Download - GIGA background study: mobile broadband in China

for GIGA Technology Program

Mikael Leinonen, Finpro Hong Kong

Wireless Broadband in China

November 30, 2005

/ 2Wireless Broadband in China/ Leinonen/ 30.11.2005 / © Finpro ry

Table of Content

1. Introduction2. Market overview

1. Business volume2. Network Operators

3. Services1. VAS Figures2. SMS & MMS3. Ring Back Tones4. M-Commerce5. Games6. Other services7. Biggest Service Providers8. Revenue sharing model

4. Currently used Broadband technologies1. 2.5G2. EDGE3. Wireless Local Loop4. SCDMA5. The Cuntong Project6. WLAN

5. 3G1. General2. Lisence issue3. TD-SCDMA4. 3G testing5. HSDPA

6. Other future technologies1. Wimax2. WRAN3. DVB-H4. Beyond 3G, 4G

7. Policy making and public sector’s role1. CATR2. Standard Association3. CJK Standards meeting

8. Public R&D programs1. General2. NFS3. 8634. FuTURE5. Notable research institutes

9. Private sector R&D activities1. General2. Network equipment manufacturers3. Handset manufacturers

10. Foreseeable radical changes

11. Finnish Companies’ possibilities in China


1. Introduction


• This report has been written for the GIGA program of Tekes, focusing on converging networks. The report provides information on the China wireless broadband markets.

• This report discusses the following issues• Overview of the China wireless broadband market• Competitive environment• Technology adoption and outlook• Available services• Government’s role in the development of the

wireless broadband• Public & Private R&D activities for wireless broadband

technologies• Opportunities for Finnish companies

1. Introduction


China in a Nutshell

China National Statistics 2004

Population 1.3 billion (Finland 5.3 million)

Land Area 9,600 000 km² (Finland 338,000 km²)

Largest City Shanghai

GDP per capita $5,600 (2004 est.)

Metropolitan Population urban population: 41.8%; rural population:

58.2%.

Source: www.china.org.cn, CIA world factbook

1. Introduction


2. Market Overview

2.1 Business Volume2.2 Network operators


General market information

• Telecom revenue reached USD 63 bln in 2004

• Mobile communications revenue: USD 27 bln 13.2% increase from

2003 ~43% of total telecom

revenue• Number of mobile phone

users was 340 million by the End of 2004

• ~25.9% user penetration by the end of 2004

• Mobile penetration is estimated to double itself by 2010

Mobile Subscribers & Penetration

0

100

200

300

400

2001 2002 2003 2004

Year

Subs

cribe

r(Mil)

0

5

10

15

20

25

30

Pene

tratio

n %

Subscriber

Penetration

2. Market Overview

2.1 General market information


Market share: fixed vs. mobile

Market Share by Revenue (2004)

Chi na Tel ecom

32%

Chi na Mobi l e

36%

Chi na Uni com

15%

Chi na Netcom

16%

Rai l com&Sat1%

• Number of mobile phone users surpassed the number of fixed line users at June 2004

• Pure mobile operator China Mobile is the biggest in market share by revenue and subscribers

• Two fixed line operators Telecom and Netcom are now achieving more market share with “quasi” mobile PHS service

2. Market Overview



Number of mobile users per technology

Mobile Users (Millions) per Operator & Technology

4Q/2004

2. Market Overview



Mobile subscribers

Yearly comparison on new mobile user subscription

0100200300400500600700800900

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Th

ou

san

d (

sub

scri

ber

s)

2001

2002

2003

2004

Source: Ministry of Information Industry

2. Market Overview



Geographically diversified penetration

• Penetration rate only ~25.9% (2004)

• Mobile phone density differs a lot in different areas. Wealthy East-coast is leading in subscriber numbers

Comparison of new mobile subscribers in East-, Central- and Western China; 1/H 2003, 1/H 2004 and 1/H 2005 (Y-axis: subscribers 10.000 ).

2. Market Overview



New mobile users are mainly post paid customers

• In 2004 ~90% of the new mobile phone users were prepaid customers

• This has caused the decrease in operators’ ARPU

Comparison of Fixed Line and Mobile communication ARPU in 2003-2005(Monthly ARPU, RMB) [1 CNY = 0.123793 USD (11/05) ]

2. Market Overview



Mobile Operators

Operator Network Users Operating revenue 2004

Note

China

Mobile

GSM since 1995, GPRS since 2002

GSM: 223.78 mln RMB 192.4 billion

(US$ 23,244 billion)

Planning to launch EDGE in 2H/2005

China Unicom

GSM since 1994, cdmaOne since 2002,

CDMA2000 1X since late 2003

GSM 88.76 mln

CDMA 30.47 mln

RMB 79.33 billion

(US$ 9.6 billion)

GSM-CDMA dual mode service since 2H/2004

China Telecom(No mobile license, but operates PHS)

PHS (LittleSmart) since 1997

PHS: 39.12 mln Total (including Fixed line): RMB 161.2 billion

(US$ 19.4 billion)

No mobile operating license!

PHS in huge growth

China Netcom(No mobile license, but operates PHS)

PHS (LittleSmart) since 1997

PHS: 20.08 mln Total (including Fixed line): RMB 64.9 billion (US$ 7.8 billion)

No mobile operating license!

PHS in huge growth

2. Market Overview



Mobile data revenues, 1Q 05 vs. 2Q 05China Mobile and China Unicom

Data revenue/ month ($ milj.)

Data Share of Revenue

(%)

Data revenue/ month ($ milj.)

Data Share of Revenue

(%)

Data revenue/ month

Data ARPU

China Mobile

416.67 18 515 21.4 110.52 101.2

China Unicom

120.33 15 116.67 14 85.48 79.03

2005 1/Q 2005 2/Q Yearly change (%)

Source: Informa, Mobile Media Analyst, Oct 05

2. Market Overview



Handset market

• 2004: 73 million handsets sold

• 2005 (E): 88 million handsets sold (by CCID)

• Over 1000 handset models in market

• Nokia, Motorola, Samsung and Bird are leading the market

• Domestic manufactures have less than 45% of the total market

2. Market Overview



China Mobile

As of 31 July, 2005

Contract subscriber Prepaid subscriber Total subscriber

Subscriber number 60,737 166,625 227,362

Net additions 105 3,476 3,581

Cumulative net additions

850 22,220 23,070

Subscriber Base ( in thousands

CM has the right to use a total of 34 MHz of spectrum, for transmission and reception, respectively, in the 900 MHz frequency band and the 1800 MHz frequency band in Mainland China.

