Telecom Media & Technology

Tue, 04/29/2008 - 15:46

Spurred on by technological developments, China's telecom industry is moving faster than ever. Dragon Lu, executive vice president of Internet value-added service provider Shenzhou Unicom, recently shared his vision with Interfax on building wireless networks using what he calls 4G technologies, to provide cheap VoIP (Voice over Internet Protocol) services and broadband access, as well as carry various applications including video telephony, mobile TV and location-based services.

Shenzhen. April 28. INTERFAX-CHINA - Shenzhen Shenzhou United Telecommunications Corp.'s (Shenzhou Unicom) executive vice president Dragon Lu, sheds light on the company's ambitious plans to build citywide wireless broadband networks in 25 of China's large and medium-sized cities.

A telecom veteran in his mid-50s, Lu previously led the design of Taipei's citywide wireless broadband network named "WiFly" which was completed in September 2006. Before joining Shenzhou Unicom in March, Lu held c-level positions with various companies, including telecom value-added service provider WorldTel Co. Ltd. and Hong Kong-listed financial service provider Asia TeleMedia.

Ambitious network plan

"Initially we plan to build wireless broadband networks in nine cities, namely Beijing, Shanghai, Shenzhen, Dongguan, Chongqing, Guangzhou, Changsha, Changde and Wuhan. We have a license to provide Internet access services in these cities. We are currently in talks with investors in the remaining [16] cities and will apply for the licenses for those cities later," Lu said.

Shenzhou Unicom began wireless broadband trials in Changde in February, and has a plan to set up wireless broadband coverage in the city's center by October of this year. Lu expects to achieve citywide wireless broadband coverage in Changde in February of next year.

The planned budget for Changde city is RMB 250 million ($35.8 million), which could be subject to change, Lu said. Equipment from Nortel, Motorola and Cisco were used in the trials in Changde.

"Because they are only trials, the manufacturers provide the equipment to us free of charge. We have set up six Wi-Fi 'hot zones' in Changde. The hot zones are basically large Wi-Fi coverage areas consisting of Wi-Fi hotspots connected together. They are located in hospitals and government office areas. In the future, we would like hospitals and schools to build their own Wi-Fi networks, and link with our public Wi-Fi networks in communities and downtown areas."

The company plans to begin wireless broadband network deployment in three additional cities, namely Changsha, Shenzhen and Dongguan, in August this year, Lu said.

"We are already researching the geographical information of these cities. I expect that we will have sizable wireless broadband coverage in these cities, covering the cities' centers, by the middle of next year," he said.

Once Shenzhou Unicom links up wireless broadband networks in Changde and Changsha, two non-neighboring cities in Hunan Province, and proves that the technology works, there should be no problem in building interconnectivity across the country, Lu explained.

Wireless technologies

In terms of equipment, Shenzhou Unicom will be using a combination of Wi-Fi, Wi-Fi Mesh and WiMAX technologies, the latter two of which Lu considers to be 4G technologies.

"The ideal model is to use WiMAX to build the backbone network and integrate it with Wi-Fi cells. WiMAX provides wider coverage than Wi-Fi. However it is not yet a very mature technology. Wi-Fi and WiMAX actually provide much faster data transmission rates than 3G technologies such as WCDMA, CDMA2000 and TD-SCDMA."

The term 4G, an acronym for fourth-generation communications system, is used to describe the next step in wireless communications. There is no formal definition for 4G yet, however 4G is projected to be a fully IP-based integrated system that will be capable of providing between 100 Megabits per second (Mbps) and 1 Gigabits per second (Gbps) speeds both indoors and outdoors.

Technologies considered to be pre-4G include WiMax, WiBro, iBurst, 3GPP Long Term Evolution and 3GPP2 Ultra Mobile Broadband.

Cooperation and permission

Changde's municipal government is not providing any funding for Shenzhou Unicom's network deployment in Changde, but has given a lot of support, Lu said.

One example of this support, Lu said, was the way in which the local urban management authority has provided detailed maps of Changde showing locations of traffic lights, bus stops, buildings and hospitals. These are the locations where Shenzhou Unicom will deploy access points. Shenzhou Unicom will also utilize the government's fiber optic cables.
"Only by working with the government can we connect isolated Wi-Fi hotspots into a large network and make Changde a wireless city."

Cooperation with local government becomes even more crucial when it comes to gaining the permissions necessary for such work. Shenzhou Unicom has a permit from the local radio administration bureau in Changde to use the radio spectrum. The 2.4GHz and the 5.8GHz spectrums are widely used Wi-Fi frequencies and 90 percent of Wi-Fi equipment used by Shenzhen Unicom uses the 2.4GHz frequency, Lu said.

"We do not need a license for building Wi-Fi networks. Only when we publish content using the networks will we need licenses. For example, for the publication of Internet-based cultural content, we need a license from the Ministry of Culture."

Lu said that Shenzhou Unicom has so far secured four types of license for its business operations. One license from the former Ministry of Information Industry allows Shenzhou Unicom to provide Internet access services in nine cities, namely Beijing, Shanghai, Shenzhen, Dongguan, Chongqing, Guangzhou, Changsha, Changde and Wuhan.

"We also have a license that allows us to provide Category 2 telecom value-added services, excluding fixed-line telephone and Internet-based information services, nationwide and a license that allows us to provide Internet-based information services within Guangdong Province." Lu said. With these two licenses, Shenzhou Unicom can provide Internet-based information services across the country while the business remains based in Guangdong, as there is no geographical boundary on the Internet.

"We also have a license from the Ministry of Culture that allows us to provide cultural products, such as gaming and animation, over the Internet," Lu added.

The market's potential and risks

With 163 million broadband users in China at the end of 2007, according to China Internet Network Information Center (CNNIC) statistics, the market is huge and full of potential, Lu said.

Shenzhou Unicom will provide wireless broadband services to both laptop and mobile phone users. The mobile phone platform is unique, as people will be able to use GSM/Wi-Fi dual-mode mobile phones that utilize Wi-Fi connections on a priority basis. Phones will automatically switch to GSM networks when Wi-Fi coverage is not available, Lu said.

"Good wireless broadband applications include video telephony, mobile TV and location-based services. For example, when you drive your car into an area, all the information regarding surrounding shops comes up on your GPS device. We are developing innovative applications like this, because they will be strong revenue drivers," he said.

Basic broadband access will be about one-third of the fixed-line broadband fee currently charged by fixed-line operators and cable network operators. VoIP services will be provided to users free of charge when they call within the Shenzhou Unicom network. Customers will only need to pay for the phone number. When they call to another network, a China Telecom user, for example, they will need to pay the interconnection fee. Users will be able to recharge their accounts through prepaid phone cards.

"Corporate users can use our applications to make calls within their companies free of charge." Lu added.

Industry sources have revealed that Qware Communications, the Wi-Fi service provider in Taipei, is currently incurring losses. With this in mind, Lu believes there are several sources of revenue for the company.

"We will record revenues from broadband access service fees, information services such as stock information, advertising, and especially from proprietary content. We can also expect to gain revenue by providing services to the government. Multimedia, broadband and mobility are the three major features of today's telecom services. We expect that the market will have a high demand for services like video telephony and mobile TV."

Shenzhou Unicom is also developing strategic partnerships. At the end of 2007 they announced a partnership agreement with Baidu.com to develop wireless search, location-based services and e-commerce.

Lu said some of Baidu's current content could be modified and optimized for the new system, and that in the future it is hoped that Shenzhou Unicom's wireless broadband network will be able to support Baidu's richer content for mobile phones, such as videos and other multimedia.