In this report, a flexible definition is used for Wireless Broadband (or Mobile Broadband, or Wireless Internet Access). These terms refer to either 2G, 2.5G, 3G mobile (cellular, Personal Communication System, 2G, 2.5, 3G) or other wireless technologies (Wi-Fi, WiMAX, WiBRO, or 4G) for high bandwidth wireless access to Internet/Data services. In some cases, the term is used in a more narrow sense to indicate either of the categories.
http://www.chinanex.com/company/index.htm China Mobile Communications Group is the largest telecom operator in China. The company spun off from China Telecom in April 2000 orchestrated by the government to create a competitive environment. China Mobile has 388 billion yuan ($46.7 billion) in asset and 121,000 employees. Revenue for 2004 was 192.4 billion yuan ($23.2 billion), or 35.6% of total telecom revenue in China; net profit was 43.2 billion yuan ($5.2 billion), up 15.3% from 2003 . By the end of 2004, China Mobile had 204.3 million cellphone customers, about 61% of total cellphone users in China (GSM and CDMA combined). China Mobile is listed in the Hong Kong Stock Exchange with ADR trading in New York with a market cap of over $60 billion. China Mobile competes with Unicom in cellphone services and, to a less degree, with China Telecom and Netcom which operate Xiao Ling Tong, a quasi mobile service. Since the mid of 2002 China Mobile has offered GPRS service that has been signed by approx. one third of the GSM users, but so far the proportion of the GPRS/WAP services is only less than 1 percent of their total revenue. In near future, before the 3G era, China Mobile is planning to launch EDGE networks in some limited cities; in order to better compete in data services with its rival China Unicom’s CDMA2000 1X network. China Mobile has its branded VAS platform called Monternet. Monternet offers MMS and hosts third party VAS downloads via WAP. In Monternet there are several different brands for targeted customer groups. One of them is “M-Zone”, which has ring-tones, MMS, mobile payment and games. Since mid 2004 China Mobile has tried to increase customer loyalty by selling tailor maid mobile phones. This is hoped to increase the number of post paid customers and the usage of high-end data services. Sources: [chinanex] [CM interview] [www.wirelessweek.com/article/ca374737?spacedesc=features&stt=001] [www3.gartner.com/DisplayDocument]
China Unicom is the world’s largest in CDMA network & 3 rd largest in mobile subscribers. By the end of 2004 it had over 22.56 million CDMA users. Total number of its GSM (77.47 million) and CDMA has exceeded 100 million subscribers. It has upgraded its CDMA network to CDMA2000 1X RTT to offer better data services. China Unicom is also offering dual-mode services for GSM-CDMA users. When moving to 3G, it plans to apply for CDMA2000 EV-DO and WCDMA licenses (testing more with CDMA2000). China Unicom has its CDMA2000 data service platform called Uni-Info. It is jointly developed with Qualcomm on Brew. But due to China Unicom’s GSM network’s bad reputation caused by its poor quality, the CDMA2000 data service has had very little usage so far. The penetration rate of CDMA 1X wireless data service was increasing. As at 30 June 2005, total subscribers of CDMA wireless data service reached 12.168 million. In the first half of the year, revenue from cellular value-added services reached RMB5.37 billion, representing an increase of 96.9%. Revenue from cellular value-added service accounted for 13.6% of the revenue from cellular service
CU launched CDMA in Jan 02. After a slow start, growth began to accelerate in June and reached 16 m in Oct 03. It boosted CDMA users by handset subsidies, offering calling discounts bundled with mobile phones & cheap prepaid plans from launch til 1H’03. CM’s long term plan is a coordinated development between GSM & CDMA: GSM is also developing when CDMA is growing. The penetration rate of CDMA 1X wireless data service was increasing. As at 30 June 2005, total subscribers of CDMA wireless data service reached 12.168 million. In the first half of the year, revenue from cellular value-added services reached RMB5.37 billion, representing an increase of 96.9%. Revenue from cellular value-added service accounted for 13.6% of the revenue from cellular service CU established a unified network platform (UNINET) which can provide mobile data services. This unified network platform will offer more services in future including mobile data services of CDMA 1x & supports VoIP, data Internet, video (UniVideo), VPNs & mobile data service