Source: China Mobile

2. Market Overview

2.2 Network Operators


As at 31 March 2005/ For the period from1 January 2005 to31 March 2005

As at 31 December 2004/For the period from1 October 2004 to31 December 2004

As at 30 September 2004/For the period from1 July 2004 to30 September 2004

Number of Subscribers 213.87 million 204.29 million 194.38 million

* Net increase in subscribers 9.58 million 9.91 million 8.91 million

* Average Revenue per User per Month (ARPU)(USD/User/Month) 11.02 $ 11.27 $ 11.14 $

* Total Usage (Minutes) 196.48 billion 188.27 billion 170.37 billion

* Average Usage per User per Month (MOU) (Minutes/User/Month) 318 313 297

* Average Revenue per Minute (USD) 0.035 $ 0.035 $ 0.037 $

Number of Users of Mobile Data Services 174.00 million 156.83 million 147.09 million

* Short Message Services Usage Volume (Messages) 59.1 billion 62.8 billion 40.0 billion

Network Capacity (Users) 254 million 244 million 226 million

Network Utilisation Rate 84.2% 83.6% 86.0%

Number of Employees 90,771 88,127 85,621

China Mobile insight: July 04 – March 05

Source: China Mobile

2. Market Overview



China Unicom

• The only operator in China to run two different networks of GSM and CDMA

• Testing on CDMA EV-DO & CDMA EV-DV as 3G

(Tianjin and Shanghai has built EV-DO trail network)

• Speculation that China Unicom can be split up two

• Uni-Info, branded WAP portal.

• Established UNISK Information Technology (together with SK Telecom) to engage in wireless value added service business

• Uni-Java (developed with Qualcomm) and Brew are two application platforms for China Unicom

2. Market Overview



China Unicom: strategies

• Boosted CDMA users thru calling discount, handset subsidy & prepaid service.

• It CDMA targets more to Hi- & Mid-End users & business customers

• “World Wind”, a branded service of dual-mode phone services enables users to transfer between GSM and CDMA network automatically

• Placing increasing attention to mobile applications as service differentiation eg: Mobile Wallet

2. Market Overview



Fixed line operators

China Telecom Overview• One of the biggest operators in China market (No.2 for revenue). • Focus on fixed line, broadband service, etc. Its main business area is southern

parts of China• China have 65.2 million Wireless Local Loop (WLL) user at the end of 2004,

China Telecom occupies 60% WLL market• Plan to obtain 3G license in the future

China NetcomOverview• Third largest operators in China.• Focus on fixed line, broadband service, WLL, etc• Main business area are north part of China• Occupy 40% WLL market share• Official partner of 2008 Olympic Games

2. Market Overview



Fixed line operators

China Railcom• Its focus on fixed line, broadband service, etc.• Its network cover whole country• Launched GSM-R trial network in 2004• Testing 3G

China Satcom• Established in 2001, focus on satellite communication. • It devotes to develop satellite communication, broadcasting and related

business• Testing 3G

2. Market Overview



Service fees

Service Handsets Monthly fee Minute price Value added services, sms, e-net, callforwarding

WLLservice

75 - 250USD

3.09 USD 0.014 0.15 USD/hour, sms XLT- cellphone 0.01 USD per message

GPRS 250 USD or less

0-25 USD 0-0.04 USD per kilobyte

1) Basic Plan: no monthly fee, usage is charged at 0.004 USD per kilobyte;

2) Economy Plan: 2.4 USD a month for 1MB free data volume, and 0.0012 USD for each additional kilobyte;

3) Elite Plan: 12 USD a month for 20MB; 4) Business Plan: 24 USD a month for unlimited usage.

CDMA 150 - 370USD

6,19 USD 0.05 USD

GSM 75 -370USD

6,19 USD 0.05 USD Prepaid: 0.07 USD per minute, Sms China Mobile network to Unicom is 0.018 USD and 0.012 USD from Unicom to China Mobile.

2. Market Overview



3. Services

3.1 VAS figures

3.2 SMS & MMS

3.3 Ring Back Tones

3.4 M-Commerce

3.5 Games

3.6 Biggest Service Providers

3.7 Revenue Sharing model

3.6 Other services


• Data services account roughly about 10% of operators’ revenue

• Over 1000 Service Providers offering mobile VAS• Total market value of mobile VAS exceed 2 billion

Euro in 2003

• VAS Market information at Q4 of 2004• WAP user reach 14.9 million, revenue 104 million Euro• Java and Brew games are smoothly increasing, revenues

are 2.5 million and 1 million Euro• IVR market revenue 24.5 Euro• CRBT increase fast, user reach 22 million, expect to reach

60 million in 2005, revenue 33.6 million Euros

3. Services

3.1 VAS figures


SMS:• 217 bln SMS sent in 2004, 2.69 bln USD of total revenue• 57% of SMS are for chat & games, followed by ringtones,

pictures, news, financial info, • CM’s top 5 SPs capture 57% revenue from WAP SMS. • Revenue from SMS is leveling offMMS:• Both operators started MMS with branded content.

• Color messaging by CM• Color E by CU – MMS, IMAP (emails), LBS

• Number of MMS users reached 6.98 million, revenue 31.1 million USD

• MMS is billed at USD 0.096 each (SMS is USD 0.012 each.)• Users also need to pay for MMS content downloaded from

Internet portals.

3. Services

3.2 SMS & MMS


Ring back tone – the next big hit?

Color Ring Back tones:

• CM’s “Color Ring”, ringback tone provided by WiseSpot’s WiseRing personalized VAS platform built on NMS Communications technology.

