Communications

China's 3G license delay is a smoke screen

Last week there was a flurry of stories about China's 3G plans after Jonathan Dharmapalan of Ernest & Young was quoted as saying he expected it to take 12 to 24 months from the start of China's commercial TD-SCDMA trials, i.e. from now, until 3G licenses were issued.  But there was little analysis or comment on what's really happening.

3G licenses are a formality.  They delay the deployment of 3GSM & CDMA 2000 which could otherwise happen rapidly — just plug new cards into existing radios and offer established handsets (already being manufactured, in China, for the world market).

China 3G is happening, without licenses.  China Mobile Group already has deployment-scale TD-SCDMA radio networks on assigned, but not "licensed" frequencies, in eight cities.  The bottleneck is TD-SCDMA handset silicon.  Commercial trials were finally enabled by the recent delivery of an initial batch of 60K handsets.  This also allows China to meet, at least technically, their pledge to have 3G service in time for the Olympics.

Dharmapalan is speculating that it will take 12-18 months of commercial trials to get the bugs out and the system to scale.  That's plausible.  If so, it will be 12-24 months before "licenses" are granted, i.e. before 3GSM and CDMA 2000 deployments are allowed to proceed in parallel with TD-SCDMA.

The problem is China's patent position.  The core patents for 3G and for 4G are already held by the likes of Ericsson, Nokia, and Qualcomm.  TD-SCDMA provided a way for China to obtain patents on a specific 3G implementation and the size of China's market makes that implementation interesting to Ericsson, etc.  Since China missed the boat on core patents for both 3G and 4G, expect TD-SCDMA and it's 4G successor to exist on a parallel path for the next 10-20 years.

The good new is commercial TD-SCDMA deployments have finally started.

I'm most interested in 3G applications.  China has a vibrant market in value-added services for 2G.  As more and better TD-SCDMA handsets get deployed, we should see some really interesting innovation coming out of China — innovation that will be applicable to any 3G technology, anywhere in the world.

Joost entering world's most advanced P2P TV market, i.e. China

Gang Lu reports rather specific rumors that Joost is going to enter the China market on or around the Chinese New Year (Feb 7th) by partnering with the Chinese portal Tom.com.  That's not surprising as Skype partnered with Tom.com when they entered the Chinese market.  What's different is Skype was innovative everywhere in the world. 

Joost will have to play catch up in China, as the Chinese are the world leaders in P2P TV and P2P streaming media.  Well established Chinese firms like PPLive and PPStream pre-date Joost by nearly two years (see my earlier comments).  And today, in China, the P2P market is clogged with many more players like UUSee, Vakaka and Vatata.

Early entrants like PPLive focused on live TV in 4:3 ratio with simple user controls, perhaps for those familiar with TV but not with TIVO, however this is changing rapidly.  What's more, friends report performance has been excellent, even in early 2005.

Joost has not worked so well within China.  From one friend and from Google translations of Chinese reviews, it appears there are many places in China where the bandwidth requirements of Joost cause performance problems, even while PPLive works well.  Presumably this will be cured by local Joost support within China. In other words, I suspect a lack of local peers within China means, for now, too much Joost content must flow over clogged international links.  A local presence should cure that.

Meanwhile, Gang Lu describes a hybrid system (streaming servers and P2P bandwidth sharing) from Vatata which:

"... supports most of the video formats, including Microsoft, Real, Flash, Apple, MPEG1/2/4, OGG/MKV etc and H.264. Vatata system consists of two sub-system: Vata, the back-end streaming platform and Tata the front-end player. Tata is absolutely fascinating. It supports On Screen Display (OSD) and allows plugins, which means you can run multiple modules (e.g. instant-messenger, channel list, etc) on top of the video screen, which just sounds like what Joost does."

So it's clear Joost is moving into a very advanced market.  It will be interesting to see the resulting cross fertilization.

edushi.com – Possibly the best city maps in the world?

After my last post (on sanyamap.com), Tariq Mufti pointed me at an even better source of cities maps, also in China.  It's Edushi.com (roughly E-City in Chinese) and they currently cover 24 cities. The title of this post is copied from Dr Andrew Hudson-Smith who's written up edushi.com in some detail.