Following the successful model established previously in Japan and South Korea, China Mobile and China Unicom outsource almost all content and applications for their wireless value-added services platforms, meaning that these operators rely almost entirely upon third party service providers to drive their network traffic, supply attractive services and increase revenue from their services. In turn, the mobile operators focus on the operation and technical enhancement of their networks, while monitoring service providers' offerings for prohibited content such as pornography and political and religious discourse. For their part, wireless value-added service providers in China rely on the two mobile operators for the network distribution of their content and services, billing and collection, and remittance of revenues. When first setting-up, a third party service provider will obtain the requisite value-added telecommunications licenses from the Chinese government and seek permission from one or both of the mobile operators to offer its services through their networks to their ultimate end-users. The mobile operators, particularly China Mobile, have highly decentralized organizational structures. As a result, separate contracts are usually entered into by the service provider, on the one hand, and the national, provincial and local offices of the mobile operators, on the other hand. The relevant office of the mobile operators will then evaluate the proposed services to ensure, for example, that they do not contain inappropriate content and are not substantively identical to an existing service. If approved, the services can be offered to the mobile operator's users at a price approved by the mobile operator. Prices for the most basic services can be US$0.01 per use or less, while monthly subscriptions for more advanced services can be several dollars. Given their dominant market positions, the mobile operators have significant negotiating leverage over third party service providers and largely dictate the terms of their cooperative agreements. However, recognizing that they are dependent on service providers to continuously create new, innovative services and drive revenue growth, the mobile operators have to date been willing to give service providers the majority of the revenue generated by their services IVR, Interactive Voice Response , is one of the hottest services currently. It is mostly sex-oriented services and thus the service providers are operating in a gray area. Distribution of pornographic material is banned in China, but so far government or operators haven’t took any large scale action to ban these services.
China's Ministry of Information Industries has issued a policy allowing only six players -- including China Telecom -- to offer VoIP services. China Telecom has been very aggressive to ban VoIP and it has blocked many Skype users to use its networks. Fixed line operators in China definitely see VoIP as a serious threat to their revenues. Nevertheless, China is estimated to have 2 million VoIP users in 2006 and 40 million in 2010. (Norson) http://www.forbes.com/business/feeds/afx/2005/09/12/afx2217719.html
Almost all of the company's 2.5G service revenues were derived from Wireless Access Protocol (&quot;WAP&quot;) services, with a relatively limited contribution from existing Java(TM) services and Multimedia Messaging Services (&quot;MMS&quot;) which were first introduced during the first quarter of 2005. The decline in 2.5G services revenues was mainly due to 1) slow growth of the China Unicom CDMA user base for WAP services, 2) increased number of free services mandated by China Unicom on its WAP portal, and 3) new policies implemented by China Mobile during the quarter to eliminate inactive WAP users from subscription billing, partially offset by growth in number of active users. 2G services comprise Short Messaging Services (&quot;SMS&quot;), Interactive Voice Response services (&quot;IVR&quot;), and a relatively limited contribution from Color Ring Back Tones (&quot;CRBT&quot;). SMS revenues were $2.1 million for the second quarter of 2005, representing a decline of 8.8% as compared with $2.3 million in the previous quarter and a decline of 38.4% as compared with $3.4 million in the second quarter of 2004. The decline in revenues from the SMS business was mainly due to China Mobile's migration to new billing platforms that resulted in the elimination of inactive users from subscription billing.
In general, end users pay two sorts of fees for their mobile Internet usage. One is communication fee that is determined by the regulator and collected by the operators. For the Monternet, China Mobile charges end user USD0.0125 per piece SMS send and USD0.0062 from its service providers. For the WAP service, the communication fee is per minute or per month. The other fee is called an Information fee in the Monternet and is paid for the specific content or application services provided by a SP via China Mobile’s network. The Information fee is paid to and determined by a SP itself but China Mobile suggests the upper limits to its SPs for their SMS and WAP services, respectively. The Information fee is shared only if a SP needs to use China Mobile’s billing systems to charge the fee due from its users. In reality, most SPs do not have their own billing systems and it is more convenient for them to use the operator’s billing system. In this case, Monternet gives every SP two options before signing a business contract. If a SP chooses to take the risk that users fail to pay, China Mobile will share 15% of the Informatiion fee and then transfter 85% of it to the SP. A SP may choose to let China Mobile handle a lot of the, then China Mobile will share 30% of the Information fee.