• CU’s ringtone@Yamaha offers a vast choice of different melodies for handset ringers.

• Special effect ringtones account 40% of downloads.

• Avg price: USD 0.25/download, USD 0.8/month fee

3. Services

3.3 Ring Back Tone


M-Commerce:

• CM’s Handset Purse• Through SMS, IVR, WAP subscribers operate on

bank accounts to purchase, transfer a/c, inquiry balance by SMS

• Will expand to shopping, a/c transfer, online payment, security deal, etc.

• CU’s Mobile Wallet Service• Cooperation with China Construction Bank• Online payment, money transfer via mobile phone

3. Services

3.4 M-Commerce


Mobile Games:• China is 2nd largest market in APAC.• Role play & action games most popular.• Mobile gaming market topped USD $98 million, 150% growth

from 2003• Estimation for 2005: $177,5 million• Currently, majority of revenue comes from offline mobile games• Increasing Java and Brew support in mobile handsets is

boosting the game market• Mobile games are mostly from Japan & Korea, few Finnish

already in market• Price: 0.5-1 USD/download Java Game

3. Services

3.5 Games


• Mobile email service has not yet been launched in China

• Market of the vertical market applications (professional use) is still in initials

• Location Based Services have certain restrictions

• Use of VoIP has been banned by China Telecom

3. Services

3.6 Other services


Top 5 SP of Games• SMS Mobile Games

• Linktone, Sina, Sohu, Tom, Mtone, Any8, Tencent

• WAP Mobile Games• Kongzhong, Nihon, Shenzhen

Xuntian, Mobile NAVI, NewPalm

• Java Mobile Games• Kongzhong, Shanda’s Digital

Red, Magus, 5wan.com, BJ Mig

Top 5 SP of SMS• Tencent• Sina • TOM• Linktone• Sohu

• Top 5 Sp of IVR• TOM• Mtone• Linktone• Sina• Tencent

Top 5 SP of WAP (China Mobile)• Kongzhong• TOM• Nihon Enterprise• GoodFeel (Sohu)• Xuntian

3. Services


Top Service Providers in 2004


Example of mobile VAS Service Provider – Hurray! Group

• Hurray! Holding Co., Ltd. (Nasdaq: HRAY - News), is one of the leading providers of advanced wireless value-added services and mobile telecommunication network software in the People's Republic of China

• Financial results for the second quarter ended June 30, 2005:• Total revenues: $15.0 million, growth of 25.1% year-over-year • 2.5G services revenues: $8.8 million, growth of 21.7% year-over-

year• 2G services revenues: $4.6 million, growth of 28.7% year-over-

year • Software and system integration services revenues: $1.6 million,

growth of 34.1% year-over- year• Net income: $5.0 million, growth of 16.0% year-over-year

• In 2/Q 2005 short-term weakness in the 2.5G market due to WAP billing policy changes by China Mobile and slow CDMA user growth experienced by China Unicom

Source: Hurray! Holding Co., Ltd.

3. Services



General revenue sharing model:• Revenue sharing model depends on nature of cooperation

between operator and SP, SPs and CPs • Revenue sharing model is typically 15-20(operator):80-85(service

provider)• Normally revenue sharing model between SP and CP is 50:50,

some times depend on negotiation• Recent changes in the model

• China Mobile plans to use 3 different revenue share models with SPs in the future

1. 15:85 SPs will be responsible marketing 2. 30:70 Operator will cooperate with SP for marketing for some

good service3. 50:50 Operator will be responsible for Sales, marketing and

support• Operators are gaining greater control over SPs• Good for some small SPs if they have attracting services and

applications. Operator will help them to do marketing.

3. Services

3.8 Revenue sharing model


4. Currently used technologies

4.1 2.5G

4.3 Wireless Local Loop

4.4 SCDMA

4.2 EDGE

4.5 The Cuntong Project

4.6 WLAN


2.5G as mobile broadband

• GPRS• China Mobile started in 2002• Covers 160 biggest cities (roaming in 73 countries)• Speed around 40 Kbps

• CDMA2000 1X• China Unicom started at late 2003• 8.711 million subscribers in 2004• Speed around 50-90 kbps

• Wireless Local Loop access service• Fixed line operators China Telecom and China Netcom

started at 1997, became very popular after 2002• Internet connection with (theoretical) 32/64 Kbps (minimal

use)


4.1 2.5G


China Mobile GPRS data card

• Starting on July 2004 China Mobile subscribers have had opportunity to use GPRS data adapter for laptop internet access

• Service is called “Moving Wing”• China Mobile provides the service with

Legend’s data card• Available in 160 cities• Mainly in business use


4.1 2.5G


EDGE

• China Mobile is deploying EDGE in some selected areas, to better compete with the high data rates of China Unicom’s CDMA2000 1x network

• China Mobile Guangdong branch has newly launched EDGE network in Guangdong province, servicing more than 18 million potential customers in cities throughout the Guangdong province.

• Service is available with Sierra Wireless AirCard 775 wireless wide area network card


4.2 EDGE


Wireless Local Loop• Two fixed line operators China Telecom & China Netcom are operating “quasi”

mobile Wireless Local Loop (WLL) service• It offers limited mobility within one metropolitan area• The cheap price of WLL service has created price war and is decreasing mobile

operators’ (CM & CU) ARPU• There are two main technologies used for WLL:

• PHS, known as LittleSmart (or Xiao Ling Tong) • SCDMA, known as Village Wireless Communication (or Da Ling Tong)

• PHS is mainly used for cities and SCDMA for rural areas• SCDMA is gaining market share from PHS• August 2005: over 81 million WLL users (55.50 mln as of the end of June 2004)• Estimated to reach 100 million users by the end of 2005• PHS Internet access (32/64Kbps) costs about USD 15 cents an hour • Average PHS handset price of USD 60• LittleSmart also offers some simple mobile VAS and Internet access with the

speed of 64 Kbps• WLL users are mainly low-end customers and use for internet access is

minimal• However, industry experts believe that China Netcom and China Telecom can

gradually shift their large WLL customer base into 3G, so it might have heavy impact on the coming 3G competition


4.3 Wireless Local Loop


• SCDMA, or Synchronous Code Division Multiple Access, is a Chinese home-grown wireless access technology

• The main developer is Beijing Xinwei Telecom Technology, in cooperation with Datang, Putian Lingyun, TCL, Amoi, Skyworth, Zhenhua, Konka, Hisense, Lenovo, Jinpeng, etc.

