China makes TD-LTE count

As the world’s largest mobile telecom market, China has the muscle to single-handedly create and sustain a market for products and technologies that the rest of the world may not necessarily be as enthusiastic to adopt. However, in the case of TD-LTE, China Mobile’s early investment in the technology, and its desire to see it adopted as a global standard, has created a momentum with global implications and opportunities. Comm. reports from Shanghai

Brda says Motorola needs to drive the 70 per cent re-use between WiMAX and LTE even higher in 2010

Motorola was selected by China Mobile as the primary TD-LTE solution partner to provide indoor coverage for all major pavilions at the World Expo 2010, which is being hosted in Shanghai. The event offers a sustained, live demonstration of public TD-LTE supporting a high level of traffic, and standing as an example as to the high-speed, high bandwidth networks that can be developed to utilise TDD spectrum.

TD-LTE uses TDD unpaired spectrum channels that combine uplink and downlink, and split resources on the basis of real-time demand. It is a standard that was initially developed with the spectrum resources present in China in mind, but given the availability of TDD spectrum in telecom markets across the world, TD-LTE has begun to take shape on a more widespread basis.

“Scale is very important and our partnership with China Mobile in Shanghai demonstrates that TD-LTE is here and mature, and is also nimble to the requirements of the operator,” said Sudhakar Ramakrishna, corporate VP and GM of Motorola’s Wireless Broadband Access Solutions and Operations for LTE Networks. “There is a realisation that you cannot ignore TD spectrum as operators are making horizontal decisions nowadays,” he added.

TD-LTE sponsors include telecom stalwarts such as Ericsson, Nokia Siemens Networks, Alcatel-Lucent, ZTE, ST Ericsson and Qualcomm as well as networking and IT infrastructure suppliers including Cisco, Juniper, NEC, LG and Actix. For its part Motorola believes it has every opportunity to build on the early leadership position it has established in TD-LTE through the China Mobile award. Given the estimated 70 per cent re-use of R&D between WiMAX and LTE, Motorola is looking to convert its sizeable investment and leadership in WiMAX into similar leadership in LTE, both TDD and FDD varieties.

“In Asia, our most important developments in 2010 are to commercialise FDD LTE and TD-LTE solutions,” said Bruce Brda, senior vice president and general manager of Home & Networks Mobility at Motorola. “Our industry is in a unique and privileged position where the challenge is how to meet demand, not how to create/grow demand. An opportunity already exists; we are not seeking it out.”

The TD-LTE network that Motorola is trialling with China Mobile is compatible with WiMAX, which is a situation that aids in the Chinese operator’s enthusiasm to see TD-LTE adopted as a standard internationally.

“Other TD-LTE opportunities exist globally from customers currently utilising WiMAX technology,” Brda said. “What Motorola needs to do as a company is drive the 70 per cent re-use between WiMAX and LTE even higher in 2010,” Brda commented.

The fact that TDD spectrum is often less expensive, and in many cases less utilised than FDD resources, also makes TD-LTE an appealing case for greenfield operators that are looking to enter the wireless data space. According to Thorsten Robrecht, head of LTE product management at Nokia Siemens Networks, there are 19 LTE FDD bands in 3GPP (from 700MHz to 2.6 GHz), offering evolution paths from GSM and WCDMA, as well as CDMA. Eight TDD bands exist in 3GPP (from 1800MHz to 2.6GHz), offering evolution paths for TD-SCDMA and WiMAX.

China Mobile is well-known for its large city trials and Motorola is confident the live TD-LTE trial being conducted at the Expo 2010 in Shanghai will be commercialised on a larger scale

Given the planned spin off of Motorola handset and home businesses from its enterprise mobility and networks businesses, the Chicago-based technology provider’s choice to back LTE and specifically TD-LTE to the extent that it has, is a major strategic bet for the organisation. As a standalone business, Motorola’s network business generated revenues amounting to US$4.9 billion in 2009, making it amongst the smaller members of the highly competitive global telecom infrastructure suppliers’ club.

Smaller annual revenues means smaller amounts that can be invested in R&D, means less opportunity to take leadership positions in new technologies and developments, means being faced with the potential of a shrinking market share. Brda is aware of such constraints and believes Motorola’s strategy to focus on the customers it already services, and focus on technologies in which it already enjoys strong positions in, is the correct one to assume in its post-separation life.

“Our investments are highly targeted as a smaller vendor. We are focussed on carrier customers where we have greater chances of success for example with KDDI in Japan,” Brda said. “We have taken cost out of the business in a way that does not affect customers,” he added.

Despite the reduced scale of the business, Motorola has performed better than many of its larger competitors such as Alcatel-Lucent and Nokia Siemens Networks in recent quarters, with Brda having noted that the exit of Nortel is evidence of the pressures that exist in the market. As a standalone business, Motorola’s network activities reported operating earnings of 12.5 per cent in Q409, and the decent performance continued in Q12010, with the business generating US$896 million in revenues and a 14 per cent operating margin.

As the world’s largest mobile operator, with more than 600 million subscribers, China Mobile has the clout to push technologies that are to its benefit

“Costs were taken out of products early, and we benefited from pleasant surprises in certain segments in the market,” Brda stated with respect to the robust performance of Motorola’s network business in Q12010.

Another strategic gamble being taken by Motorola is in its choice to engage in managed services only in operations in which it has an investment. “We are investing in tools and knowledge-based services,” Brda said. In 2009 services accounted for 38 per cent of revenues in Motorola’s network business, down to 34.8 per cent in Q12010. However, Brda believes this figure can be realistically pushed to 40 per cent of overall network revenues.