Giga Background Study Mobile Broadband in China3533

8/3/2019 Giga Background Study Mobile Broadband in China3533

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for GIGA Technology Program

Mikael Leinonen, Finpro Hong Kong

Wireless Broadband in China

November 30, 2005


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

Table of Content

1. Introduction

2. Market overview1. Business volume2. Network Operators

3. Services1. VAS Figures2. SMS & MMS

3. 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. SCDMA

5. 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

6. Policy making and public sectors role

1. CATR2. Standard Association3. CJK Standards meeting

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

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

6. Foreseeable radical changes

7. Finnish Companies possibilities in China


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1. Introduction


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This report has been written for the GIGA program ofTekes, focusing on converging networks. The reportprovides information on the China wirelessbroadband markets.

This report discusses the following issues Overview of the China wireless broadband market Competitive environment Technology adoption and outlook

Available services Governments role in the development of the wirelessbroadband

Public & Private R&D activities for wireless broadbandtechnologies

Opportunities for Finnish companies

1. Introduction


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China in a Nutshell

China National Statistics 2004

Population 1.3 billion(Finland 5.3 million)

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

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
http://www.china.org.cn/http://www.china.org.cn/


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2. Market Overview

2.1 Business Volume

2.2 Network operators


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General market information

Telecom revenue reachedUSD 63 bln in 2004

Mobile communicationsrevenue: USD 27 bln

13.2% increase from2003

~43% of total telecomrevenue

Number of mobile phoneusers was 340 million by theEnd of 2004

~25.9% user penetration bythe end of 2004

Mobile penetration isestimated to double itself by2010

M o b i le S u b s c r ib e r s &

0

1 0 0

2 0 0

3 0 0

4 0 0

2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4

Y e a

Subscriber(Mil)

0

5

1 0

1 5

2 0

2 5

3 0

Penetration% S u b s c ri

P e n e t ra

2. Market Overview

2.1 General marketinformation


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Market share: fixed vs. mobile

Market Share by Revenue (200

Chi na

Tel eco

32%

Chi na

Chi na

Uni co

15%

Chi na

Netco

16%

Rai l com&

at

1%

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 quasimobile PHS service

2. Market Overview



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Number of mobile users per technology

Mobile Users (Millions) perOperator & Technology

4Q/2004

2. Market Overview



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Mobile subscribers

Yearly comparison on new mobile user subscript

0

100

200300

400

500

600

700

800900

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

Thousand

(subscribers)

200

200

200

200

Source: Ministry of Information Industry

2. Market Overview



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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



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New mobile users are mainly post paid customers

In 2004 ~90% of the new mobile phone users were prepaidcustomers

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



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Mobile OperatorsOperator Network Users Operating

revenue 2004Note

China

Mobile

GSM since 1995,GPRS since 2002

GSM: 223.78 mln RMB 192.4 billion

(US$ 23,244 billion)

Planning to launchEDGE in 2H/2005

ChinaUnicom

GSM since 1994,cdmaOne since 2002,

CDMA2000 1X sincelate 2003

GSM 88.76 mln

CDMA 30.47 mln

RMB 79.33 billion

(US$ 9.6 billion)

GSM-CDMA dualmode service since2H/2004

ChinaTelecom(No mobilelicense, butoperates PHS)

PHS (LittleSmart) since1997

PHS: 39.12 mln Total (including Fixedline): RMB 161.2

billion(US$ 19.4 billion)

No mobile operatinglicense!

PHS in huge growth

ChinaNetcom(No mobilelicense, but

operates PHS)

PHS (LittleSmart) since1997

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

No mobile operatinglicense!

PHS in huge growth

2. Market Overview


2 M k O i


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Mobile data revenues, 1Q 05 vs. 2Q 05

China Mobile and China Unicom

Data revenue/month ($ milj.)

Data Share ofRevenue (%)

Data revenue/month ($ milj.)

Data Shareof Revenue

(%)

Datarevenue/

month

DataARPU

ChinaMobile

416.67 18 515 21.4 110.52 101.2

ChinaUnicom

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


2 M k t O i


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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


2 M k t O i


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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 netadditions

850 22,220 23,070

Subscriber Base ( in thousands

CM has the right to use a total of 34 MHz of spectrum, for transmissionand reception, respectively, in the 900 MHz frequency band and the1800 MHz frequency band in Mainland China.