• SCDMA Alliance between domestic manufacturers was established in August 2004

• (MII) has designated the 23 megahertz frequency specially for the system

• Currently the technology is deployed in 106 cities of 16 provinces across China

• Currently SCDMA WLL (wireless local loop) networks have no broadband service, but the next evolution version of SCDMA will have a possibility to offer wireless broadband access

• Government has formed a high-level working group to investigate SCDMA possibilities as an choice for wireless broadband access


4.4 SCDMA

SCDMA


The Cuntong project

• MII launched the "Cuntong" project in 2004

• Project aims to speed up telecommunications availability in central and western China and rural areas to ensure balanced development

• The Chinese government is aiming to connect 95 per cent of villages to universal telecom services by the end of 2005

• The country's six major telecom operators are all participating in the program

• Total of 628,000 villages have been connected so far, with 9,357 newly-connected last year

• still more than 50,000 villages in China which remain unconnected

• Teledensity in the rural areas is only 13 percent (compared to the whole China average of 23.7%)

• SCDMA is being adopted by major telecom operators realizing the Cuntong project

• Cuntong project gives SCDMA great market prospects

4. Currently used technolgies

4.5 The Cuntong Project


WLAN

• Started in 2001, Large-scale deployment in 2002 by China Telecom, Netcom and China Mobile

• Equipment market size about $54 million in 2004• Estimated to reach $160 million by 2008 (In-Stat: China's WLAN Market Analysis and

Forecast 2003-2008)• By the end of 2004, there were about 1,800 hotspots in China

• Mainly in upscale hotels, business centers and media organizations and other public venues

• There are about 120,000 registered WLAN customers• About 80% are individual users • 20% business users

• According to some estimations, the user penetration in urban areas is below 5%• Market is still in beginning, but expected to boom in next 5 years• Some private companies use wireless LANs, but universities are still the biggest

user group• Only few domestic vendors. Biggest equipment developers are ZTE and Huawei,

with joint research with some universities (SZPKU, Tsinghua Uni, South-East Uni)


4.6 WLAN


WLAN

• China has developed own WLAN standard (came to effect in Dec 2003)

• Standard is called GB15629.11-2003• similar to IEEE 802.11, but uses different security protocol• WAPI (WLAN Authentication and Privacy Infrastructure)

• Original deadline for vendors to sell only WAPI based equipments was June 2004

• To support WAPI, Foreign companies would need to co-product their equipments with Chinese manufacturers

• Due to strong opposition from foreign countries (especially USA), China announced to delay WAPI requirements in April 2004

• WAPI is still unlikely to completely disappear, since number of manufacturers have already licensed it


4.6 WLAN


5. Third Generation mobile

5.1 General5.2 License issue

5.3 TD-SCDMA

5.4 3G testing

5.5 HSDPA


3G

• China has not yet adopted 3G• 3G license decision is still open• Licenses are estimated to be granted during

the 1/H of 2006• Final decisions on 3G licenses are to be

made in very high political level; probably above the telecom regulator Ministry of Information Industry (MII)

• Possibly all 3 standards will be adopted

5. Third Generation Mobile

5.1 General


• Government is revealing very limited information about licenses in beforehand

• Currently there is no official & reliable information available about the timetable or operator requirements

• MII has already run several 3G tests to compare different technologies


5.1 General


• China has developed her own 3G standard, TD-SCDMA (see chapter 5.3)

• A total of 155 MHz spectrum has been scheduled for TD-SCDMA

• Country is big enough to support own standard. Goal is to keep the invested money (infrastructure, R&D) in China.

• Mainly due to political reasons country will most likely also adopt CDMA2000 and WCDMA


5.1 General


3G licenses

• There will be no license auction• China Mobile favors WCDMA• China Unicom is already testing CDMA2000 EV-DV

and EV-DO• Fixed line operators China Telecom and China

Netcom are also likely to get 3G license• Smaller fixed line operators China Satcom and

China Railcom will also get the license?• Lot of guesswork about licenses, whole industry is

waiting• WTO membership should open doors for foreign

operators, but that will take time


5.2 License issue


TD-SCDMA development

• Datang Telecommunication technology (former China Academy of Telecommunication Technology) is the most active TD-SCDMA developer

• The biggest manufacturers have formed number of Joint Ventures for TD-SCDMA R&D

• The Chinese Government has already invested more than 1 billion (US$123.3 million) in the research and development (R&D) of TD-SCDMA

• Domestic companies have got heavy public subsidies for TD-SCDMA development

TD-SCDMA developer pool


5.3 TD-SCDMA


TD-SCDMA

• ITU standard, belongs to 3GPP

• TDD technology, fully compatible with GSM and GPRS

• Easy to upgrade from existing infrastructure

• Efficient use of spectrum

• Effective data transmission. Asynchronous uplink – downlink, suitable for Internet traffic

• Use of Smart Antenna technology

• Good mobility: > 120 km/h

• Large cells, with diameter up to 40 km

• Standard development far behind rivals. Standard is very immature, no commercial use so far

• No large scale support from industry. Only few TD-SCDMA chips available

• Lack of equipments and handsets. No mass production.

