China’s Wireless Communications Market April, 2007

International, Intergovernmental and Aboriginal Relations

Government of Alberta China’s Wireless Communications Market April, 2007

About this Report

This report is primarily based on information from public sources – both English and Chinese. We have made our best effort to select information from the most current and credible sources, information that has been validated through multiple channels and that is consistent with our experience of the Chinese market. However, we do not guarantee against the possibility that some of the information in this report is inaccurate or no longer valid.

All monetary figures are in Canadian dollars unless otherwise stated. For conversion rates, we used Bank of Canada exchange rates as of February 21, 2007 (specifically CAD$1 = 6.68 renminbi and CAD$1 = USD$0.86).

Alberta China Office

Canadian Embassy Tel: (86-10) 6532-3536 19 Dongzhimenwai Dajie Fax: (86-10) 6532-1304

Chaoyang District, Beijing 100600 www.albertachina.com People's Republic of China

This report was prepared for the Government of Alberta by GrokChina, LLC. GrokChina LLC 63 Wall Street #1206 Grok specialises in helping western companies do business in New York, NY 10005 China through market and consumer research, and consulting + 1 917 498 8900

services. China Central Place, www.grokchina.com Building 15 #802, 89 Jianguo Road, Chaoyang Beijing, China 100025

Page 1 of 39

China’s Wireless Communications Market April, 2007

Table of Contents Market Overview 3 General Description 3 Key Indicators for Mobile Operators 4 Regional Markets 5

The National Telecom Operators 8

New Standards, New Technology and Operator Accountability Shape the Basic Industry 10 Third Generation Network (3G) 10 Wireless Local Loop (WLL) – PHS / Little Smart / Xiao Ling Tong 12 SCDMA/ Village Wireless Communications/ Da Ling Tong 13 China's Mobile Multimedia Broadcasting (CMMB) Industrial Standard 13 A Chinese WAPI Standard 14 WIMAX 14 Greater Control over Mobile Services 14 Other Emerging Technologies 15

Relevant Sectors 16 Handset Market 16 Wireless Value-Added Services (WVAS) 16 Wireless LANs 19

Near and Long Term Prospects 19

Key Contacts 21 In China 21 Canadian Government 21

Appendix 1: Main Players in Related Segments of the Wireless Communications Markets 23 Value Added Services Players 23 Device Manufacturers 27 Telecom Equipment Providers 29 Telecom Operators 31

End Notes 35

Page 2 of 39

China’s Wireless Communications Market April, 2007

Market Overview

General Description

- With the fourth largest GDP globally, and 1.3 billion Compared to Canada, China has roughly: consumers, the Chinese market is compelling. On the other hand, per capita income barely exceeds 40 x the population $2,000 per year and which products and services succeed is determined by the unique preferences of this culturally and economically distinct people. 2.5 x the GDP Success can be elusive in China but wireless th communications is one of China’s success stories. 1/20 the per capita income

- The rapid emergence of the world’s second largest online community, with over 130 million users, 23 x more mobile subscribers in 2006 represents one of the most dramatic developments in China. This online community is expected to 5 x the mobile services revenue in 2006 surpass the 210 million Internet users in the US by 2009.1 Moreover, roughly 52 million people currently have broadband access. Broadband 3 x the mobile services profits in 2006 adoption grew by over 50% in 2005 and almost 40% in 2006 – a development watched keenly by both the the average revenue per unit for mobile 20% services* online and mobile value added services industries.2 the average minutes of usage for - In 2006, China’s telecommunications sector invested 20% mobile services in 2006 $33 billion on infrastructure, up 7.7% year on year.3 Much of the development of China’s infrastructure 60% the wireless data ARPU in 2006 has leapfrogged the West. Growth within the fixed line business is slowing. The biggest telecom story *per calendar month - 2006 in China is mobile services.

- With 461 million subscribers, mobile services generated more than $65 billion in revenue and $12 billion in profits in 2006. The number of mobile subscribers has grown dramatically – more than 17% per year in both 2005 and 2006. The Ministry of Information Industry (MII) estimates that over 35% of the Chinese population has a cell phone and many Chinese have more than one.4

- There are two dominant mobile operators in China – China Mobile Limited and China Unicom Limited. As of the end of 2006, their combined number of mobile subscribers had reached 443.6 million, accounting for 96% of the country's total mobile subscriber base.5

- 407.1 million GSM users (301.2 million for China Mobile and 105.9 million for China Unicom) and 36.5 million CDMA subscribers.6

- China Unicom operates both a CDMA and GSM network. China Mobile currently only operates a GSM network.

