't taken off, there is renewed interest for in-building systems for medium to large sized buildings.
China is a huge cellular market, dominated by three national network operators.
Wireless revenues for China Mobile FY2016 were $100 Billion, only 15% more than Verizon Wireless with $87 billion but serving more than 7x customers (891M vs 116M). China Mobile has 73% of their customers on 4G vs Verizon Wireless having 88%.
The scale of the network is vast. China Tower, setup in 2015 and jointly owned by all three networks, is expected to launch their IPO this year for at least $10 billion. There are different assessments of the number of towers it operates, with one estimate of 1 million and another suggesting as many as 1.7 million. In any case, it dwarfs its nearest rival (American Tower) with 150,000.
China Mobile’s Nanocell project failed to materialise
We had great hopes for China Mobile’s nanocell. This was a very tightly specified indoor small cell, with a forecast of up to 1 million units. Ten vendors bid for a share of the pie with Baicells winning the largest. The initial order was comparatively small of about 100,000 units. I’ve heard that the strategy around where to deploy them wasn’t completely clear, but that the system performance/quality did not meet requirements.
In other countries, operators have gone through extensive debugging periods with new small cell vendors, but that didn’t seem to happen here. As a result, no further Nanocell orders were placed and the project appears to have been dropped.
Renewed focus on larger in-building systems
As found elsewhere, in-building coverage for medium to larger sized businesses and public buildings remains important. Often each Chinese operator installs their own standalone DAS system inside the same buildings. Distributed Radio Systems such as Huawei’s Lampsite are a popular option, with China Mobile reputed to be running a bid for a second round of Small Cells aimed at this size/format of solution.
China Telecom operates procurement on a more local basis, with each region able to decide for themselves depending on their own needs. A variety of indoor and outdoor trials are ongoing but volumes today remain relatively low.
Relatively little interest in LAA to date
LTE network capacity seems to be generally more than adequate for users today and generally under control. Perhaps that’s because none of the networks have introduced the unlimited data plans found in the US and elsewhere. So far, there doesn’t seem to be much interest in LAA (which adds a supplemental LTE downlink in the 5GHz band). It appears that all operators would rather focus on exploiting their existing licenced spectrum first.
Chinese vendors continue to grow their business
Huawei is clearly the world’s dominant player in RAN infrastructure, shipping more equipment than anyone else, despite being blocked from the US market for political reasons. European governments have worked around security concerns, with the UK government setting up an independent test laboratory that has full access to source code and can dig deep to look for any security backdoors in the system.
ZTE, the other major Chinese RAN vendor, continues to export significant volumes of kit to all parts of the globe.
The most visible independent Chinese Small Cell vendor is Baicells, who were displaying a huge variety of small cell products from indoor to outdoor including CBRS and LAA at this year’s Mobile World Congress. They have focussed on LTE only so far (both FDD and TDD modes). I’ve heard that a distributed small cell solution (similar to Lampsite) is said to be under development.
Many are looking towards China as a major market for 5G. Nokia signed a major deal with China Mobile at MWC last month. China Mobile also announced it will trial 5G in 17 cities during Q2 2018, with a strong focus on evaluating the business case. The CTO of their research institute noted tests are also focused on testing real-life services to “make sure our 5G networks can earn money so we can earn back our investment”.