• No uniform platform for applications -> No application developer “pool”

• Some unsolved technical problems:

• Cell interference• large cell area functions• high speed mobility • poor stability of existing IC’s• Power consumption of handsets

Pros: Cons:


5.3 TD-SCDMA


TD-SCDMA forum

• Industry consortium devoted to develop and support TD-SCDMA technology

• Established in Dec/2000 by China Mobile, China Telecom, China Unicom, Datang, Huawei, Motorola, Nortel and Siemens

• More than 420 members• 16 Board Members• 18 Senior Members• 390 ordinary members


5.3 TD-SCDMA


TD-SCDMA Industry Alliance

• Formed in October 2002 by:Datang Telecom Technology and Industry Group), Guangzhou Soutec (Group) Technology Co., Ltd., Holley Group Co., Ltd., Huawei Technologies Co. Ltd., Legend (Beijing) Ltd., ZTE Corporation, China Electronics Corporation, and China Pu Tian Corporation

• Now 21 members, including:UTStarcom, Alcatel Shanghai Bell, Hubei Zhongyou Technology Industry & Commerce Co., Ltd., Shanghai DBTEL, Beijing Envada Electric Power Engineering Technology Co., Ltd., Tongyu Communication Equipment Co., Ltd. and Beijing Zhong Chuang Telecom Test Co., Ltd.

• Main goals are:• to highly promote the TD-SCDMA industrialization process• to integrate and coordinate the industry resources • to lead the enterprises successfully into the third generation mobile

communication market

Source: http://www.tdscdma-alliance.org


5.3 TD-SCDMA


3G testing

• China Academy of Telecom Research (CATR) is running the 3G testing• 3G test has been ran in two phases: 1) Laboratory testing in CATR test lab and

2) field test with all 6 national telecom operators• CATR 3G test laboratory in Beijing is called MTnet. All the field tests have been

conducted and ran by CATR under the name of MTnet.• MII has Invested almost 25 Million USD on CATR testing facilities• First test (phase I & II, Core network and RAN) with all 3 standards was ran at

2001/6 to 2003/8• Results showed that TD-SCDMA was still too immature for commercial use

• Initial tests for WCDMA and CDMA2000 have been conducted already several years earlier

• The special test for TD-SCDMA was arranged during May and June 2005 and completed successfully. More than 20 models of user terminals have gone through the test and results showed TD-SCDMA to be ready for commercialization

• TD-SCDMA application level testing is still on-going in MTnet.


5.4 3G Testing


Operators’ TD-SCDMA trial networks under the MTnet

Beijing Shanghai ChongQing Chengdu

China Telecom

China Netcom

China Mobile China Mobile

China Unicom

China Railcom China Railcom

China Satcom

• Problems with terminals, high-speed mobility and cell interference

• Only one terminal (by Datang) was available for the phase1 field test


5.4 3G Testing


Network Equipment

Manufacturer

Beijing Shanghai Guangzhou

Huawei China Mobile (20) China Unicom (10) China Telecom (20)

ZTE China Railcom (20) China Netcom (10) China Mobile (20)

Siemens China Telecom (10)

Nokia China Netcom (10)

Ericsson China Mobile (10)

Nortel China Netcom (10)

Alcatel China Telcom (10)

Motorola China Mobile (10)

UT Starcom China Netcom (10)

Lucent China Netcom

Guangzhou Post & Telecom Equipment Co., Ltd

China Telecom (10)

Eastcom China Railcom (10)

Operators’ WCDMA trial networks under the MTnet with network supplier information


5.4 3G Testing


Operators’ CDMA2000 (EV-DO) trial networks under the MTnet with network supplier information

Network Equipment

Manufacturer

Operators in Beijing Operators in Shanghai Operators in Guangzhou

Huawei China Unicom (20)

ZTE China Satcom (10)

Ericsson China Mobile (10)

Nortel China Netcom (10)

Samsung China Telcom (10)

Lucent China Mobile (10)

Motorola China Netcom (10)

Putian Capitel China Satcom (5)

Dalian LinkAir China Unicom (10)


5.4 3G Testing


3.5G• Since China has been delaying 3G licenses so long, there will already

be commercial HSDPA solutions available by the time Chinese operators start to build up their 3G networks

• Operators will have change to jump directly to HSDPA in some selected areas

• Huawei and ZTE have announced to launch commercial HSDPA solution in 2006

• NEC and Samsung will launch HSDPA handsets early 2006• China Mobile will conduct HSDPA trials in Beijing in Dec 2005 with

various vendors• Datang Mobile has announced to launch a single carrier HSDPA

solution for TD-SCDMA in the 1/Q 2006• Datang Mobile has partnered up with Alcatel Shanghai Bell to develop

HSDPA solutions for TD-SCDMA• TD-Tech (Siemens—Huawei JV) has plans to launch commercial TD-

SCDMA/HSDPA products in the 1/Q 2006• T3G Technology (Datang-Phillips JV) will release the

TD-SCDMA/HSDPA chipset and system solution (single carrier, data support up to 2.8Mbps) in the 2/Q 2006


5.5 HSDPA


6. Other future technologies

6.1 Wimax6.2 WRAN

6.3 DVB-H

6.4 Beyond 3G & 4G


Wimax

• Wimax has lot of potential in China, since the fixed line network penetration is still rather small

• Government sees 3G and Wimax as complementary technologies and they have different demand on market. However, so far there is no clear action from government about Wimax

• Biggest Chinese networks equipment manufacturers, ZTE and Huawei, are both very active on Wimax

• Other active Wimax players in China are Intel and Alcatel Shanghai Belling• Many of the current research projects are focused on the interoperability of

WLAN and Wimax• As a result from TD-SCDMA project and FuTURE project, there will be a need

for a Chinese version of Wimax. Some research institutes and companies (such as Wireless Core, ZTE, Huawei) already have activities about this. Research for “Chinese Wimax” has just started recently and government has not yet given any official deadlines for forming the standard. Government is forming the responsible body to run the research

6.1 Wimax



• The Wireless Technology Innovation Institute of Beijing University of Post and Telecommunication (WTI-BUPT) is one of the most active research institutes studying Wimax in China

• WTI-BUPT has WiMAX Partnership Agreement with Picochip (UK)

• WTI-BUPT will use picoChip's WiMAX reference designs and PC102 processor within its research programmes

• Two parties will work together to develop commercial WiMAX systems optimised for the special needs of the Chinese market

• picoChip has also signed a cooperation agreement with the Institute of Computing Technology (ICT) of the Chinese Academy of Sciences (CAS) to collaborate on the acceleration of WiMAX in China

6.1 Wimax



WRAN (IEEE 802.22)

• A Wireless Regional Area Network (WRAN) system based on 802.22 protocols is intended to make use, on a non-interfering basis, of unused TV broadcast channels to address, as a primary objective, rural and remote areas and low population density underserved markets with performance levels similar to those of broadband access technologies such as digital subscriber line (xDSL) technologies and Digital Cable modem service. A secondary objective is to have this system scale to serve denser population areas where spectrum is available.

