China, Korea Emerging as Mobile Phone Powerhouses
August 23, 2004 (TOKYO) -- The number of mobile phone subscribers in China is the world's largest at 300 million, as of May 2004.
Although subscriber numbers surpassed 300 million, China's mobile phone penetration is still no more than 20.9%.
Also, experiments on third-generation (3G) mobile phone services have been carried out successfully in China, with its proprietary technology "TD-SCDMA" expected to be commercialized soon.
Despite a widespread view that 3G services will not penetrate broadly until handset prices decline to 2G levels, China still has a great impact because its market is immense.
Meanwhile, Korea topped the world with 7.3 million subscribers to CDMA2000 1xEV-DO phone services, its 3G commercial service initiated ahead of other countries in 2002, and its movie contents are gathering momentum, too.
China Absorbed in 3G Service Establishment Aiming toward 2008 Beijing Olympic Games
In China, preparations are underway for the commercialization of 3G services, led by the Ministry of Information Industry (MII). Experimental networks called "MTNet" are being operated in Beijing, Shanghai and Guangzhou.
China has three different 3G technologies. Most expect China Mobile to start W-CDMA and China Unicom to initiate CDMA2000 1xEV-DO commercial services.
The 3G technologies in test phases are W-CDMA, CDMA2000 1xEV-DO and TD-SCDMA. This is where European, Korean, Japanese and Chinese manufacturers are highly active. The precise circumstances are complicated, just as in the Three Kingdom Saga, when reflecting intentions of the six telecom carriers in China and the MII (Fig 2).
China Mobile Communications Corp is likely to employ W-CDMA, which is easy to shift from GSM, while China Unicom Ltd is likely to use CDMA2000 1xEV-DO, an advanced version of CDMA2000 1x, telecom industry officials said. China Telecom Corp and China Netcom Corp Ltd, which currently provide fixed-line telephone and PHS services, are also said to be eager to enter the 3G market.
The Chinese company, US UTStarcom Ltd, the largest PHS handset maker in China, is now developing a dual handset that is compatible with both W-CDMA and PHS. Therefore, either of the two companies, or even both are highly likely to introduce W-CDMA services.
Proprietary TD-SCDMA Needs to Cut Power Consumption by Handset Chip
In contrast to the combined 180MHz allotted to W-CDMA and 1xEV-DO, a broad spectrum of 155MHz was granted only to TD-SCDMA.
The third standard, TD-SCDMA, is fully supported by the Chinese government, because TD-SCDMA comprises Chinese technology, whose patents are partially owned by Datang Telecom Technology Co, Ltd of China. The ministry's enthusiasm for TD-SCDMA is evident in the light of its spectrum allocation (Fig 3).
However, TD-SCDMA has not yet reached the level to be a commercial service. Third-generation commercial services actually started within 2003, but the plan was postponed. The majority sees the government and the ministry as waiting for TD-SCDMA to become more technically mature.
If China starts 3G commercial services now, odds are high that the move will end in failure as the technology cannot compete with W-CDMA and 1xEV-DO in terms of handset performance and this is the case China wants to avoid at all costs.
However, the government cannot be so blatantly protective that it approves only TD-SCDMA after joining the World Trade Organization (WTO). Hence, China is decelerating its overall 3G commercial services.
According to industry officials, the most serious issue for TD-SCDMA is the delayed development of chips. Datang Mobile Communications Equipment Co, Ltd of the Datang Telecom Technology and Industry Group unveiled its first TD-SCDMA handset called "DTM8001" in March. However, its stand-by mode only lasts for 50 hours because the chip consumes a lot of power.
Nonetheless, development of chips that can be used for commercial applications is just a matter of time. While companies are successively announcing their development of chips for TD-SCDMA handsets, many firms are bidding for handset development.
Korea Marks More Than 6 Million Movie Delivery Subscribers
Korea appears to be ahead of Japan in many respects including the penetration rate of mobile phones, the number of subscribers to CDMA2000 1xEV-DO and the introduction of number portability, as well as movie contents.
The leading company in movie services is KTF Co, Ltd, Korea's second largest service provider. The company commenced its service called "Fimm" (First in Mobile Multimedia) in May 2002 and attracted 3.405 million users as of May 2004. Its rival, SK Telecom, the top service provider in Korea, developed "June," its movie contents service developed exclusively for 1xEV-DO, and obtained more than 2.645 million users.
The firms say that particularly popular contents are terrestrial TV programs encoded for mobile phones. "Such contents account for 40% of our total movie contents sales," according to KTF media contents team senior Sohn Chang Hwa.
"Satellite Digital Multimedia Broadcasting" (DMB) is likely to further fuel mobile movie services in Korea.
Satellite DMB is a service to deliver movie and music from a satellite to mobile phone terminals using a spectrum called S-band. It is a joint project between Korea and Japan's mobile broadcasting, and is capitalized by Japanese firms including Toshiba Corp.
SK Telecom is planning to initiate its service on September 1.
Korea Enhancing its Proprietary Technology Focusing on Global Market
While Korea is pursuing 1xEV-DO, Korea's Ministry of Information and Communication is focusing on further developments. One of such development is W-CDMA, and SK Telecom and KTF started commercial services at the end of 2003.
As SK Telecom and KTF have been successful in 1xEV-DO, they are not very enthusiastic about W-CDMA, whose communication speed shows little contrast with 1xEV-DO. However, W-CDMA is strongly promoted by the ministry. The Korean government intends to establish international roaming before W-CDMA becomes the mainstream technology of the global 3G market, and thus enable companies such as Samsung Electronics and LG Electronics to build up their technical experience.
Adding to W-CDMA, the ministry is promoting two other proprietary technologies, "Wi-Bro" and "WIPI."
Wi-Bro is a high-speed wireless Internet technology that uses 2.3GHz band, with an aim to achieve data transmission at 50Mbps (maximum) in 2006. Meanwhile, WIPI is a content platform for mobile phones, just like Java and BREW. Both contain Korean original technologies.
Behind the ministry's development of its proprietary technologies was the current circumstance that patents of core technologies such as 1xEV-DO and satellite DMB are held by overseas companies.
According to the Chosun Ilbo, Korean makers have paid a total of about 2 trillion won to Qualcomm Inc in CDMA mobile phone-related licensing fees over the last five years. As for satellite DMB, Toshiba owns a patent for the core technology. The ministry started to aim at the world's most advanced levels in terms of qualities such as next-generation proprietary technologies.
