Summary
China is using wireless technology to provide rural areas with access to phone and data service. By investing in this large, relatively untapped market where the majority of the Chinese people live, Beijing wants to use its data hungry population to increase economic growth. The Chinese government has long been concerned that investment and growth is too concentrated on its crowded eastern seaboard where there is already significant pressure on infrastructure.
Beijing-owned China Mobile, the world's largest mobile phone operator, is leading the way in the rural telecom development. It currently enjoys 70 percent of total market share in China and the growing popularity of smartphones creates new opportunities for the telecom industry. In 2010 smartphone sales represented only 15 percent of the market with the majority of those sales made in major cities. With over 600 million subscribers, China Mobile has invested 70 billion yuan ($10 billion) from 2009 to 2012 to expand telecommunications infrastructure to rural areas.
China Mobile has entered into alliances with other telecom companies in order to make their vision of a rural telecommunications market a reality. AirTouch China, a joint venture between China-based Bigtall Trading Company and California-based AirTouch, Inc., designs and markets devices that amplify wireless signals. This provides users with access to voice, data, and other mobile services over existing cellular wireless networks without the need for expensive landline infrastructure. AirTouch China is working to provide China Mobile, China Telecom and China Unicom with these broadband and landline replacement devices in order to reduce the need for mobile towers.
According to the CEO of AirTouch, Hide Kanakubo, “China has to keep feeding its people with technology, information and thus, further economic growth. However, most of rural China remains in a 2G environment even as the rest of the country is moving quickly to 3G, yet the world operates in 4G. The deployment of communication services to rural areas will accelerate the demand for data streaming from the Chinese people until all home and office related services converge to wireless broadband data transfer. With the expansion of wireless there will be no need in rural China for cable, landlines or fiber."
Analysis:
Simmering tensions and disputes between interior and coastal provinces in China are nothing new. For some time now, Beijing has been actively trying to channel growth and investment inward. China’s eastern provinces with key cities like Beijing, Tianjin, and Shanghai are overcrowded and pressure on infrastructure is growing.
That wireless data streaming is relatively easy to adopt in rural areas is a boon to Beijing as it promotes its rural growth strategy China Mobile’s investment reflects the value it sees in every new customer even as it tries to keep infrastructure costs down. The use of wireless amplification devices serves as an opportunity to capture the expanding market inexpensively. Its current dominance over the Chinese telecommunication industry has benefitted from the rapid growth of the need for data in rural China.
These devices by AirTouch will likely help promote the data-centric future of Chinese telecommunication infrastructure. By opening up its rural areas to wireless technology, Beijing seeks to help its farmers become more prosperous and economically useful. The methods that Beijing uses as it expands its telecommunications infrastructure will influence other developing countries such as Brazil, India, and Russia in the development of their own rural infrastructure policies, respectively.
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