Wireless Telecomms in China & Korea Industry Overviews Walter Tuttlebee Mobile VCE

1. Wireless Telecomms in China & Korea Industry Overviews Walter Tuttlebee Mobile VCE

2. Brief Industry Overviews • Topics • National Priorities • Government Players & Research Bodies • Telecom Operators & Manufacturers • Academia • Interactions – the national ecosystem Firstly China, then Korea

3. China Industry Overview Changing Priorities - From Little Red Book to Little Red Phone… (Sculpture in the team’s Hong Kong hotel)

4. Industry Overview - China • Perspective… • “In October 1983 … a conference of policy leaders in Beijing … called on China to study the concept of ‘The Third Wave’, as introduced in our book by that name” • “Since then top Chinese leaders … have strongly supported the idea that … China should simultaneously (ie alongside classic industrialisation), and as rapidly as possible, try to build a knowledge intensive economy” • Extracts from Revolutionary Wealth, Alvin & Heidi Toffler • ‘The Third Wave’ was published in 1980 and was a highly prescient forecast of the digital economy we are still only just entering 1st wave – Agricultural, 2nd wave – Industrial, 3rd wave – Information revolution

5. Industry Overview - China • National Priorities in Telecom • Teledensity growth - from 1% (1990) to 63% (2006) • 2002: The largest single geographic telecoms market • Key Imperative: Economic and Technical Independence • National Priorities: (as described by MII in 2004) • 1st Provision of communications services - to facilitate economic and social growth • 2nd Growth of indigenous industry - to reduce reliance on imports • 3rd Development of own technology - to reduce IPR costs and to create export opportunities

6. Industry Overview - China • Relevant Government Agencies • Ministry of Information Industries – MII • Provides strategic direction to industry, with responsibility for industry policy, regulation & spectrum management • Ministry of Science & Technology – MOST • Responsible for development of China’s science & technology base, overseeing the 863 programme, including FuTURE • State Administration of Radio, Film & Television – SARFT • Regulates and controls broadcasting and content provision • National Development & Reform Commission – NDRC • Higher level than the ministries, the NDRC develops national economic and social strategies - such as the 5 year plans – which determine the framework within which MII, MOST & SARFT must operate

7. Industry Overview - China • Research Bodies • CATT– Chinese Academy of Telecoms Technology • ‘Hard’ – product related – research • Eg parent of DaTang Telecom, pioneer of TD-SCDMA • CATR – Chinese Academy of Telecoms Research • ‘Soft’ research – analysis & advice • Eg responsible for the 3G trials in recent years • ‘Independent’ Research Bodies • Eg SHWCRC – Shanghai Wireless Comms Research Centre, independently operated, but with well-coordinated backing and support from the state, the local Government, ministries, universities, etc,

8. Industry Overview - China • Telecom Operators • China Mobile • China Unicom • China Telecom • China Netcom • China Satcom (smaller player) • China TieTong (smaller player) (previously China Railcom) • The State has control and majority ownership of all the companies • The companies are also financed through the Hong Kong stock market – eg Vodafone owns a few % of CMCC • A “reshuffle” has been widely expected now for ~3 years

9. Industry Overview - China • Infrastructure Manufacturers • Huawei, ZTE, Datang have emerged as the major players • Integrated – providers of infrastructure & handsets, often using predominantly their own in-house designed chipsets • Huawei • Employee ownership – unusual • Export focus on the West • Rapid recent growth in export sales $8bn in 2005 • ZTE • Export focus on developing nations • DaTang • Pioneer of TD-SCDMA, poised for payback & growth

10. Industry Overview - China • Handset Manufacturers • Global Handset Market Size in 2006 ~ 1bn units • of which 450m were made in China • A Changing Scene • 2004 – proliferation of local handset manufacturers • Reflecting restricted access to local sales channels, especially in the Mid and West of China • Recently, the international majors have increased local production, aggressive brand promotion & improved distribution • China Handset Market Size in 2006 ~120m, of which • Major international brands ~70% • Local brands ~30% - no company >5% - many companies 1-3% • Partnershipseg TCL-Alcatel, Bird-Sagem • …and 30m (?) ‘copy’ phones !

11. Industry Overview - China • Universities • A few very strong Universities in telecoms • Funded by MOST through the FuTURE programme:Future Technology for Universal Radio Environment • Fed into the 3G TD-SCDMA • Feeding into the ITU 4G standardisation process • Coordinated collaborative and competitive programme • Long Term 10 year sustained funding • Universities work with industry • Supplying technology (esp to Chinese companies) • Learning (eg from foreign companies)

12. Industry Overview - China • Interactions – An Effective Ecosystem A 2004 Perspective

13. Korea Industry Overview A view of Seoul from the surrounding mountains

14. Industry Overview - Korea • National Priorities in Telecom • Key Imperative: Exports • ICT is 45% of Korea’s Export Income • ICT, esp. telecoms, has driven Korea’s rapid economic growth • A Coordinated National Strategy – IT 8-3-9 • 8 new services • 3 new infrastructures • 9 economic growth engines (technologies) • A 5 year plan 2002-2007 • Close industry-government collaboration to define & deliver • Specific itemised public-private funding commitments, broken down by technology, by year, etc • With specific result targets – eg ICT export goal for 2007 etc

15. Industry Overview - Korea • Relevant Government Agencies • Ministry for Information & Communications – MIC • Works closely with industry (and ETRI), with responsibility for industry policy, regulation & spectrum management & future evolution • Experienced, technology-literate, leadership • Very active export promotion – Korea as a global testbed

16. Industry Overview - Korea • Research Bodies • ETRI – Electronics & Telecommunications Research Institute • Founded in 1976 • 2,300 staff • Wireless communications a core focus • Claims to have spun out over 200 companies • Close links with Government (MIC) • Close links with industry – technology transfer (eg WiBro)

17. Industry Overview - Korea • Telecom Operators • Wireline – KT (93%), Hanaro • Wireless – SKT (51%), KTF (32%), LGT (17%) • Mature, technologically advanced & saturated market

18. Industry Overview - Korea • Infrastructure Manufacturers • Samsung, LG • Integrated – providers of infrastructure & handsets, often using predominantly their own in-house designed chipsets • Built their business on CDMA • Diversifying effectively into 3G • Strong R&D (esp Samsung)

19. Industry Overview - Korea • Handset Manufacturers • Serious global players, competing highly effectively • Built the business on CDMA in the 1990s • Diversified effectively into GSM • High-end phones – fashion leaders, technology leaders • World leaders now in 3G, HSDPA, Mobile TV handsets • Samsung – world #3 (4Q 2006) • LG – world #5 • Pantech Curitel – world #7 • Supplier to Verizon, Disney Mobile • Recent expansion has caused cashflow problems

20. Industry Overview - Korea • Universities • A number of strong Universities in telecoms • Well linked into the global academic network • Well connected with ETRI & Korean Industry • Undertakes funded research for both

21. Industry Overview - Korea • Interactions – An Effective Ecosystem A 2004 Perspective

22. Industry Overview – Common Features • Despite major differences between them… • Both countries have clearly articulated national priorities, reflected in strong industry ecosystems • Both countries make effective use of University research, pulling it through to trials and commercialisation • Research Institutes also play an important role …now let’s look in more detail ➱