SCDMA integrated Wireless Access system adopts TDD duplex mode, SCDMA dedicated frequency: 1785-1085 MHz. This frequency is not in conflict with the ITU standard 3G frequency as cited in ITU for application worldwide. SCDMA integrated Wireless Access System uses smart antenna and uplink synchronization technology, which has increased system capacity. SCDMA Integrated Wireless Access System adopts the designing concept for software radio, in which the software is used for the processing of base band signal, and the hardware platform adopts high-speed A/D converter and digital signal processor (DSP). Source: Datang Telecom, Beijing Xinwei
Source: www.chinadaily.com.cn, www.china.org.cn
At present, there are three WLAN services available to the public. First one was China Telecom's &quot;Tian Yi Tong&quot; (&quot;Space Wing Link&quot;) in 2001, followed by Netcom's &quot;Wireless Companion&quot; and China Mobile's &quot;17201&quot; service. China Mobile operates the largest WLAN with about 800 hotspots which can be accessed by GPRS cellphones and notebooks equipped with a data card. China Telecom has deployed 300 hotspots and Netcom 200. To use WLAN service, customers must register with an operator to obtain a user name and password for access. They also need to purchase a data card for PCMCIA port on a notebook computer. There are two types of data cards, one is for WLAN only, the other can switch automatically between WLAN and GPRS network depending on location and network availability. Many cards are available in the market, including Nokia, Merlin, Datang, Capitel and Panda. The average price is about 1,800 - 2,000 yuan ($217 - 240). Some cards come with advanced features such as SMS/MMS, voice output, fax, and 360º antenna. For China Mobile service, customers need to connect GPRS handset to a laptop through a SIM socket on the data card, then dial &quot;17201&quot; (&quot;8617201&quot; for international locations). Type &quot;172&quot; as user name and password to log in, which can be modified during registration. Service charges for WLAN vary by operators and monthly plans. For China Mobile, customers can choose from usage based plans which .03 yuan for every kilobyte of data transferred through laptop or GPRS handset; other plans include 20 yuan ($2.4) a month for for first 1MB, 100 yuan ($12) for 20MB; additional volume is billed at .01 yuan per kilobyte. They can also choose 200 yuan ($24) for unlimited data volume. There is no charge for roaming. China Telecom targets individuals for WLAN service, who pay 1,500 yuan ($180) for in-home installation and a data card, monthly charge is 150 yuan ($18) for unlimited use. For access from a public location, the charge is .1 yuan (1.2 cents) a minute or 6 yuan (72 cents) an hour. Customer can also buy 30 hours for 50 yuan ($6) a month. Netcom service is designed mainly for business customers. The operator signed with four other operators in 2003 to allow WLAN customers to roam in South Korea, Malaysia, Singapore and Australia. The quality of service differs by operators and type of service they offer. Typically, notebook-based WLAN offers up to 11Mbps (802.11b), but there are limited hotspots available, so that signal may drop unexpectedly if user moves around. GPRS offers a throughput of 15-40Kbps (60-80Kbps with data accelerator), slower than CDMA 2000 1x by Unicom which delivers up to 136Kbps. The biggest advantage of GPRS is coverage: it is available in more than 200 cities plus hotspots, so that customers can take advantage of both networks when travel. Use of WLAN in China is still scarce, partly because most people do not have a notebook, and expense on the service can add up quickly. However, the potential of WLAN in China is significant, it is estimated the market will grow 50% a year through 2006 and the number of hotspots may triple to 6,000 by 2008.
The Chinese WLAN standard, called GB15629.11-2003, is very similar to the Institute of Electrical and Electronics Engineers Inc.'s (IEEE's) 802.11 standard, but it uses a different security protocol, called WLAN Authentication and Privacy Infrastructure (WAPI). To conform to this standard, foreign equipment vendors must license WAPI through a manufacturing agreement with one of 11 Chinese companies designated by the Chinese government, including Legend Group Ltd. and Huawei Technologies Co. Ltd.