Source: China Mobile

2. Market Overview

2.2 Network Operators

2 M k t O i


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As at31 March 2005/For the period from1 January 2005 to31 March 2005

As at31 December 2004/For the period from1 October 2004 to31 December 2004

As at30 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


2 Market O er ie


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China Unicom

The only operator in China to run two different networks ofGSM 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 SKTelecom) to engage in wireless value added service business

Uni-Java (developed with Qualcomm) and Brew are twoapplication platforms for China Unicom

2. Market Overview


2 Market Overview


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China Unicom: strategies

Boosted CDMA users thru calling discount, handsetsubsidy & prepaid service.

It CDMA targets more to Hi- & Mid-End users &

business customers

World Wind, a branded service of dual-modephone services enables users to transfer betweenGSM and CDMA network automatically

Placing increasing attention to mobile applications asservice differentiation eg: Mobile Wallet

2. Market Overview


2 Market Overview


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Fixed line operators

China TelecomOverview 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


2 Market Overview


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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 relatedbusiness

Testing 3G

2. Market Overview


2 Market Overview


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Service fees

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

WLL

service

75 - 250USD

3.09 USD 0.014 0.15 USD/hour, sms XLT- cellphone 0.01USD 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 0.0012USD for each additional kilobyte;

3) Elite Plan: 12 USD a month for20MB; 4) Business Plan: 24 USD amonth 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 ChinaMobile network to Unicom is 0.018USD and 0.012 USD from Unicom toChina Mobile.

2. Market Overview



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3. Services

3.1 VAS figures

3.2 SMS & MMS3.3 Ring Back Tones

3.4 M-Commerce

3.5 Games

3.6 Biggest Service Providers

3.7 Revenue Sharing model

3.6 Other services

3 Services


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Data services account roughly about 10% ofoperators revenue

Over 1000 Service Providers offering mobile VAS

Total market value of mobile VAS exceed 2 billionEuro 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

3 Services


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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,

CMs top 5 SPs capture 57% revenue from WAP SMS. Revenue from SMS is leveling off

MMS: 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 millionUSD

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

3. Services


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Ring back tone the next big hit?

Color Ring Back tones:

CMs Color Ring, ringback tone provided byWiseSpots WiseRing personalized VAS platform

built on NMS Communications technology.

CUs ringtone@Yamaha offers a vast choice ofdifferent 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

3. Services
mailto:ringtone@Yamahamailto:ringtone@Yamaha


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M-Commerce:

CMs Handset Purse Through SMS, IVR, WAP subscribers operate on bank

accounts to purchase, transfer a/c, inquiry balance bySMS

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

CUs Mobile Wallet Service Cooperation with China Construction Bank Online payment, money transfer via mobile phone

3. Services

3.4 M-Commerce

3. Services


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Mobile Games: China is 2nd largest market in APAC.

Role play & action games most popular.

Mobile gaming market topped USD $98 million, 150% growthfrom 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 boostingthe game market

Mobile games are mostly from Japan & Korea, few Finnishalready in market

Price: 0.5-1 USD/download Java Game

3. Services

3.5 Games

3. Services


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Mobile email service has not yet beenlaunched in China

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

Location Based Services have certainrestrictions

Use of VoIP has been banned by ChinaTelecom

3.6 Other services

3. Services


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Top 5 SP of Games SMS Mobile Games

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

WAP Mobile Games

Kongzhong, Nihon, ShenzhenXuntian, Mobile NAVI, NewPalm

Java Mobile Games Kongzhong, Shandas 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

3.7 Biggest ServiceProviders

Top Service Providers in 2004

3. Services


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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 andmobile telecommunication network software in the People's Republicof 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 WAPbilling policy changes by China Mobile and slow CDMA user growthexperienced by China Unicom

Source: Hurray! Holding Co., Ltd.