Edushi.com is owned by and uses technology developed by Hangzhou Aladdin Information & Technology Company.  Their English language description of the technology includes this:

Aladdin has first put forward the new concept of Internet application: Edushi(or rather, E-City) which is a corresponding result of the local governments’ encouragement of building “digitalized cities”. As a platform for 3-D emulation online-interaction, E-City is based in the WEB GIS and virtual-real technology.

"Digitalized city" integrates E-map, E-yellow page (city telephone directory), E-business, virtual community etc. functions.

"Edushi" allocates various information of the city based on geo information of the real city.

"Edushi" does not only emulate the architectural shape, geological status of the real city, but also vividly reproduce the entire city as well as the social activity and economical activity on Internet.

They also mention support for mobile phones, in-car navigation, a community information platform and a digital TV terminal application.

While I don't read Chinese, if you float your cursor over the list of cities at the top of this page, you can see their URLs in standard ASCII.  Using this approach I was able to go to the city view for Xian and navigate to some tourist sites that I have visited.

All and all, a fascinating combination of 3D maps, virtual reality, directories and current city culture.

China's Internet, at least as interesting as anything in the west

A common misunderstanding in the west suggests Internet entrepreneurs in China just copying whatever works in the west.  I'm sure that's true in some cases, but I've written in the past about peer-to-peer TV where Chinese companies were several years ahead of Joost and others in the west.

Today, I noticed a fascinating post by a blogger operating under the name Sun Bin.  He points to a mapping/ virtual earth website for Sanya, a resort city in Hainan province in southern China.  If you are proficient in Chinese,  try the website yourself.  Otherwise, grok this:

Yes, this is just one city so it's hardly on the scale of Google Earth or Microsoft Virtual Earth, but the user interface looks very interesting as it combines satellite photography, street maps, SimCity graphics and actual photographs of buildings, all in one beautiful graphic.

My point is not that Chinese entrepreneurs are ahead or behind, but that there are more Internet users in China than in the US, and the entrepreneurs that cater to them are smart and are doing interesting things that we seldom hear about in the English language blogsphere.

I follow a few bloggers, like Sun Bin and Gang Lu, who cover China in English (at least part of the time) and I try to maintain contacts with individuals I know in China, but it hardly makes up for not being able to read Chinese.

Ringback Tones Adoption Rates — Culture, Biz Model or Marketing Savvy?

Ringback tone services have been wildly successful in many parts of Asia and they are emerging as a major money maker, not to mention a major music distribution channel, in many other countries, but not in the US or the EU.

Nearly 55% of Korean subscribers have ringback tone service.  China Mobile has close to 50% adoption.  Yet, as of September, adoption rates in most of Europe were below 10% (the UK was at 2%) and US adoption was only 5%.  Since our LiveWire Mobile division provides white label managed ringback tone services and sells ringback tone service platforms, I'm obviously interested in understanding more.  And, with 30+ operators on six continents using LiveWire Mobile platforms or services, I have some access to comparative data.

A late start is only part of the story.  Korea went from 0 to 30% penetration in just nine months (April to December, 2002).  China took a bit longer as the service only became available in stages across China Mobile's 31 separate, relatively autonomous, provincial units.  That roll out took from mid-2003 to early 2004.  But by the end of 2004, China Mobile had 30 million ringback tone subscribers (then 69M by 12/05 and 144M by 8/06).  And yet after ~2 years of service, the US has only 12M subscribers or 5% penetration.

One clear difference in Korea and China, versus the US and EU, is the number of independent marketing organizations directly or indirectly promoting the new service.  I remember visiting Seoul Korea in January 2003 and having a billboard pointed out to me where a Korean rock star was advertising his latest hit and how you could make it your color ring tone. I was told there were more than 20 independent organizations providing content for SKT's Color Ring service at that time.  More significantly, revenue splits were such that these independent organizations found it worth while directly promoting their content to mobile subscribers.  That means there were 20+ marketing teams with independent activities that all served to increase subscriber awareness.

Compare this with the typical operator in the US or EU where the only source of information or content is the operator's portal and the only service promotion activities are those of the operator.  That means there is one product manager focused on ringback tones, they have a limited budget and they must compete with their associates for position on the operator's WAP deck.  Is it any wonder awareness is low?