In year 1998 a German telecommunication company Siemens Technologies and the China Academy for Telecommunications Technology (CATT) began jointly develop 3G mobile technology called TD-SCDMA (Time Division Synchronous Code Division Multiple Access). In the May of 2000 it was formally adopted by ITU as one of the international 3G standard. TD-SCDMA is youngest of the three standards and it has not yet been commercially used. TD-SCDMA is based on TDD (Time Division Duplex) technology that is perceived to be more suitable for data transmission than the FDD (Frequency Division Duplex) that is more suitable for voice transmission. To allow multiple simultaneous users in one transmission channel TD-SCDMA uses TDMA (Time Division Multiple Access) technology that derives the traffic channel frames into seven time slots. This allows both downlink and uplink traffic been send in the same physical channel, so TD-SCDMA can use an unpaired connection instead of paired connection of FDD systems. For synchronous mode TD-SCDMA also has an adaptive CDMA component that uses paired frequency band. [http://www.siemens.ie/mobile/TDSCDMA/tdscdma.htm] TD-SCDMA can work in both symmetric and asymmetric mode. Symmetric service means that same amount of data is sent both uplink and downlink and it is used for voice calls. Asymmetric mode is used for example downloading data, where it is efficient that more time slots are used in downlink than uplink transmission. In China TD-SCDMA will use frequency band of 2010 MHz - 2025 MHz. TD-SCDMA can offer for both circuit and packet switched data the maximum data rate of 2 Mbps. [http://www.umtsworld.com/technology/tdscdma.htm] TD-SCDMA technology allows the use of smart antennas in base stations. These antennas can target signals to and from specific terminal and is thus supposed to reduce the cell interference. However, the cell interference is still one of the biggest practical problems that TD-SCDMA equipment developers haven’t solved. [Interview: Prof. Zhang, Beijing University of Post and Telecommunication] [http://www.tdscdma-forum.org/en/resources/see.asp?id=12, document]
There has been lot of estimations that China Satcom and China Railcom would also get a 3G license, possibly TD-SCDMA. But then on the other hand, there are several unofficially announced (by MII official) requirements for licensees, such as a) Has to be Chinese b) Must have existing networks and subscriber base c) Must be financially stable d) Must be capable to build nation wide 3G network. China Railcom and China Satcom do not fulfill all these requirements.
TD-SCDMA research began at year 1995 and the current standard release 4 was released in March 2001. 1998 Siemens joined the development. Government is strongly supporting the development of TD-SCDMA in order to get bigger market share for domestic manufacturers. There are several domestic and foreign companies participating in the development work, in which Datang, ZTE, Huawei, Siemens and Philips are among the most active ones (Note: Most of these companies have R&D in more than one 3G standard). There are also some Joint Ventures between domestic and foreign manufacturers focusing on TD-SCDMA R&D (for example TD Tech by Huawei & Siemens, T3G by Datang and Phillips, Nokia & Putian JV ). Foreign companies are slowly increasing their interest in TD-SCDMA development; the latest news was that Eriksson announced to establish TD-SCDMA R&D center to China. Compared to WCDMA and CDMA2000, this developer cluster is still very small. This is definitely one of TD-SCDMA’s weaknesses .
Standard development is far behind WCDMA and CDMA2000 Still lot of technical problems with both network equipments and terminals Immature TD-SCDMA is the biggest reason for delayed 3G (CDMA2000 and WCDMA are both regarded as FDD (frequency division duplex) systems.) Unlike other two standards, TD-SCDMA uses unpaired frequency bands, so it offers optimum efficiency for both symmetric and asymmetric data services. Due to its small bandwidth of 1.6 MHz this technology allows flexible allocation of the spectrum. TD-SCDMA uses Smart Antenna technology that is similar to MIMO. TD-SCDMA NEs (network equipments) can be inserted into existing GSM network, as it uses the same core network (this is also the case for WCDMA). Commonly TDD systems are said to fit better data transmission, but be less effective in voice connections. Spectrum is the market in mobile telecommunication system. A system with an effective spectrum will make its network construction and operating cost low. In many countries FDD spectrum is already mostly in use. TD-SCDMA only needs 1/3 of the bandwidth used by WCDMA. For asymmetrical operations such as Internet transmitting, it can change its asymmetry; and for symmetrical operations such as voice transmitting, it can change its symmetry. So, it increases the overall efficiency of the spectrum. (We must still remember, that when talking about standards and their features, we are more referring to theory than ready made and tested systems and applications.) Currently TD-SCDMA chips have been developed by T3G Technology, Chongqing Chongyou Information Technology and ZTE. There are around 20 handset models and among the domestic manufacturers at least ZTE, Huawei, Datang mobile, Putian, Lenovo, Hi-sense, CECT have developed TD-SCDMA models. Samsung’s HGH-T560 (powered by T3G’s chip) has proven video streaming and video calling funtionality. In network equipment side the biggest players are Datang, Huawei and ZTE, but also Motorola, Nortel and Eriksson have joined the group lately. ZTE has deployed a demo TD-SCDMA network in Romania.
