article reprint — TELLABS INSPIRE june 2008
A Gold Medal in Telecom
In the Olympic spotlight, China upgrades its telecom infrastructure.
By Robert Clark
For China, the upcoming 2008 Summer Olympics in Beijing is more
than a sporting event. It’s a coming-out party of sorts for the entire
nation, an announcement that this country of 1.3 billion people is
ready to take its place as a major power on the world stage.
In anticipation of intense international scrutiny, the preparations have
been exhaustive. Factories have been re-located to improve the air
quality for athletes in Beijing, cab drivers have been issued a 300-
plus page handbook full of English phrases and cultural do’s and
don’t’s (sample: Frenchmen like their handshakes brief and light).
The government has poured some $40 billion into new stadiums,
beautification projects and infrastructure upgrades, including a new
airport terminal. Also receiving an overhaul: China’s telecom network.
Olympics are, by their nature, heavily reliant on communications
facilities and technologies. Events are broadcast to hundreds of
countries around the globe via television and the Internet; nearly
25,000 members of the international media are expected to
descend on Beijing to cover the Games for audiences back home.
To meet this challenge, China Netcom assembled a 2,000-person
team solely dedicated to Olympics projects, which included the
installation of nearly 200 km of fiber optic cable in Olympics venues
in Beijing, as well as nearly 20,000 voice lines.
According to Yu Xijian, China Netcom’s network division chief, the
carrier made massive increases to its submarine cable capacity in
order to carry broadcast signals to the United States and Europe.
It also deployed an IPv6-based next-gen network pilot around the
Olympic cities to provide real-time video surveillance.
In addition to the network enhancements, new communications
facilities include a command-and-control center, a 2,000-seat call
center to handle calls into the Beijing Organizing Committee and a
smartcard-based authentication system for broadband access.
Beyond Beijing
The seaside city of Qingdao, located 690 km southeast of Beijing, will
host the Games’ sailing competitions. A wireless network known as
McWiLL has been installed to support video coverage of these events.
McWiLL is based on SCDMA technology, a wireless standard related
to TD-SCDMA and manufactured by Beijing Xinwei, a member of the
Datang Telecom Group.
China Mobile will also operate a public Wi-Fi network in Qingdao
that boasts coverage in every corner of the city. The carrier has
been aggressively deploying Wi-Fi networks throughout China’s
Olympic cities in anticipation of huge demand from media and
visitors, according to Ma Benteng from China Mobile’s Office of
Olympic Affairs. He declined to provide details of the Wi-Fi rollout
but says the competition with China Netcom to deploy Olympic
Wi-Fi “was intense.”
2 article reprint — a gold medal in telecom
221 Million Served…and Growing
The Internet in China is huge. Not just
numerically — although its Internet popula-
tion is now the world’s largest — but also
in terms of the powerful role it plays in daily
and social life.
“It’s the first real public sphere in China’s
history,” said Kaiser Kuo, group director of
digital strategy for Ogilvy China.
That’s because unlike the country’s free-
wheeling economy, China’s mass media
is still tightly controlled by the Communist
Party. Citizens turn to the online world to
play and exchange information. Surveys
show that since 2006, the Chinese have
spent more time online than watching
programming on state-run TV: an
average of 16.2 hours a week.
“Traditional media just can’t hold a candle
to the Internet,” Kuo said. “It’s a place
where individuals can express themselves
— within certain limits.”
“Crucible of Contemporary Culture”
According to the China Internet Information
Center (CNNIC), China now boasts 221
million Internet users, which places the
country in a tie with the United States for
the largest online population. (In a report
due later this summer, China is likely to
overtake the U.S.) The boom shows no
signs of slowing anytime soon. China’s
Internet penetration stands at a mere 16
percent, compared with 75 percent for
U.S. adults and an even higher rate for
teens.
China’s Web surfers tend to be young:
Half are under 25, says a March CNNIC
survey, while the average age of a reg-
istered broadband subscriber (the head
of the household) is 32, a full 10 years
younger than in the U.S.
Is TD-SCDMA ready for its close-up?
The Olympics comes at a particularly critical period for China’s
domestic telecom industry. The carrier market is unbalanced and
overdue for reform. More than three-quarters of the profit and
growth goes to China Mobile, while the fixed-line operators are
bleeding customers. China Netcom, the host fixed-line telco for
the Olympics, last year lost nearly three percent of its voice lines,
thanks to aggressive mobile price-cutting.
In the midst of this environment, China has struggled to launch
3G high-speed mobile services, the marquee telecom project for
the 2008 Olympics — and the biggest question mark. Part of the
Growth in usage, as well as broadband Sounding Off Online
adoption, has been spurred in part by The Chinese are among the world’s most
the country’s major telcos. Barred from active bloggers: Forty-eight percent of
offering mobile services, the fixed-line pro- Internet users have blogged, compared
viders have turned to broadband Internet with 15 percent in Australia, 18 percent
access as a means of growing revenues in Singapore and 38 percent in Korea.
and their customer base. Statistics
Bulletin boards are tremendously popular.
indicate their efforts have met with great
Eighty percent of Web sites offer them,
success: Usage grew 53 percent last year,
and some 10 million posts are made
and 78 percent of all users access the
daily. Used by 35.5 percent of China’s
Web via broadband.
online community, BBSs offer the chance
But Chinese patterns of usage differ to sound off — anonymously — on the
sharply from those of Western consumers. issues of the day.
For example, instant messaging trumps
One recent example: As the Olympic torch
e-mail: Just 56.5 percent of China’s online
relay met with protests around the world,
community uses e-mail. The most popular
the Chinese responded with demonstra-
online activities include listening to and
tions against foreign media bias. Sina.com,
downloading music (86.6 percent), IM (81
China’s biggest Internet portal, set up a
percent), video (76.7 percent) and news
Web page dedicated to the campaign,
(76.9 percent). Some video sites draw
featuring a graphic of the CNN logo
as many as 100 million visitors per day.
punctured by bullet holes and the
Despite the predominance of the young, slogan “Chinese netizens open fire
the Internet is also popular with older against CNN and other Western media.”
Chinese. Some 40 percent of people over
Charles Frith, a Beijing-based media buyer
50 use IM, and 32 percent regularly play
and blogger, says the online discussion
online games.
takes place in a completely different
The online game culture is deeply context and style from Europe and
entrenched, thanks to the spread of North America.
broadband and in particular the proliferation
“It’s much more topic-driven, whereas
of Internet cafés. A typical café has 100
in the West it is profile-driven,” he said.
or more state-of-the-art PCs, mostly used
“In the West, we express our characters
for gaming and watching video.
through our profiles. No one would think
The Internet has also become a “crucible of exposing their true identity online in
of contemporary culture,” Kuo believes. China.” —Robert Clark
It’s a major new source of words and
phrases, such as PK, short for “player kill,”
a term from the gaming world that’s now
employed in daily speech. The Internet novel
has become a genre of its own, with many
of today’s popular novels published online
before hitting bookstores.
challenge has been the
choice of technology, China Mobile
with China pursuing launched the first
its own TD-SCDMA
standard as opposed “pre-commercial”
to the more dominant TD-SCDMA service
CDMA2000 and UMTS. in eight cities on
April 1
Although these rival stan-
dards have gained favor
in progressive deployments over the past five years, the Ministry of
Information Industry has delayed the issue of China’s 3G licenses
while the TD technology remains under development.
3 article reprint — a gold medal in telecom

