China Wireless Infrastructure

Fiber reels BeijingThis is a busy time for the wireless equipment space in China. Over the past two years, the growth of Wi-Fi has proven a huge boost for many vendors.  A few years ago, it was hard to find reliable Wi-Fi access, now it is so ubiquitous that it is common to hear people complain about the service quality of any given hotspot. This seems to remain a growth area, as capacity replaces coverage as the driver of equipment sales.

More importantly, LTE is coming to China. China Mobile has its license and the other two carriers seem likely to get one at some point in 2014. A few people we spoke with seemed to think that LTE growth would be a priority for the government. A big theme for the economists in China is the need to increase consumer spending. Moving to LTE is an easy way to spur consumer spending, as a smallish investment in networks can provoke a wide scale upgrade of smartphones. And higher data rates will spur growth in Internet usage.

That being said, other markets are more of a mixed bag for LTE. Japan, South Korea, the US and Scandinavia are all well along the path to LTE adoption. We also heard of very healthy demand for wireless infrastructure in Southeast Asia. However, other markets seem to be taking their time.

The pattern of LTE deployment has been very much market specific. In any market, if one carrier has a need for LTE (for better global roaming, capacity constraints, underused spectrum, etc.) that has been enough to spur the whole market to move to LTE. However, that means several markets without an obvious, pressing need are seeing carriers focus more on fully utilizing their 3G networks, which have not really been fully depreciated yet. So a mixed bag.

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