China starts building 3G trials
By Mure Dickie in Beijing
Published: December 22 2005 22:01 | Last updated: December 22 2005 22:01
GraphicChina has quietly begun building large-scale trial networks based on its home-grown third-generation (3G) mobile telephone standard, say industry participants.
Construction of the networks in Shanghai and other cities is the strongest evidence yet of China’s determination to create a central role for the TD-SCDMA standard as part of its long-awaited roll-out of 3G services.
It will also fuel expectations that Beijing plans soon to issue a TD-SCDMA licence to China Telecom, the leading fixed-line operator, which is running the Shanghai trial along with two other phone companies.
The Shanghai trial involves two core networks and 16 “base stations” that cover commercial districts, development zones and residential neighbourhoods, one industry participant said.
“They started with Shanghai . . . and are also drawing up plans for other cities,” said another participant. “[The trial networks] will be progressively expanded to a pretty big scale.”
BDA China, a telecoms consultancy, said by introducing TD-SCDMA, Beijing hoped to give China Telecom an edge over domestic rivals that use foreign-backed standards and to support local equipment providers.
A headstart would help to make up for the lack of maturity of TD-SCDMA technology compared with the rival European-backed WCDMA and US-supported CDMA-2000 standards.
It would be good news for local equipment vendors such as Datang Telecom, TD-SCDMA’s biggest backer, and ZTE, which makes products for the other 3G standards but is strong in TD-SCDMA and is supplying the equipment for the Shanghai trial.
Equipment vendors have been awaiting the arrival of 3G in China, the world’s most populous telecoms market in terms of subscribers, with each local operator likely to spend about Rmb50bn ($6.2bn) over two or three years to build a national network.
Beijing’s telecoms regulators remain tight-lipped about their plans, but there have been increasing signs of likely action.
State media this week quoted Xi Guohua, information industry vice-minister, as saying “decision time” had arrived for 3G licensing policy and that TD-SCDMA must play a central role. “Now the technology and the industrial chain for this standard has taken shape,” Mr Xi said. “TD-SCDMA must take a place in Chinese 3G and it may be run by a strong operator.”
His remarks were seen as a signal that China Telecom would be soon allowed to build a nationwide TD-SCDMA network.
The timing of any move remains unclear amid speculation about a potential restructuring of the telecoms market.
However, BDA said Beijing would not wait to decide on industry reorganisation before moving on 3G.
IR/PS in the News : Telecommunications Report
"Workshop Participants Back FCC's Spectrum Approach"
June 15, 2005
Forty industry, government, and academic experts gathered at the University of California at San Diego recently to develop scenarios on the future of wireless markets and regulations in the U.S., China, and other developing countries. The workshop was the third such held at the school to predict developments in the market - and regulations - over the next five to seven years.
A leader of the effort, Peter F. Cowhey, dean of the Graduate School of International Relations and Pacific Studies at UC-San Diego, who holds the QUALCOMM chair in communications and technology policy, discussed the workshop with TR. An edited transcript of the interview follows.
TR: Can you explain how the workshop process worked?
Cowhey: We broke into three working groups and people developed alternative scenarios for the future. . . . One dealt with the United States, one dealt with developing countries in general, and the third specifically focused on China. To save time, I'll use the U.S. and China scenarios as illustrative of what we were thinking about.
On the U.S. side, the basic view of two alternative scenarios that were developed was very overlapping in the sense that people thought the implication of truly smart handset devices and of Internet protocol architectures for networks in the wireless industry in the future was that the traditional business models of carriers would be under enormous stress, that there was a high likelihood that despite all the experimentation with new consumer services for the carriers, that that would not raise average revenue per user, and that the consequence of that would be that the
carriers would be under grave stress. Two scenarios emerged from those starting points.
One is the enterprise services scenario, and the other is what the group called the Google phone scenario. The enterprise services scenario basically argued that the largest source of revenue that actually could be tapped by carriers would be enterprise-level services, which could be rolled out in a whole new way in a world with much greater spectrum and higher-speed networks that were wireless. And that the carriers then would be leveraging their control of their traditional wired networks, along with this high-speed wireless network experience to offer quality of service and
customized services to enterprises, who were the one set of customers who would probably be willing to pay for these sort of conditions. . . .