• The WRAN system must be capable of supporting a mix of data, voice and audio/video applications.

• The target markets to be addressed by the 802.22 protocols in WRAN networks are single family residential, multi-dwelling units, SOHO, small businesses, multi-tenant buildings and public and private campuses..

• So far very few Chinese companies involved, but being similar to Wimax it has lot of potential market in China

6.2 WRAN



• Currently the coming 3G is the big topic and mobile television is not widely discussed yet

• Still no government decision about used standard so far (could also be DVB-H)

• JV company of Shanghai SMG and 东方明珠 has recently begun the DMB Mobile TV trial in Shanghai

• China is also developing own standard for mobile television

• Several parties have propositions for standard; Tsinghua University is strongest among them

6.3 DVB-H


Mobile TV


UWB

• UWB technology is most suitable for short range transmission, with distances up to 10-20 meters

• In longer range transmitting UWB’s signal becomes too weak• Chinese government has no official plans about UWB, but • China Academy of Telecom Research (CATR) has some small

scale UWB research going on for consultancy purpose to support government’s spectrum investigations

• In 2004 NSF (Natural Science Fund) has published UWB research fund (1.8 million Yuan) for public bidding as one of the key programs of the NSF Department of Information Sciences

6.4 UWB



• Currently Chinese research institutes are talking about B3G, not 4G

• There are basically two branches of B3G research:• Datang Mobile’s Beyond TD-SCDMA• B3G research under the FuTURE project

• B3G research in FuTURE Project will be discussed more in details in chapter 8.3

6.5 B3G, 4G


B3G – 4G


Datang Mobile – Beyond TD-SCDMA

• Improvement of the existing technology• Joint Detection, Smart Antennas, Adaptive Array,

MIMO• HSDPA (& later HSUPA)

• Long Term Evolution for TDD

• Schemes proposed for LTE TDD• MC TD-SCDMA

Smooth evolution, better Compatibility• LTE TDD OFDM

Totally new solution, for long future of TDD

6.5 B3G, 4G



Multi-Carrier TD-SCDMA• Basic Technologies

• Joint Detection• Smart antenna• Uplink synchronization• DCA• HSDPA

• Enhanced Technologies• E-UL, HSUPA• Enhanced JD, improving the cell-edge performance• Multiple carriers, based on LCR • MIMO, Include space multiplex & beamforming• MBMS, Include macro diversity• Others, … … …

Datang Mobile: Long Term Evolution for TDD

6.5 B3G, 4G



7. Policy making and public sector’s role

7.1 CATR7.2 Communication Standard Association

7.3 CJK Standards Meeting


• China has a planned economy, using 5-year plans• Each 5-year plan gives guidelines and goals for domestic

industry• In the current 5-year plan (2000-2005) mobile industry has

been selected as one of the key industries• Mobile industry is in a tight control of the Central government• Some of the biggest national research programs are also

included in 5-year plans• All the operators and number of equipment manufacturers are

either fully or partly government owned



• Ministry of Information Industry (MII) is the telecom regulator

• Many of the research activities for wireless technologies are under the Ministry of Science and Technology (MOST)

• Main focus of government’s research investments is in mobile technologies. Same goes to the state owned companies’ operations



China Academy of Telecommunication Research, CATR

• Under MII

• Telecom research and consulting to support MII’s policy making

• The main body in organizing government’s research and funding programs for wireless technologies standardization and development

• Core business divided into 7 department

7.1 CATR



China Academy of Telecommunication Research Organization chart

7.1 CATR



Communications Standard Research Institute of CART

• Core Services:• Supporting of governmental administration and regulation• Formulating national and industrial telecommunication standards• Technical and consultancy service for operators and manufacturers• Test and certification of telecommunication equipment• Technical trial of telecom technology and product

• Major study area:• 3G/B3G • next generation network （ NGN ）• network interconnection and interworking• telecom resources of numbers and radio frequency• intelligence network• Signaling network• PSTN• broadband packet network• IP network• optical transmission network• synchronous network• access network• mobile communications network• paging, trunk and cordless technology• microwave and satellite system

7.1 CATR



The Research Institute of Communications Policy of CATR

• The Research Institute of Communications Policy is the specialized policy-making consulting department of CATR under MII. This Institute is the main supporting organ serving China communications competent authorities in the policy-making work. It has in-depth participation in telecom industry policies, regulatory policies, laws & regulations and telecom industry development plan stipulation for a long period of time.

• Customers:• Ministry of Information Industry• State Development and Reform Commission• Ministry of Science and Technology• The governments at various levels including provincial and

municipal Communications Administrations• Telecom operators and manufacturers• Monetary securities & investment institutions • R & D institutions at home and abroad

7.1 CATR



China Communication Standard Association, CCSA

• With the approval of the MII and Standardization Administration of China and the Civil Affairs Ministry, China Communications Standards Association (CCSA) was founded in December 18, 2002

• Also foreign companies and foreign-investment enterprises can apply for joining in CCSA

• Scope of activities• To promulgate the state laws, regulations and policies on standardization and to

facilitate the communication between its members and the Authorities• To carry out research and survey activities on communications standardization

system ; to organize its members into participating in such activities as drafting standards, soliciting comments, coordination, verification, standards consistency testing, and interconnection and interworking tests

• To promote the implementation of communications standards through carrying out related activities, such as promulgation of communications standards, consultation, service and training;

• To organize national and international technical seminars as well as activities of cooperation and exchanges

• To undertake work related to standardization commissioned by the relevant Authorities, its members and other organizations

