China swaps out 'scum' telco bosses

Beijing has just swapped around its telco chiefs. Two have done a direct swap and the third has retired, replaced by a government official to take over the third operator.

As China’s economic management comes under global scrutiny, it’s a neat illustration of how it sees the game differently from the rest of the world.

Under the changes, Chang Xiaobing is the now chairman and party secretary at China Telecom, positions he previously held at China Unicom. Former China Telecom chief Wang Xiaochu replaces him at Unicom.

Over at China Mobile, the new man is Shang Bing, previously a vice-minister at MIIT. He replicates the path followed by retiring Xi Guohua, who moved to the operator from the MIIT in 2011, taking over as chairman in 2012.

The appointments were revealed in a series of announcements on Monday morning by the CCP Organisation Department – another key point: leadership posts in large and politically-sensitive SOEs are all CCP positions.

This isn't the first time the party has simultaneously rung the changes among the telco top tier. In 2004 it carried out a similar reshuffle in which, Unicom chairman Wang Jianzhou became China Mobile president, Shang Bing was promoted to Unicom president and China Telecom vice-president Chang Xiaobing became CU chairman and party secretary.

And why?

As a commentary in Sina Tech says, many analysts at that time thought the reshuffle would allow the chiefs to see the world through each other’s eyes and “avoid excessive competition.” Clearly the party bosses think it's been a success.

Punters think differently, however. The most popular comment under the most popular Sina story – focusing on China Mobile – declares: “You scum. All your packages are a fraud.”

The changes come on the heels of mediocre interim results. For all its dominance in 4G, China Mobile  earnings fell by nearly 1% and revenue rose just 4.9%. China Telecom’s net shrank 4% and only China Unicom showed improvement, with a 4.5% hike in income. No one is suggesting the leadership changes are intended to address any of the issues facing the three.

Final point: none of the new execs is female. All of the nine new appointees at China Mobile are male.

China Unicom VP's exit draws speculation

Interesting story on the resignation of China Unicom vice president Li Gang has just crossed the wires.

To be precise, 57-year-old Li hasn’t been to work since Chinese New Year in early February and his resignation has just been approved by “higher authorities” (almost certainly the Communist Party organization department).

In January Li was rumoured to be leaving Unicom to head up one of the incoming MVNOs.

While there’s a revolving door between China’s SOEs and the bureaucracy – high-level positions are party appointments – senior execs don’t just leave when they feel like it. 

As Li’s example shows us, they have a few hoops to jump through. Reportedly he’s been on the Chinese equivalent of ‘gardening leave’ since February.

The spectacle of a top official resigning in the middle of a fierce anti-corruption drive has sparked speculation, but so far there has been nothing to suggest anything other than that he is seeking a lucrative exit to the private sector.

On the other hand, China Unicom has made no announcement about Li's departure, which was formally approved on Monday.

Li became prominent in the early 2000s as head of Guangdong Mobile, which under his leadership contributed a third of China Mobile’s profit. He pioneered some of China Mobile’s biggest brands, such as the GoTone postpaid service and the Shenzhou card for mass market users.

After missing out on promotion at China Mobile he jumped to Unicom in 2005.

While nothing links Li to any malpractice, half a dozen China Mobile executives have been convicted for corruption in the last five years. Vice-chairman Zhang Chunjiang received a suspended death sentence in 2011 after his conviction for receiving $1.15 million in bribes. Last year a vice-president, Lu Xiangdong, was convicted over taking $4.1 million in bribes.

Not so fast: FDD licences revisited

This blog pleads guilty to a mild bout of irrational exuberance over the issue of FDD-LTE trial licences on Friday.

For sure the licences give China Telecom and China Unicom the chance to build out FDD in 16 cities. But in each case only two of those cities are tier-1, and it's telling that Beijing is not one of them.

