CDMA uptake shows no signs of waning at China Telecom: LTE is ‘destiny,' but so far a data-only network

Editor’s Note: This article is an excerpt from RCR Wireless News’ May Special Edition, “Enabling the Mobile Revolution: Mobile Chips, Devices and Accessories.” The 80-page special edition is available here.
SHANGHAI, China–Subscriber growth at China Telecom Corp. Ltd. is exploding. That alone doesn’t make the carrier especially unique in this market, but its choice of CDMA technology sure does.
While the world’s largest operator, China Mobile Ltd., chugs along with more than 500 million subscribers getting service on the GSM technology path, China Telecom continues to invest in CDMA technology upgrades without hesitation.
The carrier isn’t losing sleep over the age old CDMA vs. GSM debate either; indeed it’s embracing its differentiation all the while adding subscribers at a month-over-month rate of 5%.
“China Telecom is in a very good growth period with subscriber base and revenue increasing, said Qi Bi, CTO at China Telecom. “Last month’s growth was 5% subscriber growth per month and it’s still growing and there’s no sign of reducing the trend.”
Bi, who works at the company’s research institute in Beijing, emboldened his case for the technology at a pair of keynotes here in Shanghai at Huawei Technologies Co. Ltd.’s 5th Global Operation and Development CDMA Forum and Mobile Broadband China.
The way he sees it, the CDMA infrastructure market was in decline until China Telecom joined the party and purchased the existing CDMA system from the defunct China Unicom. “The tide changed when China Telecom joined the CDMA network,” he said.
China Telecom ended 2008 with 28 million subscribers. It was granted a CDMA2000 3G license in January the following year and within 110 days it had launched the EV-DO Revision A version of the technology in 122 cities. The carrier’s subscriber count doubled to 56 million by the end of 2009, with just 7.7% of the market. It now hopes to reach 100 million customers by the end of 2010, which would make it the largest CDMA service provider worldwide.
It would appear the company is equipped to handle all that growth with a sales staff of more than 16,600 now on board as well.
“China Telecom has determined to grow the subscriber (base) significantly” by focusing on existing government, enterprise and household markets, Bi said.
“We will continue to improve our system to benefit enterprise, government and consumers,” he added. “We are very focused on mid- to high-end customers.”
The carrier has a strong relationship with government and enterprise thanks to its traditional landline market. While non-voice services only recently became the largest revenue source for China Telecom, at 52%, the vast majority of non-voice revenue still comes from wireline data services.
“When we do wireless the slogan is coverage, coverage and coverage,” Bi said, adding that the operator has increased its number of base stations from 110,000 to more than 180,000 today.
“For CDMA to be successful we need to focus on three areas – system terminal, roaming and evolution,” Bi said.
CDMA evolution paths
With an evolution to EV-DO Rev. B, China Telecom and others will be able to apply more spectrum to data customers while increasing spectral efficiency, he said.
The operator has three EV-DO Rev. B trials underway, including one here in Shanghai. China Telecom is still evaluating results from the tests and will be making more long-term decisions about the upgrade path later this year.
“Currently we are actively promoting the ecosystem establishment for Rev. B,” Bi said. “We are working very close with our terminal vendors.”
Multiple chipset vendors have the capability and Qualcomm Inc. (QCOM) already has a chipset available, he added.
These endeavors are all underway because the possibility of network drain and overload becomes all the more likely as subscriber counts rise.
In China Telecom’s early days of CDMA and EV-DO system deployment, Bi admits that the operator generally assumed that network load would be uniform and that the network would be best optimized based on that assumption. That hasn’t turned out to be the case.
Like practically every other network, China Telecom’s network has spots that are heavily loaded and areas that experience low traffic. Hot spots lie in the center of China’s heavily populated cities and the operator carries light traffic on the edge of the country’s cities.
Nonetheless, Bi is optimistic about the technology choices available to him as he looks to shuffle spectrum availability between these points in the network to improve the customers’ experience in areas that have higher demand.
EV-DO Advanced is a software upgradeable designed specifically for network optimization, Bi said. With this path, China Telecom plans to expand the cell site and coordinate time and frequency slots in the city centers to offload traffic in the busy cells and make the idle cells do more.
That’s the basic essence of EV-DO Advanced, Bi said. The technology applies advanced mathematical algorithms based on network traffic distribution.
“This technology is based on the assumption that data will grow … and we can shrink the spectrum used for voice and empty that spectrum for data,” Bi said.
While “the appetite for investment on upgrading voice networks is not that big,” he said. “This will be one of the most efficient voice networks worldwide.”
Making the network more efficient will improve capacity, but new chipsets also have the potential to more than double system capacity, Bi added.
Improved system terminals “could be very useful when the spectrum becomes very important and a constraining resource,” he said. “The technologies used for these include dual antennae and interference cancellation.”
LTE as destiny
While there is still a roadmap to follow purely on CDMA, China Telecom is “destined to evolve to LTE,” Bi said. “China Telecom has also launched a bigger effort to evolve to LTE and the evolution will be smooth and backward compatible with CDMA.”
It’s impossible to ignore the key innovations that the OFDM-based (orthogonal frequency-division multiplexing) technology will deliver, most importantly improved data speeds. But Bi is careful to call the technology what it is at this point.
Bi laid out his vision for LTE with a heavy dose of reality.
“Currently LTE is actually a data-only solution,” he said. “It is not 4G. It is a data-only solution.”
For an IP network to support voice, the carrier must launch VoIP services, which are still in the early stages at the operator level. In fact, it’s Bi’s understanding that not one carrier has commercially launched its own VoIP services yet.
“Nonetheless, LTE will improve the spectral efficiency,” Bi said, but more spectrum will be required. EV-DO technology uses 1 megahertz of spectrum while LTE could use upwards of 20 megahertz of spectrum, he said.
The problem is that while data speeds might triple, the customer wants to see an increase of tenfold or even twentyfold, he added. “The increase of the peak rate is exponential through time,” he continued.
3G networks effectively hit their limit at 1.86 bits per second per hertz per user and LTE has the potential to deliver 6 bits per second per hertz, according to Bi.
“We are very close to what we can achieve physically in the wireless communication” space, he said. “The average spectral efficiency only increases moderately.”