Of course other factors also contribute to service success.  Our LiveWire Mobile team has accumulated a set of best practices based on discussions and consulting work with operators around the world.  They have a formal service offer of course, but I'll endeavor to summarize some of their learning in a future blog post.

China broadband access is great, 98% packet loss on international links really stinks

Last week I was in Guilin China for Connect 2007.  Chinese friends called Guilin the most beautiful place in China, so I decided to stay over the weekend to see the sights (unedited conference and sightseeing photos here).  Between blogging the Connect conference and being there for three additional days, I ended up using the Internet more than I have on my last three trips to China combined.  Wow, what a pain.  I mentioned my set up and some of my problems in this earlier post.

Connectivity to sites within China is was just fine.  For example, here are results between Guilin and Shenzhen at different times of the day over several days:

 

 

The problem arises the moment you want to access sites outside of China.  Suddenly bandwidth drops and packet loss soars.  Here are tests to Japan and the Philippines, but the story is similar to Europe and the US.

 

 

These measurements were all with one ISP in one city but when I mentioned my problem to Chinese friends who routinely travel within China on business, they're response was "Oh yes, bandwidth to the outside is always a problem.  It's probably government policy to keep it that way."

I can't tell if the bottleneck is in the physical links or in the speed of the equipment that implements the Great China Firewall, but somewhere there's a capacity problem that's causing queued packets to be dropped.

 

An update on TD-SCDMA, China's 3G technology

I have some knowledge of 3G activities in China through NMS’s involvement with mobile video projects for various operators and equipment providers in China.  But, as I’m never sure exactly what’s subject to non-disclosure agreements, I’ve remained mum.  However yesterday, John Sun of Datang Mobile Communications Equipment gave a presentation at Connect 2007 in Guilin in which he talked publicly about the current “large scale” application trials, so there are some things I can discuss.

If you haven’t been following 3G in detail, there are three major standards.  They're all based on code division multiple access (CDMA) modulation, but they are otherwise incompatible.  Their common names are:

• CDMA 2000 in various forms:  1xRTT, EV-DO, Rev A, Rev B, …
• 3GSM a.k.a. UMTS in various forms:  W-CDMA, HSDPA, HSUPA, HSPA+,  …
• TD-SCDMA, for now, is a China-only development

CDMA 2000 has been the leader in available bandwidth, at least until recently, and 3GSM is the clear market share leader.  Meanwhile, TD-SCDMA remains in trial.  In fact, outside of China, TD-SCDMA is generally dismissed as a negotiating ploy by China to obtain acceptable patent cross licensing agreements with Qualcomm, Ericsson and the like.

But I haven't seen any discussion in English of the extent to which TD-SCDMA is already being deployed in China.  True, China has not assigned any 3G licenses, but under the name “application trials,” experimental TD-SCDMA networks began running in four cities in 2005.  It took longer than expected to get the system running, however, since April 2007, these “trials” have been extended to ten cities and have been substantially enlarged to what I might call “deployment scale.”  Here are the cities:

China Mobile has TD-SCDMA networks in eight cities (in red on the map).  China Netcom has a single TD-SCDMA network in Qingdao and China Telecom has a TD-SCDMA network in Baoding.  Interestingly enough, SKT is apparently running a trial in Korea.  I hadn't heard of that trial prior to John Sun's presentation and I don't t have further details on what's going on with TD-SCDMA in Korea.

Handsets support TD-SCDMA/ GSM/ GPRS so their are no gaps in voice coverage.  They also support 3G video telephony (3G-324M).  Frequency bands are 1880–1920 MHz and 2010–2025 MHz and all spectrum is available for either direction as TD-SCDMA uses TDD (which alternately transmits & receives on the same frequency).

China has committed to offering 3G mobile telephony in the 2008 Olympic cities.  I assume that will be W-CDMA if it's to be of any use to foreign visitors, however, it's also clear that TD-SCDMA service will be available in the Olympic cities.  Everyone wonders when 3G licenses will finally be awarded, but licenses are just a political act.  Construction of 3G networks is the time consuming part and that is clearly underway.

