VZCZCXRO5811
RR RUEHCN RUEHGH
DE RUEHBJ #5110/01 2010603
ZNR UUUUU ZZH
R 200603Z JUL 06
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC 2009
RUCPDOC/USDOC WASHDC
INFO RUEHCN/AMCONSUL CHENGDU 6800
RUEHGZ/AMCONSUL GUANGZHOU 1094
RUEHHK/AMCONSUL HONG KONG 7842
RUEHGH/AMCONSUL SHANGHAI 5313
RUEHSH/AMCONSUL SHENYANG 6571
RUEHIN/AIT TAIPEI 5823
RUEATRS/DEPT OF TREASURY WASHDC
RUEHGV/USMISSION GENEVA 1230

UNCLAS SECTION 01 OF 02 BEIJING 015110 
 
SIPDIS 
 
USDOC FOR DAS LEVINE AND 4420/ITA/MAC/CEA/MCQUEEN 
STATE PASS USTR 
USTR FOR STRATFORD/WINTER/MCCARTIN/GRIER 
USTR FOR MCHALE/WINELAND 
TREASURY FOR OFFICE OF INTERNATIONAL INVESTMENT 
TREASURY FOR OASIA/ISA-DOHNER AND KOEPKE 
GENEVA PASS USTR 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ETRD EINV ECPS PGOV ASEC WTRO CH
SUBJECT: 3G: NO LICENCES IN SIGHT BUT PLENTY OF ENTHUSIAM 
 
¶1. (SBU) Summary:  A recent conference in Beijing brought 
together an enthusiastic international group of academics 
and software and hardware vendors who agree that China is 
ready for 3G, although it is still unclear what the "killer 
application" will be.  The key challenge the industry faces 
is uncertainty about when Ministry of Information Industry 
(MII) will issue 3G licenses.  End Summary. 
 
The Conference 
-------------- 
 
¶2. (U) Organized by the Hong Kong based beacon Events Ltd, 
the July 6-7 "3G Mobile China International Summit and 
Exhibition" in Beijing was supported by the Chinese 
Government and included senior officials from MII and the 
Chinese Research Institute of Communication, as well 
Chinese business representatives from China Telecom, 
Unicom, Netcom, Huawei and International companies such as 
Motorola, Nokia, Vodaphone, Qualcomm, Siemens, Alcatel and 
Cisco. In contrast to many other 3G conferences in China, 
this one focused on what 3G had to offer to the consumer 
rather than touting the advantages of the homegrown TD- 
SCDMA standard.  More than 400 registered attendees 
representing a swath of business ventures from 
semiconductor companies to cell phone content providers to 
mobile phone software and hardware producers attended the 
conference.  However, the organizers admitted that this 
year many major sponsors registered extremely late due to 
the uncertainty surrounding 3G licensing. 
 
¶3. (SBU) Nokia's Vice-President for Marketing and Sales of 
Radio Networks Mr. Robin Lindahl stated that his company 
had had 5 years of experience in rolling out 3G around the 
world. In China, Nokia is focusing on the transition from 
2G to 3G.  He underlined the importance of having a strong 
2G network available throughout China to backup any new 3G 
network, and the importance of the smooth transition to and 
evolution of that network. He went on to say that most of 
China's 3G networks will be built on already existing 
topologies and that the market winner will be decided by 
whichever company can launch its 3G networks the quickest. 
Currently, Nokia has 2G/GSM base-stations that can be 
upgraded to 3G by just adding a module. Nokia plans on 
using the W-CDMA standard. 
 
The Killer Application 
---------------------- 
 
¶4. (SBU) The success of any new tech product depends on the 
"Killer Application" that will make that service attractive 
to consumers.  In China's 3G case this is as yet unclear. 
Asked why China even needs 3G while the existing 2G 
networks have yet to be fully deployed, a technical 
consultant with Siemens' 3G division said that for most 
young Chinese the cell phone will be their first and main 
means of accessing the Internet.  He argued that cell 
phones are far cheaper than laptops or even home computers 
and combine a variety of services and applications 
(Internet access, music downloads, picture and video 
taking, personal organizer and gaming) that potentially means a 
whole generation of young people will be using them to 
manage their lives as opposed to PCs.  In order for such 
phones to provide such services, a 3G network and the 
associated increase in bandwidth will be vital.  Charles 
Yu, Vice General Manager of Unicom-Brew,  said that his 
company was betting on music and TV services as the killer 
applications that will make 3G viable in China (Note: Since 
Qualcomm and China Unicom jointly established Unicom-BREW 
Telecommunication Technologies Ltd. in 2003, over 2 million 
users have utilized Qualcomm's BREW platform for a total of 
over 25 million downloads. End Note). 
 
The Challenges 
---------- 
 
 
BEIJING 00015110  002 OF 002 
 
 
¶5. (SBU) The key challenge for the industry remains the 
issuance of 3G licenses.  MII remains vague about the 
timeframe, yet many industry analysts believe that MII will 
only issue licenses when TD-SCDMA is mature enough to 
compete with W-CDMA and CDMA2000.  Xie Feibo, Deputy 
Director General of the MII Bureau of Radio Regulation, 
meanwhile pointed out that radio frequencies for 3G had 
actually been assigned back in 2002 and that an extra 100 
Mhz of frequency had been set aside solely for 3G.  Mr. 
Michael Stork of the German electronics company Rohde & 
Schwarz said that success in testing mobile networks was 
another challenge for new 3G terminals. Today's cell phones 
not only bundle more and more features, products, 
standards, multi-bands and wireless applications, but also 
utilize much more powerful chips than previous models.  Mr. 
Stork said unless companies can provide good customer 
service with well priced phones that are easy to use, 
interest in 3G will wane swiftly. 
 
Comment 
------- 
 
¶6. (SBU) Many of the attendeesat the conferene agree that 
China is ready fr 3G and that the convenience of features 
such TV, video, fast Internet access, and gaming will be 
the killer applications that will spark consumer interest. 
However, as evidenced by the last minute registrations to 
this conference, MII procrastination over licenses has left 
this multi-billion dollar industry in limbo. 
 
 
Randt