Latest new members: With the approval of TD-SCDMA Forum Consortium, TCL Communications Co. Ltd has acquired the TD-SCDMA Forum Board Membership. Shanghai DBTEL Industry Co. Ltd and Spreadtrum Communications Technology Ltd. also joined the Forum as Senior Members. Source: TD-SCDMA Forum
By focusing on TD-SCDMA’s technologies the Alliance will: pursue the TD-SCDMA standard’s advancement and perfection as well as the TD-SCDMA industry’s management and collaboration; promote the share of resources and mutual benefits between enterprises; advise the government to adopt important industry policies in favor of TD-SCDMA development; and improve the collective competitiveness of the telecommunication enterprises within the Alliance. Within the TD-SCDMA Industry Alliance, the Alliance members operate the uniform Intellectual Property (IP) Rights policies, highly share the technology and market information with each other, frequently communicate with each other, and create a rational labor division, all in order to promote the rapid and healthy development of the TD-SCDMA telecommunication industry;
Besides the Mobile Communication Simulation Test Center, MTnet ( testing and simulation platform for GSM/ CDMA/ WCDMA/CDMA2000/TD-SCDMA ), CATR has two other test networks in their premises in Beijing, namely RTnet and EMC Lab.
equipment suppliers for each locations and operators. Each foreign supplier was restricted to supply one operator per each location only. Numbers shown in table tell the number of base stations in respectful network.
equipment suppliers for each locations and operators. Each foreign supplier was restricted to supply one operator per each location only. Numbers shown in table tell the number of base stations in respectful network.
Industry experts see that China Mobile needs to launch HSDPA in the most advanced market areas (like in the biggest cities in coastal area) to compete the data rates of China Unicom’s future EV-DO network. It is still unlikely that China Mobile would deploy HSDPA in large scale.
picoChip technology is being used by Intel and Airspan in their WiMAX basestation designs. Source: http://www.atlasventure.com/newsandevents/news.cfm?id=140 The Wireless Technology Innovation Institute, Beijing University of Posts and Telecommunications (WTI-BUPT), located in Beijing, China, is dedicated to the research in advanced wireless technologies. WTI-BUPT has cooperation with domestic and international commercial companies such as China Mobile, China Unicom, China Telecom, Huawei, ZTE, Datang Group, Ericssion, Simens, etc.
