1. 1 Broadband Wireless Access and the Telecom Industry Mr. Hubert Chan Chairman & CEO HKC International Holdings Ltd April 2005

2. 2 Agenda Technology & Interoperability issues Hong Kong Telecom development User’s wish list Equipment Manufacturer’s perspective Manufacturer’s wish list

3. 3 BWA Broadband Wireless Access (BWA) provides high throughput to users wherever indoors or outdoors, with capability to bring in voice, data and video BWA such as 3G and WiMAX and VoIP are expected to bring revolution to the communication habit

4. 4 BWA IEEE 802.16 requires line of sight IEEE 802.16a was rectified in Jan 2003 which does not requires line of sight IEEE 802.16e is working on the handoff and roaming issues IEEE 802.16f is working on the mesh network topology The standard is evolving, which may cause confusion to Industry

5. 5 Communication Communication between two parties requires some kind of ‘PROTOCOL’ In reality, telecom equipment has the well know INTEROPERABILITY problems

6. 6 Interopability issues Different standards cannot talk – e.g. H.323 vs SIP Different version of standards cannot talk – e.g. IEEE 802.11a vs IEEE 802.11b Different manufacturer’s products of the same standard have interoperability issues – e.g. Handoff and Roaming of 802.11G products – e.g. High speed version of Wireless LAN devices (SpeedBooster vs 125* High Speed Mode)

7. 7 Interoperability Issues Same manufacturer and device of same standard at different countries are different – e.g. IEEE802.16a frequency spectrum 2.5G vs 3.5G due to different Government regulations

8. 8 Hong Kong Telecom development In Hong Kong – 6 Mobile Network operators Mobile subscriber penetration 118.3% – (more service subscription than population) – 10 Fixed Network operators Fixed line penetration 54.8% – 188 ISP Household broadband penetration 61.2% (OFTA Mar 05)

9. 9 Hong Kong Telecom development In accordance with the TA Statement issued on 6 July 2004 on Review of Type II Interconnection Policy, mandatory Type II interconnection at telephone exchanges (i.e. Type II interconnection at Point A) would be withdrawn by 30 June 2008 For those FTNS operators relying heavily on Type II interconnection, BWA is a possible alternative that operators may consider as ‘last mile’ access

10. 10 Hong Kong Telecom development Mobile Data services has been offered by six 2G network operation and six MVNO, together with 3G operators OFTA recognizes that BWA technologies have the potential to support fully fledged mobile services

11. 11 BWA legal framework OFTA has issued a consultation paper in Dec 2004 to consults the industry on the issues prior to establishment of the regulatory framework for BWA services in Hong Kong

12. 12 BWA legal framework Basic issues: Whether BWA should be licensed in HK If yes, when and how e.g. by Auction or by Contest Which frequency Spectrum: 2.5G, 3.5G or 5G?

13. 13 BWA legal framework OFTA: “To differentiate BWA services from a full mobile service, the TA proposes that the service offered by a fixed carrier license through BWA would only be allowed to have ‘limited mobility’. ‘Limited mobility’ here shall be interpreted as no cell handoff capability allowed.”

14. 14 BWA legal framework The consultation period has been extended to March 2005 and received 30 submission of comments from the Industry Some comments have been extracted from OFTA’s publication in the following slides

15. 15 PCCW “TA should seriously consider allocating the 2.3 GHz frequency band for mobile BWA so that operators have more flexibility in selecting the technology for the BWA services.” PCCW does not agree that BWA licences should have restrictions on mobility “Assignment of BWA spectrum should be done via auction to ensure transparency and equity” “(In China) the fixed BWA services initially acted as a supplement to the fixed broadband network. Later the services have developed and directly competed with the fixed broadband services such as ADSL.”

16. 16 HK Broadband Network “As the mandatory Type II interconnection would be expired on June 2008, the TA should allocate the BWA spectrum to the industry in the soonest possible so that the licensees could plan ahead for the prompt introduction of the service to the market.” “any regulation of BWA, no matter (UTMS or TDD, ETSI HiperMAN or IEEE 802.16 as advocated by the WiMAX Forum) should offer equal obligations/ opportunities to licensees and TA should not favor any underlying technology in any manner whatsoever”

17. 17 CSL “OFTA’s claim that an auction for BWA spectrum would allow the market to decide who will be assigned BWA spectrum is obviously flawed. By insisting that all potential bidders hold a fixed carrier license, the TA will be precluding many organizations or consortia from bidding for BWA spectrum.” “need to license BWA in the same way as 3G services”

18. 18 Hutchison Telecom “HTHK strongly objects to the issuance of BWA licenses for mobile services, including the TA’s suggestion that such licenses be initially used for fixed services with the possibility of being subsequently converted to provide mobile services” “TA must come with a clear ‘no mobility’ restriction over the full term of the license”

19. 19 HK Cable TV “HKCTV is of the view that the TA should allow broadband wireless access (“BWA”) services to have “full” mobility rather than “limited mobility” and should allocate more frequency for BWA service.” “TA’s proposed regulatory restraint concerning the so-called “limited mobility” of BWA services would stifle innovation and may prevent the introduction of advanced BWA technology in Hong Kong.”