Initial results have not been encouraging. China Mobile launched
the first “pre-commercial” TD-SCDMA service in eight cities on
April 1, ordering just 60,000 TD-SCDMA handsets for the initial
phase of the deployment. For the operator, which adds 3 million
customers a month to its GSM networks, such a small order sent a
message indicating lack of confidence in the network’s commercial
readiness.
These doubts were borne out: In the first 10 days, China Mobile
signed up just 2,000 subscribers and sold roughly the same num-
ber of handsets. Some customers complained about the patchy
coverage, limited handset choice and short battery life. These are
issues that challenge all new mobile networks, but they suggest that
a quality 3G experience will be beyond the reach of spectators at
the August games.
“There is no concrete [forecast] as to how many subscribers these
networks will take up by the time of the Olympics, and there is also
no timetable for a formal commercial launch,” said Allan Ng, an
analyst at BOCI Research. “I’m not sure the games are regarded as
a crucial test for the TD technology. After all, adopting TD is a politi-
cal decision that the Chinese government has made, and it will not
change its mind until the market has made a clear choice.”
Foreign guests, who are unlikely to hand over 3600 Yuan
(US$516) for a TD-SCDMA phone, will have to bring their EDGE or
CDMA2000 1X handsets. At this stage, China Mobile has no plans
to lease TD phones to visitors, although it has promised to supply
15,000 handsets to Olympics organizers.
But they may be reluctant to use them. TD-SDCMA deployment in
Beijing has been extremely slow due to difficulties in site acquisi-
tion, which has resulted in coverage gaps. Li Jinliang, a Chinese
mobile consultant, said that China Mobile will need to install another
1,000 base stations in the run-up to the Olympics to provide full
coverage. That’s 50 percent more than the operator commissioned
in the past year.
Yet all is not lost. “I think the fixed-line broadband network and the
second-generation [GSM and CDMA] networks can cope with the
Olympics demand,” said Ng.
Which means that despite its best Olympian efforts, when it comes
to mobile communications, China may find itself relying on some-
thing old, rather than something new.

Acronym GSM Global System for Mobile Communications

CDMA Code Division Multiple Access TD-SCDMA Time Division-Synchronous Code Division Multiple Access
EDGE Enhanced Data Rates for GSM Evolution UMTS Universal Mobile Telecommunications System

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