The more radical scenario was that really the carriers would lose control over the entry point to the network - that is the handset would truly be the access gateway and that a growing proportion of all customers would essentially be carrier-independent. The handsets would do searching for the
network of choice, set by the parameters or tastes of consumers. . . . Services would come in the same sort of Google-like experience that you would essentially have preferences there, that [you] would crawl down and choose what you want - subsets of the applications - whether it's for content or whatever else. ... It's kind of a - from the viewpoint of the carriers - a profitless race to keep up.
TR: Tell us about the scenario for deployment of services in China.
Cowhey: The China scenario group basically said, "Let's imagine what a radical change in the China market might look like." . . . They chose the idea that China really does embrace an industrial policy for the fourth generation [of wireless services], such as China has been in discussions with [South] Korea and Japan on and off over the last year. And in the fourth-generation scenario, China says it's going to deploy a 100 megabits-per-second network in a relatively rapid way. It uses command-and-control tactics to both allocate the spectrum for the network and to impose compulsory standards on the carriers to get it to deployment.
And, depending on the mix of technologies, maybe compulsory intellectual property licensing laws for foreign vendors that want to sell at all into this network deployment.
And the question then was, "What would happen for the world market, for industry, as a result of this strategy." And a couple of the predictions out of the group were a little surprising. The first was that unless the Chinese government offered a massive subsidy to the carriers, the cost of the
services would be sufficiently high that they wouldn't find a vast consumer market in China. And that the enterprise market in China tends to be in relatively new infrastructure, and therefore wireless services aren't that competitive head-to-head against fiber-optic service for those new office buildings. . . .
Then the second conclusion was that . . . there might be disappointing returns for the Chinese in the advanced industrial countries because the amount of spectrum you would have to clear for a fourth-generation network to be rolled out rapidly - and the capex [capital expenditures] involved was sohigh - that you might not find that the major players in the Western markets would actually buy the export equipment. But there might be a market that could be developed in the big emerging markets, where the Chinese example might be enough to swing countries like Brazil and India to decide to emulate the Chinese model. ... It's much harder to predict ... winners and
losers out of this scenario than you might think of at the beginning.
And the final point that they made is that the big benefit that would be almost for sure of the effort is that it would allow large scale, national deployment of high-speed connectivity in the parts of China that are not well-served by the current communications infrastructure, and thus it might
change the pattern of industrialization in China away from the current sort of coastal approach. . . .
TR: What were the policy conclusions of the participants?
Cowhey: The first is that in all of these scenarios, the convergence of services that you're likely to get over the wireless device is such that it makes a lot of the old regulatory distinctions not work that well. And there's a case for careful considering of moving to more general competition policy to replace specific communications regulation with a few caveats. You'd still want to have some special rules probably about interconnection among service providers and carriers, and at least you would want some principles about how you would think . . . if there is too much concentration
of control of the spectrum. . . .
The second thing is that all of these scenarios depend on a continuation of the basic direction of FCC spectrum policy in the last few years - that is, getting more spectrum out on a more flexible basis. It relies on the reauthorization of auctions in the U.S., for example. It requires incentive
systems to move incumbents from the spectrum that they currently occupy. So things like the trust fund, using auction proceeds to move incumbents. It requires timely conversion of television spectrum to other uses. . . . In general, it was an endorsement of the general direction of the FCC policy, saying, though, that you had lots of problems to solve yet and you had to do these fundamentals at least.
The third point is that all of these policies make it more important to get rid of inefficient subsidy systems because the pressures of wireless carriers offering lower-priced networks was such that our traditional cross-subsidized pricing structures weren't going to work. . . . In developing countries, for example, one of the chief points of the scenarios was that almost all the cross-subsidy schemes work against the build-out of networks. So the feeling was that you needed to have universal service policies that would be much more transparent and competitively neutral and targeted in a way to assist the right consumers, not the carriers.
The final, I think, [three] sets of conclusions were more international. The first was that it was possible that we were heading to a period where the world radio conferences would no longer be necessary and that would be a desirable outcome. That instead they would become times for consultation about best spectrum practices and discussions of how allocations might head in terms of smart spectrum policy. But you'd no longer have to do the same level of global coordination.
The second point is that it would be good to get international consensus about how to approach certain public-goods aspects of communications services like emergency services, so that equipment designers and carriers operating global networks could have a common approach, make it more efficient over time.
And the third point was that the potential for mobilizing industrial policy in the marketplace was still there, as witnessed by the China scenario, and that U.S. and other government officials would have to continue to watch for the possibility that industrial policy might severely distort the market