20. 20 CM Tel (HK) Ltd “We support the TA’s proposal that BWA in Hong Kong to be initially be offered as a wireless extension of the conventional wireline based fixed network service.” “CMT disagrees with the proposal of spectrum assignment by auction. We consider that a better approach for the assignment of spectrum is selection by beauty contest.”

21. 21 Sin Chung Kai, JP, Legislative Councillor “I consider that OFTA's attempt to dedicate the 3.5 GHz bands to BWA is appropriate for Hong Kong.” “OFTA's restriction on the use of BWA spectrum for fixed telecom services is artificial and could potentially deter the rollout and adoption of BWA technology in long run.”

22. 22 WiMAX Forum “we agree that the 3.5 GHz band is a good initial choice as a licensed broadband wireless band.” “for the 3.4 – 3.6 GHz band, to be consistent with the rest of the global allocations, this band should be licensed.” “Relative to the question of auction timing, WiMAX equipment will be available in the second half of 2005; therefore it would be recommended that any time within the next 6 months to year end would be optimum timing.”

23. 23 HK ISP Association “ BWA licenses should be open to all service providers and should not be limited to existing FTNS operators.” “Mobility and roaming should be covered in the new BWA license, as it is anticipated that mobility capability should be widely available in forthcoming equipments when BWA can be deployed in Hong Kong.”

24. 24 User’s wish list On the road, he can be reached by the cell phone network. He can also download news clips. At hotspot, he watches live high quality video, his device connects with high speed wireless LAN

25. 25 User’s wish list At office, the mobile device shall be connected to the PABX system via the wireless LAN and becoming an extension of the PABX With the same mobile device, he can receive calls made to his office number and also intercom calls He can make inter-office call at other city via the company’s VPN He never miss calls when he move around at the office

26. 26 User’s wish list At home, the device shall connects to the cordless phone base and perform like an cordless phone All he need is a SINGLE handsome device which enable him to be reached wherever he is.

27. 27 User’s wish list A manufacturer may think that the user’s wish list can be accomplished with the technology of WCDMA/CDMA2000, WiFi, WiMAX, Bluetooth, IPv6, SIP/H.323, Symbian/Windows Mobile and VoIP How true is it?

28. 28 Equipment Manufacturer’s perspective “VoIP – the wave at the Turn of the Century” is a major revolution in the telecom industry At late 1990’s, telephone manufacturers were very interested on the IP Phone products, as the traditional POTS telephone margin was getting very thin. Users were also interested on VoIP as they were attracted by the “Toll by-pass”

29. 29 Equipment Manufacturer’s perspective However, the market growth of IP Phone at years before and after Year 2000 was totally unsatisfactory. Many manufacturers were too embarrass to announcement the sales volume VoIP sales volume has solid growth only recently

30. 30 Equipment Manufacturer’s perspective Some reasons: – High cost and high price – Reliability – Restricted Broadband Internet coverage – Not easy to setup and high maintenance cost such as get through firewall/NAT, dynamic IP updating – a totally different story from plugging a POTS phone into the wall socket

31. 31 Equipment Manufacturer’s perspective Need to be back to the BASIC Technology innovation arises public interest, but the success also relies on business case and solid user benefits

32. 32 Manufacturer’s wish list Standard – not standard(s) – It is a nightmare if communication standard is rectified and not full compatible with the current version of product which is under development Implies standardization body should not be purely technology focus but also should have roadmap of interoperability in mind

33. 33 Manufacturer’s wish list Interoperability – products has NO Interoperability issues with other manufacturers (implying tighten control of standard specification rectification) – Single product works at different countries – Regulatory bodies in different countries come up with the same frequency spectrum and protocol (e.g. WiMAX 2.5G vs 3.5G, GSM vs CDMA)

34. 34 Manufacturer’s wish list Technology solution providers (e.g. chipset manufacturers) not only supply basic development design but also allow innovative application development

35. 35 Manufacturer’s wish list Last but not least – Users have solid benefits from the new technology, otherwise it is just another ivory tower.

36. 36 Q & A website : http://www.hkc.com.hkhttp://www.hkc.com.hk email : contact@hkc.com.hkcontact@hkc.com.hk