Internet Connectivity in Guilin, China — Great China Firewall, plus engineering & capacity issues

I'm in Guilin China for the Connect 2007 Asia conference.  I've got the Tor bundle (Tor & Privoxy & Vidalia) installed on my laptop so I can get around the Great China Firewall (GCF) and that works well.  Tor starts up automatically when my PC starts, but I only use it for browsing (by clicking the Tor button for Firefox) if I can't reach a site directly.  Yes, it's noticeably slower going through Tor, but it always works.  For example, just now, seeking the URLs to paste in about the GCF, I could get Rebecca MacKinnon's post directly, but timed out on this from Gigaom.  I clicked the Tor button, hit retry and the Gigaom post loaded.  So, the Tor bundle is a good setup which I highly recommend if you are traveling to China.

The bigger problem for me at the moment is basic throughput.  The Sheraton Hotel Guilin (where the conference is being held) has wired Internet connectivity in the rooms for 50 Yuan ($6.65) per day and free WiFi in the lobby, but only WiFi from China Mobile (CMCC) in the conference area (100 Yuan per day through the hotel business center for those of us without a China Mobile phone number).

Performance is roughly equivalent for all three connections.  Early in the morning or late at night (perhaps during the night, but I do have to sleep sometime), everything works well.  It's not the blazing speed I sometimes see in Beijing, but it works. Here are the results in my room at 7:37am against a server in Shenzhen (300 miles away):

and here's a test against a server in Los Angeles:

Unfortunately, by 10am things begin to slow down and by noon yesterday, I was seeing greater than 50% packet loss and it became impossible to blog the conference live.  I was using the China Mobile WiFi but going up to my room didn't help.

My guess:  There's a significant capacity problem between Guilin and the rest of China.  Not surprising I suppose, considering Guilin is a tourist city, not a business city.

Application Innovation in Asia - Connect 2007 Guilin

The second session at Connect 2007 Asia is entitled "Application Innovation" with George Cheng of NMS Asia moderating.  The panelists are:

• Ricky Chan, Vice President, Sales and Business Development, APAC, Vidiator
• Joseph Lai, Director, Business Development, EMMA
• Ben Chiu, Executive Vice President & Co-Founder, NaturalTel
• John Sun, Senior Marketing Manager, Datang Mobile Communications Equipment

Ricky Chan is first.  Vidiator is a US company, but has substantial deployments in Japan, Korea and Hong Kong.  Their focus is video content streamed over IP to the widest possible variety of handsets.  The talk is interesting, but they are the Asian outpost of a US company that I was already somewhat familiar with.  As far as I can tell, they only deploy on 3G networks as that's the only way video over IP is at all responsive.

Ben Chiu is co-founder of NaturalTel in Taiwan.  Again the focus is video, but here it's user-to-user video, i.e. video blogging, live video chat (with availability, a.k.a. presence), video message box and video call screening.  This is video-centric social networking and, in typical Asian fashion, it works on both the PC-based Internet and on mobile phones.  Mobile access is the most common approach.  Ben has plenty of screen shots, many of attractive Taiwanese girls, but all the text is in Kanji so I'd have a hard time participating.

Their mobile service leverages 3G circuit-switched video.  Ben claims they are generating $20 per month of extra ARPU from those who've adopted this service.  That sounds very steep for Taiwan where average voice ARPU is on the order of $23-$25.  I'll try and get clarification from Ben directly at the end.

Ben is followed by Joseph Lia from Emma Group in Hong Kong. Their focus is mobile gaming.  Joseph leads off by quoting Jupiter Research as estimating "that nearly one-third of worldwide mobile entertainment revenues generated in 2009, will represent mobile gambling revenues."  Emma Group is another company that's built a service on 3G video telephony.  Here's a diagram of their platform:

and here are some of their mobile games.  First the slots:

then

All in all, very interesting!  None of these are open Internet applications and the last two are not even IP, instead using video over circuit-switched data, i.e. 3G video telephony, but they are small companies whose applications are being deployed by operators.  That's very different from the US where it takes months or years to cut a deal with an operator and only the well heeled need apply.

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Note: John Sun's presentation was also very interesting, but focused on TD-SCDMA infrastructure, so I'll treat it in a separate post.

Connect 2007 Asia group photo

I hope to have a better print in due course.  When I do, that will show up in my Flickr account.  Meanwhile,