3.7 Biggest ServiceProviders

3. Services
http://finance.yahoo.com/q?s=hray&d=thttp://finance.yahoo.com/q/h?s=hrayhttp://finance.yahoo.com/q/h?s=hrayhttp://finance.yahoo.com/q?s=hray&d=t


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General revenue sharing model:

Revenue sharing model depends on nature of cooperation betweenoperator and SP, SPs and CPs

Revenue sharing model is typically 15-20(operator):80-85(serviceprovider)

Normally revenue sharing model between SP and CP is 50:50, sometimes depend on negotiation

Recent changes in the model China Mobile plans to use 3 different revenue share models with

SPs in the future1. 15:85 SPs will be responsible marketing2. 30:70 Operator will cooperate with SP for marketing for some good

service

3. 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.

3.8 Revenue sharingmodel


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4. Currently used technologies


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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



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China Mobile GPRS data card

Starting on July 2004 China Mobile subscribershave had opportunity to use GPRS dataadapter for laptop internet access

Service is called Moving Wing China Mobile provides the service with

Legends data card

Available in 160 cities

Mainly in business use

4.1 2.5G



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EDGE

China Mobile is deploying EDGE in some selectedareas, to better compete with the high data rates ofChina Unicoms CDMA2000 1x network

China Mobile Guangdong branch has newlylaunched EDGE network in Guangdong province,servicing more than 18 million potential customers incities throughout the Guangdong province.

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

4.2 EDGE



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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 heavyimpact on the coming 3G competition

4.3 Wireless Local Loop



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SCDMA, or Synchronous Code Division Multiple Access, is a Chinesehome-grown wireless access technology

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

SCDMA Alliance between domestic manufacturers was established inAugust 2004

(MII) has designated the 23 megahertz frequency specially for thesystem

Currently the technology is deployed in 106 cities of 16 provincesacross China

Currently SCDMA WLL (wireless local loop) networks have nobroadband service, but the next evolution version of SCDMA will havea possibility to offer wireless broadband access

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

4.4 SCDMA

SCDMA

4. Currently used technolgies


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The Cuntong project

MII launched the "Cuntong" project in 2004

Project aims to speed up telecommunications availability in central and westernChina 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

4.5 The Cuntong Project



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WLAN

Started in 2001, Large-scale deployment in 2002 by China Telecom, Netcomand 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 publicvenues

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

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

4.6 WLAN



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WLAN

China has developed own WLAN standard (came to effect inDec 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 (especiallyUSA), China announced to delay WAPI requirements in April2004

WAPI is still unlikely to completely disappear, since number ofmanufacturers have already licensed it

4.6 WLAN


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5. Third Generation mobile

5.1 General

5.2 License issue5.3 TD-SCDMA

5.4 3G testing

5.5 HSDPA

5. Third Generation Mobile


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3G

China has not yet adopted 3G

3G license decision is still open

Licenses are estimated to be granted during the1/H of 2006

Final decisions on 3G licenses are to be madein very high political level; probably above thetelecom regulator Ministry of InformationIndustry (MII)

Possibly all 3 standards will be adopted

5.1 General



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Government is revealing very limitedinformation about licenses in beforehand

Currently there is no official & reliableinformation available about the timetable oroperator requirements

MII has already run several 3G tests to

compare different technologies

5.1 General



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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 mostlikely also adopt CDMA2000 and WCDMA

5.1 General



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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 ChinaNetcom are also likely to get 3G license

Smaller fixed line operators China Satcom and ChinaRailcom will also get the license?

Lot of guesswork about licenses, whole industry iswaiting

WTO membership shouldopen doors for foreignoperators, but that will take time

5.2 License issue



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TD-SCDMA development

Datang Telecommunicationtechnology (former ChinaAcademy of TelecommunicationTechnology) is the most active

TD-SCDMA developer The biggest manufacturers have

formed number of Joint Venturesfor TD-SCDMA R&D

The Chinese Government hasalready invested more than 1

billion (US$123.3 million) in theresearch and development (R&D)of TD-SCDMA

Domestic companies have gotheavy public subsidies for TD-SCDMA development

TD-SCDMAdeveloper pool

5.3 TD-SCDMA

http://www.philips.com.hk/index.html


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TD-SCDMA

ITU standard, belongs to 3GPP

TDD technology, fully compatiblewith GSM and GPRS

Easy to upgrade from existinginfrastructure

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 40km

Standard development far behindrivals. Standard is veryimmature, no commercial use sofar

No large scale support fromindustry. Only few TD-SCDMAchips available

Lack of equipments andhandsets. No mass production.