the system will operate with a minimum spectrum efficiency of 0.5 bit/(sec*Hz) and a typical efficiency of 3 bit/(sec*Hz) including error coding, hence providing a typical capacity of 18 Mbit/s in 6 MHz TV channel, 21Mbit/s in 7 MHz channel and 24 Mbit/s in 8 MHz TV channels in the forward direction. Source: IEEE
Natural Science Fund UWB research program Theory and key technology of ultra-wide band high speed wireless access Ultra-wide band wireless communication system has a lot of advantages such as high transmission rate, anti-multiple path interference, and sharing of the same frequency spectrum with existing systems, low power dissipation, easy full digitalization, etc. At present, it has become the first choice for high-speed data transmission. The project is to make breakthroughs in the theory and key technologies by studying some issues in relevant disciplines, to build an ultra-wide band wireless communication network demonstration system, thus laying foundations for a new generation of high speed personal domain network. Main research contents: 1) Optimum theory of designing ultra-wide band mini-antennae, and the combination of antennae and send-receive front end; 2) Transmission characteristics of ultra-wide band signal, especially that under the indoor density multi-path environment; 3) Theory and technology of high performance receiving system; 4) Technologies of frequency spectrum coexistence and compatibility of ultra-wide band system and other communication systems; 5) Communication network protocol based on ultra-wide band technology. source: http://www.nsfc.gov.cn/e_nsfc/2004/02gp/002kp/006.htm
Besides Datang Mobile, all the rest B3G research is under the FuTURE project and thus discussed in the same chapter
Communications Standard Research Institute communicates with 3GPP and ITU and offers consulting for MII. It also has s ome research cooperation with universities under the national research programs. Institute cooperates with private companies on standard research and drafting for China Communication Standard Association (CCSA) for domestic standardization. One of the core business areas is to offer testing services. The institute has two large-scale labs, i.e. &quot;Communications Network Integrated Experiment Simulation Test Center （ RTNet)“ and &quot;Mobile Communication Simulation Test Center （ MTNet ） &quot;, with integrated test environment simulating fixed and mobile network, leading test instrument and software-simulated development tool, as well as a professional test team. RTnet is for fixed line testing, e.g. NGN and IPv6. and MTnet is for 3G testing. Institute also runs EMC Lab, that is for equipment approval certification testing. MTnet and RTnet are mainly for some high level project, EMC is closer to market. Testing business is the main income source for the Communications Standard Research Institute.
“ In the future, NSFC will continue to focus its international cooperation and exchange on the major tasks of science funding, strive to further promote the funding for &quot;research projects&quot; and &quot;talent training&quot; by taking promoting fountainhead innovation as its guideline, and implement the strategic plan of creating a favorable environment for Chinese scientists to participate in international (regional) cooperation and exchange in an attempt to advance with times and obtain more productive and fruitful achievements in international cooperation. “ Source: NSF
source: http://www.nsfc.gov.cn/e_nsfc/2004/01au/02fs.htm In the past 15 years, NSFC has funded over 52,000 research projects of various categories by investing a total sum of 6.6 billion RMB, including 49,000 General Program projects, 1,369 Key Program projects, 188 Major Program projects and 3,000 Special Fund projects. More than 60,000 scientists are supported annually by NSFC to conduct basic research. In addition, 7,400 young researchers have been granted the Young Scientists Fund, 711 have been granted the National Science Fund for Distinguished Young Scholars, and 144 have been granted the Overseas, Hong Kong and Macao Young Scientists Cooperation Fund. With the consistent support from NSFC, a big number of major research achievements and breakthroughs have been obtained and NSFC has made important contributions in promoting the progress of Chinese basic research and talent training.
In 2002, the IT sector covered 20% of the whole 863 Program in terms of total expenditure and number of projects. 863 sub-projects were divided as follows: University and College 39% Research Institute 28% Enterprises of various types 30% Others 3% Applied technology development corresponded 64% and Applied basic research corresponded 33% of all the projects. In terms of expenditure, applied technology development corresponded 62% and applied basic research 23% of all the projects. Regional distribution of the projects was clearly highest in Beijing, which had 34.9% of all the projects (632 projects). Shanghai was number two, having 10.1% of all the projects. Source: MOST, 863 Annual Report 2002
Phase 1. In this phase, investigations on key technologies for air interface of beyond 3G/4G system and development of demo systems for verification of the key technologies will be finished; demonstration of various future wireless services on the demo system will be carried on; some corresponding proposals will be submitted to ITU. Phase 2. In this phase, researches on air interface of beyond 3G/4G system will continue to make it mature, and researches on systematic technologies (including technologies on the inter-connectivity with Ad hoc networks and nomadic wireless access network, etc.) will be carried on. Field trial of the demo system with the ability to bear beyond 3G/4G services inter-connected with other external networks will be carried out. Preliminary standardization documentation for beyond 3G systems will be submitted to ITU. Phase 3. In this phase, major special projects will be launched to support large-scale field trial and completion of standardization documentation for beyond 3G/4G system for universal radio environment.
