ctia wireless march 22 – 24, 2004 atlanta, ga 1 aug 1 - rev 061 understanding the chinese wireless...

Aug 1 - Rev 06 1

CTIA Wireless March 22 – 24, 2004

Atlanta, GA

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Understanding the Chinese Wireless Market and Capturing Growth

Opportunities

Jing Wang

Senior Vice President Senior Vice President Chairman QUALCOMM ChinaChairman QUALCOMM China

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Atlanta, GA

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Telecommunications Industry in China Today

Wireless Market Environment

Market Opportunities with CDMA

Challenges

Conclusion

Presentation Topics

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China OverviewPopulation:1.3 Billion

GDP: $1.4 Trillion (2003),

the sixth largest economy in the world (excluding Hong Kong, Taiwan and Macao)

Telecommunicationsmanufacturing, sales and services in China are more than one third of national GDP (Gross Domestic Product)

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-50.0%

0.0%

50.0%

National GDP Increase Telecom Investment Increase

Telecom Revenue Increase Telecom/GDP

National GDPIncrease

7.1% 7.5% 7.5% 8.0% 9.10%

TelecomInvestmentIncrease

7.0% 38.5% 25.0% -26.8% 8.60%

1999 2000 2001 2002 2003

Telecom Industry Statistics - As of Dec. 2003Fixed Line Users 263.3 Million Penetration Rate 20.4 %

*Mobile Users 268.7 Million Penetration Rate 20.8 % Internet Users 79.5 Million

*China has the largest number of mobile users in the world.

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Domestic telecommunications industry continues to evolve:

1. Data services are accelerating due to increased internet usage and new digital networks.

2. Paging business continues to decline due to competition from other wireless services (mobile).

3. Land line services remain strong as PHS (“Little Smart”) expands rapidly.

4. Mobile business is the growth engine of the telecomm industry.

5. New services (location based services, e-mail, etc.) are growing fast, but are still insignificant overall.

1%

46%

34%

4%

3%12%

0%

Paging Mobile Land Line

Data Communication International Long Distance Domestic Long Distance

Other Services

2003 China Telecom Industry Revenues

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Major Players in China Telecom Industry

Revenue: $ 17.56 B Capex: $ 7.37 B (EST)

Subscribers: 160 M (Fixed Line)

Broadband Subs: 7.35 M

Revenue: $ 8.1 B Capex: $ 4.83 B (EST)

Subscribers: 92.0 M (CDMA & GSM)

CDMA Subs.: 19.1 M

2003 Revenue: $ 19.2 B (CMHK) 2003 Capex: $ 7.9 B (EST)

2003 Subscribers: 173 M (GSM )

Revenue: $ 8.81 B (EST)Subscribers: 88.45 M (Fixed Line)

Broadband Subs.: 10 M

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Since 2000, China Mobile (CMCC) has focused on deploying GPRS, which turned out to be unsuccessful. CMCC slowed its deployment in 2003. Many expect it to migrate to WCDMA next year

China Unicom (CU) continues to expand its CDMA network. In 2002, the network was upgraded to 1X. Now CU is about to finish its Phase III expansion with a total network capacity of appr. 55 M subscribers. CU also plans to launch dualmode service in July 2004.

In 2001, former China Telecom (CT) split into China Telecom for Southern China and China Netcom (CNC) for Northern China (with former CNC and Jitong). CT is very anxious to obtain a mobile license. CT has actively deployed CDMA-based WLL systems at 450 MHz and 1900 MHz, and PAS, with approximately 30 M users. CT has not decided its choice of 3G standard.

CNC is very interested in mobile business. It has been deploying WLL (or limited mobility-based) CDMA 450, and PAS systems. CNC is currently investigating its 3G strategy.

Major Players’ Roadmap for Wireless

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Challenges

Conclusion

Presentation Topics

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Major Government Agencies Shaping

China’s 3G Outlook

Selection of 3G Standards / Issuance of New Mobile Licenses

Decision Makers: - State Council

- SDRC (State Development and Reform Commission)

- MII (Ministry of Information Industry)

- MOST (Ministry of Science & Technology)

Key Influential Groups: - State Council Information Industry Leading Group

- State Council Development Research Center

- MII 3G Expert Group

- Operators and Vendors

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In Million Subscribers

Total number of mobile subscribers: 268.7 Million

China Mobile: approx.173 Million (Market Share: 65%)

China Unicom: approx. 92 Million, including 19.1 Million CDMA subscribers and 72.9 Million GSM subscribers (Market Share: 35%)

Wireless penetration rate: 20.8%

China Wireless Market – As of Dec. 2003

73 78 87 89 91 928480.5

7169.866.1 68 75.5

0

50

100

150

200

250

300

ChinaMobileChinaUnicomTotal

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Mobile Data Market Analysis<December ‘04>

In-depth market survey has been conducted

among current mobile phone users across

12 major cities

(CBD area) in China.

1. Beijing

2. Shanghai

3. Guangzhou

4. Shenzhen

5. Nanjing

6. Qingdao

7. Shen’yang

8. Fuzhou

9. Hangzhou

10. Jinan

11. Dalian

12. Chengdu

Mobile Subscriber Preferences

• Short/Long Text Messages

• Ring Tones/Music Download

• Daily Info. (news, weather, transportation, etc.)

• On line /Download Games

• Greetings Postcard/Image/Pictures

• Email (Send/Receive/Notification)

• Business Info. (corporate, product, service, etc.)

• Taking photo and send photo via camera phone

• Location Services (map, etc.)

