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48 Wire & Cable ASIA –November/December 2014
Telecomnews
In a strong indication that the Chinese telecom industry has become less
willing to underwrite expensive devices like the iPhone and Galaxy S, China
Mobile Ltd, the number one carrier, is cutting subsidies by $2 billion.
This will make things considerably harder for Apple Inc, of the USA, and
South Korea’s Samsung Electronics Co in the world’s biggest phone market.
But, as noted by Bloomberg News, the pullback may promote growth for
Chinese makers like Xiaomi Corp and Lenovo Group Ltd that offer similar
phones for lower prices. (“Apple, Samsung Face Rising Challenges in China
Market”, 15th August)
The 38 per cent cut in subsidies follows an order from government regulators
to the three national carriers, China Mobile, China Unicom and China
Telecom, that they lower their marketing expenses, thus dictating a change
in practices that have spurred sales of premium handsets to an increasingly
wealthy population.
While the order could save the companies $6 billion, it may also further shift
the hierarchy in Chinese market share after Samsung lost the top spot in the
April-June quarter and Apple failed to crack the top five in sales.
“High-end flagship phones will suffer the most from the regulation due
to their prohibitive prices in the China market without subsidies,” Lydia Bi,
a Shanghai-based analyst at researcher Canalys, told Bloomberg in Beijing.
“Samsung and Apple, as the two major high-end flagship phone makers,
have the most to lose.”
According to Tay Xiaohan, a Singapore-based analyst with IDC, Chinese
consumers are already becoming more receptive to the higher-end phones
produced by Chinese vendors. The trend will likely favour companies like
Xiaomi, which Canalys said shipped 15 million devices in the second quarter,
giving it 14 per cent of the market to Samsung’s 12 per cent. Xiaomi was not
even among the top five vendors a year earlier.
China’s state-owned Assets Supervision and Administration Commission
reportedly told the three national carriers to cut spending on advertising and
subsidies by a combined estimated $6.4 billion over three years.
At China Mobile, subsidies for high-end phones can reach $750. In
mid-August, the carrier’s website was offering the 16-gigabyte iPhone 5s for
$860, without a contract.
Ø An item in the South China Morning Post for 18th August reflected the
Bloomberg view of a global mobile phone market shifting gears, with
aggressive Chinese companies ‘bent on conquering the world with
boatloads of low-cost Android-based smartphones.’
According to Hong Kong-based reporter Bien Perez, these companies
are benefiting from the rapid evolution of smartphone technologies,
cheaper components, expert electronics contract manufacturers
on the mainland, and a vast domestic market of budget-conscious
consumers ‘to build scale and compete head-on against Apple, Samsung
Electronics, and the other major global brands.’
Citing a report by Bernstein Research, the Post identified these ambitious
Chinese mobile handset suppliers. The ‘Gang of Six,’ so called by
Bernstein senior analyst Alberto Moel, is led by ‘computer kingpin’
Lenovo and ‘red-hot start-up’ Xiaomi, followed by telecom equipment
manufacturing giants Huawei Technologies and ZTE Corp and consumer
electronics firms Coolpad Group and TCL Communication Technology.
As the era of Chinese subsidies for high-end
phones nears its end, ambitious smaller names
aim to overtake the majors
With Japan’s NEC as lead
supplier, a consortium in-
cluding Google plans the
‘FASTER’ subsea cable for the
trans-Pacific route
The 6,200-mile trans-Pacific subsea
cable system announced by Google
in August and given the ambitious
name FASTER will be landed at
Chikura and Shima in Japan and
will feature seamless connectivity
to neighbouring systems in Asia.
Connections in the USA will further
extend the network to major West
Coast hubs serving the Los Angeles,
San Francisco, Portland and Seattle
areas.
Employing 6-fibre-pair cable and
optical transmission technologies,
FASTER will have an initial design
capacity of 60Tbit/s, made up of
100Gbit/s from 100 wavelengths of
6-fibre pairs. The $300 million system
is expected to enter service in the
second quarter of 2016.
The system, in which Google is one
of six commercial partners, has NEC
of Japan as lead supplier. The other
partners are KDDI (also Japanese);
China Mobile International and China
Telecom Global; Singapore’s SingTel;
and Global Transit, of the USA.
Noting that the cable system features
the largest design capacity on
the trans-Pacific route, one of the
longest in the world, Woohyong Choi,
chairman of the FASTER executive
committee, asserted that the
announcement of the project should
buoy all users of the global Internet.
The Google spokesman, Urs Hölzle,
VP of technical infrastructure for the
California-based Internet services
giant, was more characteristically
company-centred. At Google, he said:
“[We] want our products to be fast
and reliable, and that requires a great
network infrastructure, whether it’s for
the more than a billion Android users
or developers building products on
Google Cloud Platform.”
As noted by Guy Daniels of
TelecomTV, FASTER does not
represent Google’s first investment in
a submarine cable. In 2008 it joined
a consortium to finance the $300
million, 3.3Tbit/s trans-Pacific Unity
cable that entered service in 2010,
linking the USA to Japan. It was also
a participant (by way of its Bermuda
subsidiary) in the $400 million, BigStockPhoto.com • Photographer: Krishnacreations