Plus, as Sina Tech notes, the wording of the MIIT announcement is revealing, repeatedly declaring that these were "LTE network integration trials," just to make sure that the trial deployments would include TD-LTE and not just the much-preferred FDD flavour.

So the allocation of the licences is signficant, but the detail suggests the MIIT is not in a hurry to open the gates to full nationwide FDD rollout. TD, the national champion, gets precedence.

FDD is a big deal for the two operators because, to quote Sina again, competing with China Mobile on TD alone is a "dead-end street."

On the other hand, Telecom and Unicom execs will no doubt be planning to take advantage of the hazy definition of just what is an FDD base station or terminal, and just how vigilantly the MIIT will police it. A report at IT Sohu suggests that many of the networks will become "underground FDD" systems - operating commercially under the cover of a TD licence. That wouldn't be the first time in China telecoms.

FDD rollout cities

China Telecom: Lanzhou, Xian, Shijiazhuang, Jinan, Chongqing, Chengdu, Zhengzhou, Wuhan, Nanjing, Hangzhou, Shanghai, Shenzhen, Nanning, Hefei, Nanchang, Haikou.

China Unicom: Harbin, Shenyang, Shijiazhuang, Jinan, Taiyuan, Zhengzhou, Chongqing, Chengdu, Wuhan, Nanjing, Hangzhou, Shanghai, Fuzhou, Changsha, Guangzhou, Shenzhen.

China Telecom, China Unicom get their FDD licences

China's MIIT today issued China Telecom and China Unicom their long-awaited FDD-LTE licences.

Officially the new permits are 'trial licences' for 16 cities to test out FDD-TDD integration. However, precedent suggests the two operators will face few obstacles in upgrading to full commercial service in the next 12 or so months.

Both Telecom and Unicom have been reluctantly pressed into building out 4G using the government-backed TD standard. The first 4G licences, issued last December, specified TD only.

China Mobile has embraced TD-LTE because of the limited acceptance of its TD-SCDMA 3G system. It claims it will have built out a TD network in 300 cities by year-end.

China Telecom has said it would use TD for no more than 30% of its coverage, and primarily in high-density urban areas.

China Unicom has been the slowest to upgrade to 4G because of its desire to extract more value from its W-CDMA network and did not call its first LTE tender until last December.

The go-ahead for FDD will have no impact on vendor contracts and will probably mean little material change in network rollouts. Both companies are still in the early stage of deploying 4G and will have already developed FDD plans ahead of the licence issue.

China Unicom: Sure, we like TD-LTE

China Unicom has bowed to the inevitable and has become the third and final Chinese cellco to sign up for TD-LTE.

At least, symbolically. 

After much industry speculation, chairman Chang Xiaobing has confirmed that the operator has already begun building a TD-LTE trial network, citing the lure of the early issue of TD-LTE licences.

Chang said at the company’s interim result in Hong Kong that it was highly likely that TD-LTE licences would be issued first, just as TD-SCDMA was the first 3G licence handed out five years ago.

In the past, Chang had indicated a preference for FDD-LTE, the natural choice for a W-CDMA player.

But, like his counterpart Wang Xiaochu at China Telecom, his views have evolved over the last few months. Earlier this year Chang said Unicom aimed to transition to 4G through its “own strategy” – a reference to FDD – and last year spoke of “unswervingly remaining on our own technology path.”

Given the limited benefits of TD and the complete lack of detail about either the trial or future rollout, Chang’s commitment appears little more than a politically correct gesture.

China Telecom has said it will use TD as a supplement to FDD-LTE in urban areas, but Chang has not even gone that far.

As an anonymous source put it to Sina Tech:

Unicom will implement a TD-LTE test network to support national innovation, but it still will maintain every kind of preparation and trial for FDD-LTE. In the 4G handset and network era China Unicom still probably will be predominant.”

For all that, Chang said that while he thought the TD-LTE licence would be issued first, he didn’t think it would happen this year as the MIIT has promised.