No uniform platform forapplications -> No application

developer pool Some unsolved technical

problems: Cell interference large cell area functions high speed mobility poor stability of existing ICs Power consumption of handsets

Pros: Cons:

5.3 TD-SCDMA


SC


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TD-SCDMA forum

Industry consortium devoted to develop andsupport 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


5 3 TD SCDMA


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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., HuaweiTechnologies Co. Ltd., Legend (Beijing) Ltd., ZTE Corporation, ChinaElectronics Corporation, and China Pu Tian Corporation

Now 21 members, including:UTStarcom, Alcatel Shanghai Bell, Hubei Zhongyou TechnologyIndustry & Commerce Co., Ltd., Shanghai DBTEL, Beijing EnvadaElectric Power Engineering Technology Co., Ltd., TongyuCommunication Equipment Co., Ltd. and Beijing Zhong ChuangTelecom 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


5 4 3G T ti
http://www.tdscdma-alliance.org/http://www.tdscdma-alliance.org/


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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 at2001/6 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 severalyears earlier

The special test for TD-SCDMA was arranged during May and June 2005 andcompleted successfully. More than 20 models of user terminals have gone

through the test and results showed TD-SCDMA to be ready forcommercialization

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

5.4 3G Testing


5 4 3G T ti


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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 cellinterference

Only one terminal (by Datang) was available for the phase1field test

5.4 3G Testing


5 4 3G Testing


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Network EquipmentManufacturer

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 &TelecomEquipment Co.,Ltd

China Telecom (10)

Eastcom China Railcom (10)

Operators WCDMA trial networks under the MTnet with network

supplier information

5.4 3G Testing


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5 5 HSDPA


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

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

Operators will have change to jump directly to HSDPA in someselected 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 developHSDPA solutions for TD-SCDMA

TD-Tech (SiemensHuawei 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


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6 1 Wimax

6. Other future technologies


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Wimax

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

Government sees 3G and Wimax as complementary technologies and theyhave different demand on market. However, so far there is no clear action fromgovernment 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 (suchas Wireless Core, ZTE, Huawei) already have activities about this. Research

for Chinese Wimax has just started recently and government has not yetgiven any official deadlines for forming the standard. Government is forming theresponsible body to run the research

6.1 Wimax

6 1 Wimax



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The Wireless Technology Innovation Institute of BeijingUniversity of Post and Telecommunication (WTI-BUPT) is oneof 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 WiMAXsystems optimised for the special needs of the Chinese market

picoChip has also signed a cooperation agreement with theInstitute of Computing Technology (ICT) of the ChineseAcademy of Sciences (CAS) to collaborate on the accelerationof WiMAX in China

6.1 Wimax

6 2 WRAN



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WRAN (IEEE 802.22)

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

The WRAN system must be capable of supporting a mix of data, voiceand 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 privatecampuses..

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

6.2 WRAN

6 3 DVB-H



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Currently the coming 3G is the big topic and mobiletelevision 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 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


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6.5 B3G, 4G



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Currently Chinese research institutes aretalking about B3G, not 4G

There are basically two branches of B3Gresearch: Datang Mobiles Beyond TD-SCDMA B3G research under the FuTURE project

B3G research in FuTURE Project will bediscussed more in details in chapter 8.3

6.5 B3G, 4G

B3G 4G

6.5 B3G, 4G



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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

6.5 B3G, 4G



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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 3G, G


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7. Policy making and public sectorsrole

7.1 CATR

7.2 Communication StandardAssociation

7.3 CJK Standards Meeting

7. Policy making and publicsectors role


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China has a planned economy, using 5-year plans

Each 5-year plan gives guidelines and goals for domesticindustry

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 alsoincluded in 5-year plans

All the operators and number of equipment manufacturers are

either fully or partly government owned



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Ministry of Information Industry (MII) is thetelecom regulator

Many of the research activities for wirelesstechnologies are under the Ministry ofScience and Technology (MOST)

Main focus of governments research

investments is in mobile technologies.Same goes to the state owned companiesoperations