Source: Professor Zhang Ping, Secretariat of Future Forum
It was previously the Wireless Communication Department of Simit ( Shanghai Institute of Microsystem and Information Technology ). Around 70% of the funding comes from government projects (1/3 of this is from CAS) and remaining 30% from private companies. The private sector projects are rather equally divided between foreign and domestic companies.
for GIGA Technology Program Mikael Leinonen, Finpro Hong Kong Wireless Broadband in China November 30, 2005
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
Technology adoption and outlook
Government’s role in the development of the wireless broadband
Public & Private R&D activities for wireless broadband technologies
Opportunities for Finnish companies
China in a Nutshell 1. Introduction Source: www.china.org.cn , CIA world factbook 9,600 000 km ² (Finland 338,000 km²) Land Area urban population: 41.8%; rural population: 58.2%. Metropolitan Population $5,600 (2004 est.) GDP per capita Shanghai Largest City 1.3 billion (Finland 5.3 million) Population China National Statistics 2004
2. Market Overview 2.1 Business Volume 2.2 Network operators
Mobile phone density differs a lot in different areas. Wealthy East-coast is leading in subscriber numbers
Comparison of new mobile subscribers in East-, Central- and Western China; 1/H 2003, 1/H 2004 and 1/H 2005 (Y-axis: subscribers 10.000 ). 2. Market Overview 2.1 General market information
New mobile users are mainly post paid customers
In 2004 ~90% of the new mobile phone users were prepaid customers
This has caused the decrease in operators’ ARPU
Comparison of Fixed Line and Mobile communication ARPU in 2003-2005 (Monthly ARPU, RMB) [ 1 CNY = 0.123793 USD (11/05) ] 2. Market Overview 2.1 General market information
Mobile Operators 2. Market Overview 2.1 General market information No mobile operating license! PHS in huge growth Total (including Fixed line): RMB 64.9 billion (US$ 7.8 billion) PHS: 20.08 mln PHS (LittleSmart) since 1997 China Netcom (No mobile license, but operates PHS) No mobile operating license! PHS in huge growth Total (including Fixed line): RMB 161.2 billion (US$ 19.4 billion) PHS: 39.12 mln PHS (LittleSmart) since 1997 China Telecom (No mobile license, but operates PHS) GSM-CDMA dual mode service since 2H/2004 RMB 79.33 billion (US$ 9.6 billion) GSM 88.76 mln CDMA 30.47 mln GSM since 1994, cdmaOne since 2002, CDMA2000 1X since late 2003 China Unicom Planning to launch EDGE in 2H/2005 RMB 192.4 billion (US$ 23,244 billion) GSM: 223.78 mln GSM since 1995, GPRS since 2002 China Mobile Note Operating revenue 2004 Users Network Operator
Mobile data revenues, 1Q 05 vs. 2Q 05 China Mobile and China Unicom 2005 1/Q 2005 2/Q Yearly change (%) Source: Informa, Mobile Media Analyst, Oct 05 2. Market Overview 2.1 General market information 79.03 85.48 14 116.67 15 120.33 China Unicom 101.2 110.52 21.4 515 18 416.67 China Mobile Data ARPU Data revenue/ month Data Share of Revenue (%) Data revenue/ month ($ milj.) Data Share of Revenue (%) Data revenue/ month ($ milj.)
Nokia, Motorola, Samsung and Bird are leading the market
Domestic manufactures have less than 45% of the total market
2. Market Overview 2.1 General market information
China Mobile 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 Subscriber Base ( in thousands 23,070 22,220 850 Cumulative net additions 3,581 3,476 105 Net additions 227,362 166,625 60,737 Subscriber number Total subscriber Prepaid subscriber Contract subscriber As of 31 July, 2005
China Mobile insight: July 04 – March 05 Source: China Mobile 2. Market Overview 2.2 Network Operators 85,621 88,127 90,771 Number of Employees 86.0% 83.6% 84.2% Network Utilisation Rate 226 million 244 million 254 million Network Capacity (Users) 40.0 billion 62.8 billion 59.1 billion * Short Message Services Usage Volume (Messages) 147.09 million 156.83 million 174.00 million Number of Users of Mobile Data Services 0.037 $ 0.035 $ 0.035 $ * Average Revenue per Minute (USD) 297 313 318 * Average Usage per User per Month (MOU) (Minutes/User/Month) 170.37 billion 188.27 billion 196.48 billion * Total Usage (Minutes) 11.14 $ 11.27 $ 11.02 $ * Average Revenue per User per Month (ARPU)(USD/User/Month) 8.91 million 9.91 million 9.58 million * Net increase in subscribers 194.38 million 204.29 million 213.87 million Number of Subscribers As at 30 September 2004/ For the period from 1 July 2004 to 30 September 2004 As at 31 December 2004/ For the period from 1 October 2004 to 31 December 2004 As at 31 March 2005/ For the period from 1 January 2005 to 31 March 2005
Established in 2001, focus on satellite communication.
