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China bides time on 3G, WAPI

Posted: 26 Feb 2004 ?? ?Print Version ?Bookmark and Share

Keywords:wireless? wi-fi encryption? gsm?

The intensely competitive Chinese wireless market is biding it's time on issues ranging from which 3G technology to adopt to whether or not to proceed with a controversial Wi-Fi encryption scheme, a China market researcher said.

Speaking Monday (February 23, 2004) at the 3GSM World Congress, Duncan Clark, managing director of BDA China Ltd described the world's-fastest-growing wireless market as poised to make critical decisions on wireless standards over the next 18 months. Hence, government officials and company executives alike are waiting as along as possible to see which standards emerge for 3G.

Meanwhile, Chinese powerhouses like equipment vendors Huawei and ZTE are emerging as key players in the global wireless market. While China still lacks strong R&D and IP capabilities, other companies like Bird and TCL are gaining credibility in the wireless world, Clark said.

China is under pressure to move early on adopting a 3G standard but will likely resist pressure to avoid past dependence on foreign equipment suppliers, Clark said. With deployment of its TD-SCDMA spec as soon as 2005, China officials have adopted a "wait and see" attitude on future 3G technologies. Beijing could begin issuing licenses for 3G later this year, but Clark warned the GSM market may not be as big as expected.

"There's going to be a GSM market in China, but it's not going to be overnight," he said. "It's not one market, it's [many] provinces."

Regardless of how the 3G standards battle plays out, the Chinese wireless market remains immense. Chinese companies showed up in force for this week's GSM Congress. Market researchers estimate that 53 million mobile handsets were sold in China in 2003. That number is expected to grow to 78 million by 2007, Clark said, as manufacturers seek to penetrate markets in the interior of the country.

One potential irritant as foreign companies look for ways to crack the Chinese market is the move last December to mandate a proprietary encryption scheme for Wi-Fi systems used within its borders. China's Wired Authentication and Privacy Infrastructure (WAPI) has raised industry concerns, especially in the U.S. U.S. officials reportedly plan a behind-the-scenes approach to resolving the issue. Other observers think China will take a similar approach.

"I think [the WAPI mandate] is a mistake," Clark said in response to a question from an Intel Corp. executive. "I don't think it represents the views of the highest levels of the Chinese government."

Clark and others speculate that Chinese companies may have convinced factions within the government to go along with the WAPI mandate. The problem is that "bad policies in China never end, they just fade away" because senior officials don't want to be seen as bowing to outside political pressure, Clark added.

The proposal "seems very misguided, and I think [the Chinese government will eventually] can it," Clark said. "But I could be wrong."

-George Leopold

EE Times

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