7.2 CCSA



CJK Standards Meeting

• CJK (China-Japan-Korea) Meeting on Information and Telecommunication Standards started on June 2002 with an initiative of 4 Standards Development Organizations from the respective countries (CCSA as one of them)

• Background: mutual understanding and cooperation was necessary to promote sound growth and development of the information and telecommunication industries

• The purpose of CJK Standards Meeting is • to mutually exchange views and information on the status of

Information and Telecommunication industries in the three countries

• to contribute to the works of standards organizations of regional and global levels

• to encourage mutual support and assistance among four SDOs

• Contribution to the international standards organizations

7.3 CJK Standards Meeting



8. Public R&D programs

8.1 General

8.2 NSF8.3 8638.4 FuTURE

8.5 Notable research institutes


• There are 4 governmental entities launching nationwide public research funding projects: MOST, National Planning and Reform Bureau, MII and China Academy of Science (CAS)

• Each of them have their provincial departments, who have the right to fund regional level research projects. Beijing, Shanghai and Shenzhen are most active cities in launching regional projects

• Typically in government’s research projects there is an expert group that initiates the project, which is then published for public bidding

• Usually any companies and research institutes can apply for these projects

• In communication technologies largest projects include research on 3G Networks, TD-SCDMA, FuTURE (B3G), CDMA2000, WCDMA, NGN, LAS-CDMA…

• In government funded projects company’s self-funding ratio is usually 50%

• Sino-foreign JV’s can also get public funding, if the majority (51% or more) of the investment and ownership is domestic.

8.1 General



• In national level there are currently 5 main research programs going on in China (NSF, 863, 973, Starfire & Torch).

• Among them, NSF & 863 include funding for wireless technology development

• Additionally there are large number of regional research projects

• Many cities have public funds for SME’s high technology R&D

8.1 General



NSF – Natural Science Fund

• Covers whole china• Wireless technology development is one of the

targets• Funding for private companies• Activities include joint research projects and

international academic conferences in China and abroad

• Up to now, it has signed cooperative agreements and MOU with 60 science funding organizations and national research institutions in 35 countries and regions and raised its budget for international cooperation and exchange from 0.37 million USD (1987) to 10.15 million USD (2004)

8.2 NSF



NSF - Natural Science Fund

• In the past 15 years, NSFC has funded over 52,000 research projects of various categories by investing a total sum of 0.81 billion USD

• In 2004 NSF funded 26 Key Program projects, with the average funding about 0.22 million USD

• The Division of Information Science had number of projects regarding wireless communication technologies, such as UWB, Mobile service Platforms, etc.

8.2 NSF



source: http://www.nsfc.gov.cn/e_nsfc/2004/01au/02fs.htm

8.2 NSF


1 CNY = 0.123793 USD (11/05)


863 Program

• The National High Technology and Development Program of China

• Started first time in March 1986• Original program was temporary, but is now continuous and

covers whole country• 6 main research sectors, including Information Technology• In IT sector, Wireless technology falls under the sub-branche of

Communication Technology• Annually 3-5 major projects in each main sector• Single project funding are between 0.12-2.5 Million USD• About 80% of the projects are around 1.2M USD• Some projects involve foreign companies as well• The most important sub-program for wireless technologies is

called FuTURE project

8.3 863



The FuTURE Project

• China begun developing B3G technologies in 2001, when FuTURE project started

• Future Technologies for Universal Radio Environment

• FuTURE is under the Communication part of the National 863 Program

• Launched by Ministry of Science and Technology (MOST)

• The first phase was launched for the 10th 5-years plan (2001-2005), including FuTURE and FuTURE+ phases

8.4 FuTURE



The FuTURE Project

• The Mission is to “establish universal radio experiment environment that can meet the application demands and technique trends headed for the years around 2010”

• Integrates layered wireless communication systems via IPv6 core networks

• In broadband side it focuses on Cellular Layer (B3G/4G mobile) and Areas Layer; WxAN (WLAN/WPAN/WHAN)

8.4 FuTURE



The FuTURE Project

• The 1st phase included vision, spectrum and technology trend evaluations (FuTURE) and Demo systems and application development and standard candidate proposals (FuTURE+)

• 2nd Phase, FuTURE II (2005-2010) is for trial & pre-commercial systems and standardization work

8.4 FuTURE



The FuTURE Project

• 863 / Communication Subject / Wireless communication branch / FuTURE project

• It aims at: • meeting the trends and needs in the field of wireless

telecommunications in the next 10 years• to carry out investigations on key technologies for air

interface of beyond 3G/4G mobile communication system• to set up demo systems to verify the key technologies that

can support future wireless services• to improve Chinas overall research capabilities in mobile

communications • Enhance China’s international competitiveness during the

standardization process of future beyond 3G/4G wireless communication systems

8.4 FuTURE



The FuTURE Project

• FuTURE project Coordination Committee undertakes the scientific research management and technological coordination

• project will organize international and domestic specialists to carry out research into the B3G system, network structure, and operational demands

• It cooperates closely with China Wireless Telecommunication Standards (CWTS) and spectrum distribution

• Goal is to keep pace with the development of ITU

Source: http://www.chinab3g.org/english/futureproject.htm

8.4 FuTURE



FuTURE’s working targets

8.4 FuTURE



FuTURE technology framework

• OFDM/GMC + TDMA/FDMA based multiple access

• Distributed radio architecture for improved coverage

• IDMA for better multiple cell frequency use

• Add-on techniques:• Powerful iterative receiver (turbo receiver)• Advanced Turbo/LDPC channel coding/decoding• Unified MIMO and adaptive time slot structure

8.4 FuTURE



Achievements

• Active international cooperation on research and standardization

• Cooperation with Japan and South-Korea

• Big number of patents from funded sub projects

• FuTURE B3G test network in Shanghai

8.4 FuTURE



FuTURE Forum

• Established in 2004• Non-Governmental & non-profit organization• Jointly founded by operators, equipment providers,

universities and research institutions both in China and abroad

• Objectives:• to clarify the vision of future mobile communication

development;• to assess new trends and new technologies, and to

promote the research in B3G field;• to realize the sustainable development of mobile

communication through international cooperation between China and the rest of the world