It devotes to develop satellite communication, broadcasting and related business
2. Market Overview 2.2 Network Operators
Service fees 2. Market Overview 2.2 Network Operators 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. 0.05 USD 6,19 USD 75 -370 USD GSM 0.05 USD 6,19 USD 150 - 370 USD CDMA
Basic Plan: no monthly fee, usage is charged at 0.004 USD per kilobyte;
Economy Plan: 2.4 USD a month for 1MB free data volume, and 0.0012 USD for each additional kilobyte;
Elite Plan: 12 USD a month for 20MB; 4) Business Plan: 24 USD a month for unlimited usage.
0- 0.04 USD per kilobyte 0-25 USD 250 USD or less GPRS 0.15 USD /hour, sms XLT- cellphone 0.01 USD p er message 0.014 3.09 USD 75 - 250 USD WLL service Value added services, sms, e-net, call forwarding Minute price Monthly fee Handsets Service
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
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
Top 5 Sp of IVR
Top 5 SP of WAP (China Mobile)
3. Services 3.7 Biggest Service Providers 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
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. Third Generation Mobile 5.3 TD-SCDMA
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. Third Generation Mobile 5.4 3G Testing
Operators’ TD-SCDMA trial networks under the MTnet
Problems with terminals, high-speed mobility and cell interference
Only one terminal (by Datang) was available for the phase1 field test
5. Third Generation Mobile 5.4 3G Testing China Satcom China Railcom China Railcom China Unicom China Mobile China Mobile China Netcom China Telecom Chengdu ChongQing Shanghai Beijing
Operators’ WCDMA trial networks under the MTnet with network supplier information 5. Third Generation Mobile 5.4 3G Testing China Railcom (10) Eastcom China Telecom (10) Guangzhou Post & Telecom Equipment Co., Ltd China Netcom Lucent China Netcom (10) UT Starcom China Mobile (10) Motorola China Telcom (10) Alcatel China Netcom (10) Nortel China Mobile (10) Ericsson China Netcom (10) Nokia China Telecom (10) Siemens China Mobile (20) China Netcom (10) China Railcom (20) ZTE China Telecom (20) China Unicom (10) China Mobile (20) Huawei Guangzhou Shanghai Beijing Network Equipment Manufacturer
Operators’ CDMA2000 (EV-DO) trial networks under the MTnet with network supplier information 5. Third Generation Mobile 5.4 3G Testing China Unicom (10) Dalian LinkAir China Satcom (5) Putian Capitel China Netcom (10) Motorola China Mobile (10) Lucent China Telcom (10) Samsung China Netcom (10) Nortel China Mobile (10) Ericsson China Satcom (10) ZTE China Unicom (20) Huawei Operators in Guangzhou Operators in Shanghai Operators in Beijing Network Equipment Manufacturer
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
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
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
7. Policy making and public sector’s role
China Academy of Telecommunication Research, CATR
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 7. Policy making and public sector’s role
China Academy of Telecommunication Research Organization chart 7.1 CATR 7. Policy making and public sector’s role
Communications Standard Research Institute of CART
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:
next generation network （ NGN ）
network interconnection and interworking
telecom resources of numbers and radio frequency
broadband packet network
optical transmission network
mobile communications network
paging, trunk and cordless technology
microwave and satellite system
7.1 CATR 7. Policy making and public sector’s role
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.
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 7. Policy making and public sector’s role
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 7. Policy making and public sector’s role
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 7. Policy making and public sector’s role
8. Public R&D programs 8.1 General 8.2 NSF 8.3 863 8.4 FuTURE 8.5 Notable research institutes
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)
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 a pprox. 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.
8. Public R&D programs 8.5 Notable research institutes
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
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.