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China Academy of Telecommunication Research,

CATR Under MII

Telecom research and consulting to support

MIIs policy making The main body in organizing governmentsresearch and funding programs for wirelesstechnologies standardization and

development Core business divided into 7 department

7.1 CATR



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China Academy of Telecommunication Research

Organization chart

7.1 CATR



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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



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The Research Institute of Communications Policy of CATR

The Research Institute of Communications Policy is thespecialized policy-making consulting department of CATRunder MII. This Institute is the main supporting organ servingChina communications competent authorities in the policy-making work. It has in-depth participation in telecom industrypolicies, regulatory policies, laws & regulations and telecomindustry 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 andmunicipal Communications Administrations

Telecom operators and manufacturers Monetary securities & investment institutions R & D institutions at home and abroad

7.1 CATR



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China Communication Standard Association, CCSA

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

Also foreign companies and foreign-investment enterprises can applyfor 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 draftingstandards, soliciting comments, coordination, verification, standards consistencytesting, and interconnection and interworking tests

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

To organize national and international technical seminars as well as activities ofcooperation and exchanges

To undertake work related to standardization commissioned by the relevantAuthorities, its members and other organizations

7.2 CCSA



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CJK Standards Meeting

CJK (China-Japan-Korea) Meeting on Information andTelecommunication Standards started on June 2002 with aninitiative of 4 Standards Development Organizations from therespective countries (CCSA as one of them)

Background: mutual understanding and cooperation wasnecessary to promote sound growth and development of theinformation 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 regionaland global levels

to encourage mutual support and assistance among four SDOs

Contribution to the international standards organizations

7.3 CJK StandardsMeeting


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8. Public R&D programs

8.1 General

8.2 NSF8.3 8638.4 FuTURE

8.5 Notable research institutes

8.1 General



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

Each of them have their provincial departments, who have the right tofund regional level research projects. Beijing, Shanghai and Shenzhenare most active cities in launching regional projects

Typically in governments research projects there is an expert groupthat initiates the project, which is then published for public bidding

Usually any companies and research institutes can apply for theseprojects

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

In government funded projects companys self-funding ratio is usually50%

Sino-foreign JVs can also get public funding, if the majority (51% ormore) of the investment and ownership is domestic.

8.1 General



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

Among them, NSF & 863 include funding forwireless technology development

Additionally there are large number of

regional research projects Many cities have public funds for SMEs high

technology R&D

8.2 NSF



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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 andabroad

Up to now, it has signed cooperative agreements

and MOU with 60 science funding organizations andnational research institutions in 35 countries andregions and raised its budget for internationalcooperation and exchange from 0.37 million USD(1987) to 10.15 million USD (2004)

8.2 NSF



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NSF - Natural Science Fund

In the past 15 years, NSFC has funded over52,000 research projects of various categoriesby investing a total sum of 0.81 billion USD

In 2004 NSF funded 26 Key Program projects,with the average funding about 0.22 millionUSD

The Division of Information Science hadnumber of projects regarding wireless

communication technologies, such as UWB,Mobile service Platforms, etc.

8.2 NSF



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

1 CNY = 0.123793 USD (11/05)

8.3 863



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863 Program

The National High Technology and Development Program ofChina

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

8.4 FuTURE



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The FuTURE Project

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

Future Technologies forUniversal Radio

Environment FuTURE is under the Communication part of theNational 863 Program

Launched by Ministry of Science and Technology(MOST)

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

8.4 FuTURE



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The FuTURE Project

The Mission is to establish universal radioexperiment environment that can meet theapplication demands and technique trends

headed for the years around 2010

Integrates layered wireless communicationsystems via IPv6 core networks

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

8.4 FuTURE



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The FuTURE Project

The 1st phase included vision, spectrum andtechnology trend evaluations (FuTURE) andDemo systems and application development

and standard candidate proposals(FuTURE+)

2nd Phase, FuTURE II (2005-2010) is for trial

& pre-commercial systems andstandardization work


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8.4 FuTURE



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The FuTURE Project

FuTURE project Coordination Committee undertakesthe scientific research management andtechnological coordination

project will organize international and domesticspecialists to carry out research into the B3Gsystem, network structure, and operational demands

