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Communications & Networks

  Steady Growth For China's Wireless Network Optimization Equipment
September 25, 2008

In 1H 2008, China's wireless network optimization equipment revenues reached 3.34 billion Yuan, which was 66.2% of total revenues in 2007. There has been steady but moderate yearly growth.

Wireless network optimization equipment is primarily focused on increasing coverage of blind signal areas, and usually consists of base station amplifiers, microwave devices and antenna. Since 2000, China has been aggressively enlarging its wireless network coverage. However, for blind signal areas, telecom operators find it financially or technically unfeasible to simply open more base stations. This is where wireless network optimization equipment comes in.

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Source: CCID Consulting, July 2008

Chinese mobile subscriber growth and demand for advanced services will drive the growth of wireless network optimization. Blind spots that need to be addressed include urban residential quarters, certain roads, railways and subways, campuses, large public areas, waterways, mountainous regions, vast grasslands, and the countryside.

Case in point: China Mobile as initiated its 3G coverage with TD-SCDMA trials, building out macro-cellular base stations. However, its coverage is inconsistent, especially compared to the 2G coverage that mobile subscribers come to expect. In order for China Mobile to effectively promote 3G and increase its adoption, the company will have to deepen its coverage using wireless network optimization strategies and equipment.

Vendor Competition

Vendors with scale and size have gained market share. First tier vendors include Comba and China GrenTech, with operating revenues exceeding one billion Yuan. Comba's products include repeater stations, digital microwave, antenna, and base station subsystems. China GrenTech's include wireless network coverage, RF and wireless broadband access products. Both vendors have also transitioned to RF and module technology solution providers.

Second tier vendors include Allwin and Sunnada. These vendors typically provide repeater station equipment and integrated solution services. However, they are planning to expand to more high-end offerings.

Vendor Profit Pressures

China's telecom operators have been gradually centralizing their equipment procurement, to simplify their business processes and save costs. This has led average price declines of mobile communications equipment. Vendor's gross profits have declined from the 50% range in 2004 down to well below 40% in 2007.

Moreover, wireless network optimization equipment is targeted specifically to telecom operators, which also require high technical content and vendor stability. In response, vendors have leveraged their technological competencies into other RF-related fields, broadcast television, wireless metropolitan area networks and wireless broadband LAN, which may bring renewed vendor growth.

When procuring equipment, telecom operators are apt to also include product, systems integration, and network maintenance as part of the purchase. Therefore, in order to be competitive, vendors also must have more comprehensive set offerings that include supporting software and services. CCID Consulting believes that vendors who lack such comprehensive offerings will not survive.

For more information

Please contact us for these and other China-related data, information and products.

Unless otherwise specified, all information provided is sourced from CCID Consulting.


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