Wireless

April 2, 2003
Operators stake claims in Wi-Fi gold rush
Duncan Clark

CHINA -- As it is in most markets around the world, 802.11b is the preferred standard of China's telecoms operators. This standard, endorsed by the Institute of Electrical and Electronics Engineers (IEEE) in the United States and widely promoted by chipset and device manufacturers, benefits from the use of 2.4GHz. radio spectrum.

Following the hands-off approach of most telecoms regulators overseas, the Ministry of Information Industry (MII) has deemed this bandwidth unregulated. WLANs are attractive to fixed-line operators such as China Netcom and China Telecom because of their transmission speeds of 11Mbps within a range of up to 100m at dedicated hot spots.

WLANs open up intriguing new commercial models with hot-spot operators in airports, retailers and other public areas. These are useful new tools for the two fixed-line operators to make good on the government's commitment to promote competition, especially in the attractive, tier 1 coastal markets in rival territories. China Telecom is promoting its service under the Tianyitong brand, while China Netcom's WLAN offering appears as Wuxian BanLu.

A sort of air grab is under way as each operator rushes to sign deals to serve public hot spots with the highest amount of traffic, such as airports, the increasingly ubiquitous Starbucks outlets and even chains of noodle restaurants (where a waterproof keyboard protector may prove a useful accessory). Of course, this spells market fragmentation. However, it is likely that roaming agreements, akin to the initiative announced by Intel and Singapore's telecoms regulator, the Infocomm Development Authority (IDA), will come into play to ensure that consumers can get online whichever patch of operator turf they happen to be on.

WLAN integrated with mobile
A key factor in WLAN growth in China is the increasing affordability and popularity of laptops, the terminals of choice for WLAN surfing. Laptop prices are now about half their level two to three years ago, while the incomes of the mainland's urban professionals continue to rise. Laptop sales remain below one million a year, but an increasing number come with built-in 802.11b capability. Those without can simply buy an 802.11b card, prices of which have also dipped. PDAs represent another, though less prevalent, form of WLAN terminal. However, the power-hungry nature of 802.11b chips and PDAs' small screens limit their appeal.

China Mobile is deploying an integrated WLAN/GPRS network, meaning that customers can use GPRS connections outside of hot spots and WLAN within. China Unicom is reportedly planning a CDMA 1x/WLAN service, and has already showcased a WLAN network, at last year's Boao Forum in Hainan.

The modest capital expenditures associated with these deployments make WLAN intriguing to operators in an environment of spending constraints. With wide-scale 3G deployments unlikely before the middle of next year, WLAN looks like the best bet for developing the mobile data market in the interim. In fact, with network upgrades to 802.11G, at speeds of 24Mbps and upward, WLANs could leave the eventual 2Mbps connection speeds of 3G in the dust. Also, WLANs benefit from readymade content in the form of the Web, unlike 3G with its unproven content and business models.

Of more relevance, though, is the issue of cost. The prospect of funding two, three or even four nationwide 3G networks is daunting. In Japan, even 3G pioneer NTT DoCoMo has deployed its own WLAN in a defensive move. Ironically, one of the most crowded areas of the exhibition at the 3GSM World Congress in Cannes last month was the Ericsson Internet cafe, not as a result of any scramble to view W-CDMA gear or handsets, but to benefit instead from the free WLAN service on offer.

(The author is managing director of BDA China, a consulting and research firm focused on China's telecom and technology sectors.)