• View Live Programs (sports, major news, etc.)

New Services are Growing

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Challenges

Conclusion

Presentation Topics

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China Unicom CDMA Subscriber Growth

Growth of CDMA industry creates new opportunities for industry players especially in the data services sector

China Unicom CDMA Subscriber GrowthChina Unicom CDMA Subscriber GrowthCDMA Subs. (M) Dec. 03Dec. 0319.1 million19.1 million

2003

11

12

1311.6511.65Jun.30Jun.30

July

14

15

16

17

12.7512.75Jul.27thJul.27th

Aug.

13.713.7Aug.15thAug.15th

Sept.

14.5514.55Sept.5thSept.5th

Oct.

15.8215.82Sept.18thSept.18th

Nov.

16.9716.97Oct. 30Oct. 30

18

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China’s 3G Prospects -All CDMA Technologies are Under Consideration

? ?

• China Telecom and China Netcom do not have mobile licenses yet.

• Datang, a Chinese telecom vendor and Siemens co-developed TD-SCDMA which is considered a “home-grown” technology in China. The government strongly supports TD-SCDMA, allocating 155 MHz in 3G spectrum for TDD (TD-SCDMA) as an incentive.

• Government might push for WCDMA and TD-SCDMA combination.

• Current market is favorable to CDMA 2000.

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• MII 2.1G CDMA2000 MTnet & Field Trial• CDMA2000 1x lab testing finished last year

• CDMA2000 1xEV-DO lab testing is in progress since Feb. 2004

• Field testing will commence after the completion of lab testing, approximately end of March

• 1x/1xEV-DO field trial will be conducted through Sept. 2004

• MII 3G Standard Evaluation• MII is evaluating the 3G standards based on technical, economic and political

considerations; report will be submitted to State Council by the end of 2004

• Led by SDRC, MII and MST will jointly study and formulate China’s 3G development plan

• MII 2.1G WCDMA MTnet & Field Trial• Phase 1 lab testing concluded last year

• Phase 2 field testing is in progress since the beginning of 2004

• Field trial is expected to be completed by Sept. 2004

China 3G Development

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China CDMA Industrial Value Chain

TechnologyPlatformVendors

Infrastructure& Equipment

Vendors

ApplicationPlatformVendors

ApplicationDevelopers

ContentProviders

ContentAggregators

MobilePortal

Providers

MobileNetwork

Operators

HandsetVendors

New M-Data Business Value Chain

MotorolaLucentNortel

EricssonSamsung

ZTE

SamsungLGZTE

MotorolaToshibaSanyo

KyoceraSoutecHiSenseCapitelHaierBird

KonkaTCL

EastcomXoceco

MobileMobileOperatorOperator

““M-PORTAL”M-PORTAL”

ISPISP

ICPICP

ASPASP

QUALCOMM Participates In and Enables Every Link of the Chain

Operator Takes Leadership

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• Unicom – BREW Telecommunications Technologies Ltd. was formally established in China on March 18, 2003

• Through this joint venture, China Unicom and QUALCOMM agree to cooperate in the following areas:

China Unicom & QUALCOMM BREW Joint Venture

• BREW Software Licensing

• Application Testing

• Development of Applications

• Technical Support

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Cell/Cell Sector ≈ 500m-≥5km“What town?”

EOTD/OTDOA ≈ 100m-500m“What part of town?”

gpsOne ≈ 5-50m“What street corner?”

Better accuracy =

more services & value

Accuracy Influences Location-Based Services• China Mobile & China Unicom will compete fiercely

on High Precision LBS in 2004 and beyond

• China Unicom has deployed Assisted GPS (AGPS) LBS in all major cities.

• China Mobile has launched Cell-ID based LBS (low precision), may consider adopting AGPS

• China Unicom and QUALCOMM jointly launched “Three Cities” Marketing Campaign around Valentine’s 2004

• Build market awareness through local promotional events

• Market launch in Beijing, Shanghai, and Guangzhou

• Position China Unicom as the leader in offering fun, innovative, life-enhancing products

• Events include “Treasure Hunt” for men and women using AGPS

gpsOne in China

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• Unicom will launch C&G July 19, 2004 using multimode multiband CDMA/GSM handsets branded as “World Wind.” Unicom intends to achieve three main objectives with C&G:

• Give its GSM users access to CDMA data

• Support international roaming

• Attract high-end GSM users

• 1xEV-DO will further strengthen Unicom’s position in providing value-added services

• Unicom completed technology trial with 6 infrastructure vendors in 2003

• Unicom plans to conduct pre-commercial trial to evaluate applications and services in 2004

1xEV-DO and GSM1x

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Challenges

Conclusion

Presentation Topics

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• Uncertainties surrounding the issuance of 3G licenses

• Government’s involvement in 3G technology selection

• Lack of IPR licensing agreement for WCDMA and TD-SCDMA

• Government’s pursuit of “home grown” technologies at the expense of market interest

• Uncertainties in market demand for high speed wireless data

Market Challenges

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Unique Wireless Market: Political, Legal and Technical Environments

History of CDMA in China

QUALCOMM’s China Operations Today

Conclusion

Presentation Topics

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Conclusion

• China market continues to provide high growth opportunities

• Rapid growth of CDMA introduces new compelling data services and opens up new supporting industries

• Chinese manufacturers start exporting CDMA products

• Issuance of 3G license will lead to further market development

ctia wireless march 22 – 24, 2004 atlanta, ga 1 aug 1 - rev 061 understanding the chinese wireless...

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