Source: http://www.chinab3g.org/english/futureproject.htm

8.4 FuTURE



FuTURE Forum

• Working scopes:• To report to governments and relevant organizations the

viewpoints and suggestions proposed by Forum members; • To provide suggestions to initiate the R&D projects as well

as the standardization research• To promote international cooperation between the Chinese

and overseas organizations by organizing conferences and seminars

• To organize research and discussion activities of the Forum members and to publish professional reports and white papers

• To communicate and work with other international consortium

• To sort and provide with the latest relevant information

8.4 FuTURE



Notable research institutes for wireless technology

• The Wireless Technology Innovation Institute of Beijing University of Post and Telecom (WTI of BUPT)

• Tsinghua University in Beijing

• South-East University in Nanjing and Xi’an JiaoTong University

• Shanghai Wireless Communication Research Center (Wireless Core)




Wireless Core

• Shanghai Research Center for Wireless Communications is a Non-profitable organization established in 2003 by Ministry of Science and Technology (MOST), Chinese Academy of Science (CAS) and Shanghai Municipal Government. SHRCWC annual research budget is approx. 3 million Euros and mainly funded by conducting research projects for government.

• Wireless Core is focused on B3G research and is a member of the FuTURE project. Wireless Core operates the FuTURE B3G test bed in Shanghai. Research is focused on physical layer.

• It has active cooperation with private companies and its partners include for example China Netcom, Huawei, ZTE, Nokia, Ericsson, Siemens, Motorola and key universities.

• Wireless core has around 100 employees and the total number (including students) is around 160. About 80 of the permanent employees are researchers.




9. Private sector R&D activities

9.1 General9.2 Network equipment manufacturers

9.3 Handset manufacturers


• State owned companies are mainly focusing on 3G and B3G research

• Majority of the companies still having very limited R&D resources

• Most of the wireless technology companies buy the core technology from foreign (U.S., Taiwan) companies

• Most prominent companies in terms of R&D include ZTE, Huawei, Datang and Putian

• Current trend is to establish Joint Ventures with foreign companies• Examples: T3G by Datang and Philips, JV by Huawei and

Siemens ($100 million- plus), JV by Putian and Nokia ($111 million) , R&D lab by Nortel & Datang


9.1 General


Network equipment manufacturers:

• ZTE: GSM, CDMA2000 3X, WCDMA, TD-SCDMA, WLAN, Wimax, PHS

• Huawei: GSM, GPRS, CDMA, WCDMA, TD-SCDMA, WLAN, Wimax

• Putian Capitel: CDMA2000 1X, WCDMA, TD-SCDMA

• Datang: GSM, CDMA, TD-SCDMA, BTD-SCDMA


9.2 Network equipment manufacturers


Mobile phone manufacturers

• China has granted 38 mobile phone manufacturing license• Private companies R&D activities vary a lot

• Tier 1 manufacturers: core technology designed in-house, heavy investments on R&D. e.g. Huawei, ZTE, Datang, Putian

• Tier 2 manufacturers: up to 50% design in-house. Mostly big consumer electronic companies who have in early stage been using design houses, but nowadays investing more on own R&D. e.g. Konka, TCL, Ningbo Bird, Haier, Soutec and Kejian. Core technology still outsourced.

• Tier 3 manufacturers: own R&D very limited, usually only plastic coating, etc. Buy solutions and components outside and only assembles the phones. e.g. Kejien, Telsda, taxian, Panda Mobile

• Generally speaking domestic manufacturers have too much focus on production capacity at the expense of R&D investments


9.3 Handset manufacturers


Market is rapidly growing and opening

• Rapid growth of urban population: over 200 million people are estimated to move from countryside to the big cities during the next decade

• Annual economic growth (around 10%) will continue

• Improving living standard changes consuming habits

• Market is opening for foreign companies

• WTO membership is gradually forcing China to open the mobile market for foreign operators and service providers



• 3G licenses will probably be granted in 1/Q 2006

• The whole industry is waiting to get confirmed information

• License decision will determine:• Scale of TD-SCDMA adoption• WCDMA vs. CDMA2000• Winners and losers among manufacturers



Big operator reform before 3G license granting?

• In order to avoid duplicate investment in telecommunication industry, the government is now considering to reform the operators.

• One possible plan is:Split China Unicom into two: GSM part and CDMA partSplit China Railcom into South part and North partChina Telecom + China Unicom GSM part + China Railcom

North part = China Telecom China Unicom CDMA part + China Netcom +China Railcom

South part = China UnicomChina Mobile + China Satcom = China Mobile

This new plan will affect the situation of China Telecommunication industry and 3G license issue.



• Consolidation among service providers is expected to happen in near future due to changes in revenue scheme

• New Telecom law to be released in 2006?• will likely outline the gradual opening of VoIP services for

foreign players in China• Other changes and outlines

• Domestic manufacturers to partner up more and more with foreign players

• Government’s decisions will remain unpredictable

Other…



11. Finnish companies possibilities in China


Finnish companies possibilities in China

• China’s mobile market is of huge size and still growing rapidly. At the same time the market is highly competed by domestic and foreign companies

• More and more domestic companies are investing on R&D and manufacturing facilities in China

• Market for bulk products and services is getting saturated -> Finnish companies need to find the niche market with high quality products. Unique content/application or innovative technology can success.



Huge demand of Mobile VAS market

• Booming VAS market creates huge need for premium content and innovative applications

• Branded content and high quality games

• Market for professionally used applications is starting to grow

• Localization is required (language and culture)!



Fulfill the needs of operators

• Near future, especially the coming 3G era, will see a boom on network investments• Both “green field” and upgrades

• Already need for reliable and effective billing, provisioning and CRM systems

• DRM systems

• Tools for network planning and optimizing

• Sharing the experiences in 3G business model



Converging the diversified infrastructure

• Multiple standards need interoperability

• Multimode handsets

• Unified platforms

• Services for different platforms