It cooperates closely with China Wireless

Telecommunication Standards (CWTS) andspectrum distribution

Goal is to keep pace with the development of ITU

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

8.4 FuTURE



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FuTUREs working targets

8.4 FuTURE



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FuTURE technology framework

OFDM/GMC + TDMA/FDMA based multipleaccess

Distributed radio architecture for improvedcoverage

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 FuTURE8. Public R&D programs


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Achievements

Active international cooperation on researchand standardization

Cooperation with Japan and South-Korea

Big number of patents from funded subprojects

FuTURE B3G test network in Shanghai



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FuTURE Forum

Established in 2004

Non-Governmental & non-profit organization

Jointly founded by operators, equipment providers,

universities and research institutions both in Chinaand abroad

Objectives: to clarify the vision of future mobile communication

development;

to assess new trends and new technologies, and topromote the research in B3G field; to realize the sustainable development of mobile

communication through international cooperation betweenChina and the rest of the world

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



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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 Chineseand overseas organizations by organizing conferences andseminars

To organize research and discussion activities of the Forummembers and to publish professional reports and white

papers To communicate and work with other internationalconsortium

To sort and provide with the latest relevant information

8.5 Notable researchinstitutes



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Notable research institutes for wireless technology

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

Tsinghua University in Beijing

South-East University in Nanjing and XianJiaoTong University

Shanghai Wireless CommunicationResearch Center (Wireless Core)

8. Public R&D programs8.5 Notable researchinstitutes


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Wireless Core

Shanghai Research Center for Wireless Communications is aNon-profitable organization established in 2003 by Ministry ofScience and Technology (MOST), Chinese Academy of Science(CAS) and Shanghai Municipal Government. SHRCWC annualresearch 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 B3Gtest 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 permanentemployees are researchers.


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9. Private sector R&D activities

9.1 General

9.2 Network equipmentmanufacturers

9.3 Handset manufacturers

9. Private sector R&D activities9.1 General


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State owned companies are mainly focusing on 3G and B3Gresearch

Majority of the companies still having very limited R&Dresources

Most of the wireless technology companies buy the coretechnology 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 andSiemens ($100 million- plus), JV by Putian and Nokia ($111million) , R&D lab by Nortel & Datang

9. Private sector R&D activities9.2 Network equipmentmanufacturers


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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. Private sector R&D activities9.3 Handsetmanufacturers


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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 beenusing design houses, but nowadays investing more on own R&D.e.g. Konka, TCL, Ningbo Bird, Haier, Soutec and Kejian. Coretechnology still outsourced.

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

Generally speaking domestic manufacturers have too muchfocus on production capacity at the expense of R&Dinvestments


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Market is rapidly growing and opening

Rapid growth of urban population: over 200 millionpeople are estimated to move from countryside tothe 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 serviceproviders



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3G licenses will probably be granted in 1/Q2006

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



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Big operator reform before 3G license granting?

In order to avoid duplicate investment intelecommunication industry, the government is nowconsidering to reform the operators.

One possible plan is:

Split China Unicom into two: GSM part and CDMA part

Split China Railcom into South part and North part

China Telecom + China Unicom GSM part + China Railcom Northpart = 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 ChinaTelecommunication industry and 3G license issue.



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Consolidation among service providers is expected tohappen 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 morewith foreign players

Governments decisions will remain unpredictable

Other


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11. Finnish companies possibilitiesin China

11. Finnish companiespossibilities in China


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Finnish companies possibilities in China

Chinas mobile market is of huge size and stillgrowing rapidly. At the same time the market ishighly competed by domestic and foreign companies

More and more domestic companies are investingon R&D and manufacturing facilities in China

Market for bulk products and services is gettingsaturated -> Finnish companies need to find the

niche market with high quality products. Uniquecontent/application or innovative technology cansuccess.



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Huge demand of Mobile VAS market

Booming VAS market creates huge need forpremium content and innovative applications

Branded content and high quality games

Market for professionally used applications isstarting to grow

Localization is required (language and

culture)!



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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



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Converging the diversified infrastructure

Multiple standards need interoperability

Multimode handsets

Unified platforms Services for different platforms

Documents

Giga Background Study Mobile Broadband in China3533