- China Mobile, with more than 300 million mobile customers, is not only the largest mobile operator in China, but also in the world. It is five times larger than second-place Cingular Wireless.

Page 3 of 39

China’s Wireless Communications Market April, 2007

Key Indicators for Mobile Operators

Revenuei

- China's wireless market revenue, including related segments such as valued added services, is projected to reach $232 billion by 2008.7

- Revenues for mobile service in 2006 are estimated to exceed $65 billion dollars.

- China Mobile’s revenue in 2006 was $42.7 billion, a 21% increase from 2005.8

- China Unicom’s (2006E) revenue was $14 billion.iii,9

- The remainder is revenue earned by small regional operators.

Average Revenue per Unit (ARPU)

- In January 2006, overall ARPU for mobile services in China was $9.88 per calendar month (pcm)ii (compared to roughly $50 in Canada). ARPU for fixed line communications in the same timeframe in China was $9.64.10

- ARPU for pre- and post-paid customers are significantly polarized – post-paid ARPU was $23.46 pcm, while ARPU for pre-paid customers was $7.87 pcm.11

- In October 2006, China Mobile reportediii ARPU for its 300 million customers of $13.32 pcm.12

- Although it represents a comparatively small percentage of China Mobile’s total customer base, it’s worthwhile to note that ARPU on China Mobile’s contract customers is significantly higher: roughly $27.69 pcm.

- China Unicom, the country’s other dominant mobile operator, reportediii ARPU for the same period $7.44 pcm for its 106 million GSM customers and $10.00 pcm for its 36 million CDMA customers.13

- The allocation of 3G licenses – which will be discussed later in this brief – is expected to directly impact value added services (VAS) available through mobile devices. This is hoped that 3G and VAS will turn around falling ARPU figures and buoy already healthy profit margins within the industry.

Minutes of Usage (MOU)

- Operators saw an average of 300 minutes of usage per month (MOU) for mobile services in 2006.

- As of October 2006, China Mobile reported 374 MOUiii for its GSM customers.

- As of October 2006, China Unicom reportediii average MOU of 233.4 for its GSM customers and 274.8 MOU for its CDMA customers.

i Note that revenue figures for value added services, handsets, and other related markets are not reflected in the mobile services market figures. Current and forecast revenues for those markets can be found in the related sections of this brief. ii Blended across CDMA and GSM subscribers across all operators iii Based on January to September 2006 results.

Page 4 of 39

China’s Wireless Communications Market April, 2007

Regional Markets

- Much of China’s wealth has historically Regional Mobile Penetration in 200614 been concentrated in China’s eastern seaboard cities. Fearing that social 100.00% instability will increase due to the growing income gap between the rich 90.00% cities on the eastern coast, and the 80.00% western and central regions – particularly rural areas – the Chinese 70.00% government has made concerted and sustained investments in developing 60.00% 52.80% infrastructure, improving education, and 50.00% encouraging commerce in secondary regions and rural areas. This has also 40.00% extended to significant projects aimed at 26.90% 27.40% 30.00% improving fixed-line and mobile telephony infrastructure and data 20.00% networking / Internet access. 10.00% - In terms of mobile services, network 0.00% infrastructure and handsets, regional Western Region Central Regions Eastern Coast markets account for the majority of growth. This is in large part due to a (incl. Beijing and concerted strategy by China Mobile to Shanghai) recruit rural subscribers.

Primary and Secondary Cities

- In Canada, there are five metropolitan areas with more than 1 million people. In China there are ninety four. There are nine Chinese cities with populations larger than Toronto: Shanghai, Beijing, Guangzhou, Shenzhen, Hong Kong, Wuhan, Tianjin and Chongqing.iv

- Calgary, if it were in China, would be China’s 90th largest metropolitan area. Of the eighty nine cities larger than Calgary, eighty four have names that few people outside of China would recognize.

- Historically, western businesses entering China have concentrated on Beijing, Shanghai and Guangzhou and Shenzhen, a bias that is now rapidly being corrected by western and local businesses alike. In many industries, secondary and tertiary cities are the new primary targets. For example, Chongqing, Wuhan, and Xi’an are large urban areas with increasing wealth.

iv The population of “cities” in China is a surprisingly complex question since there are several administrative units and political entities to define metropolitan areas. The above list is provided by the United Nations (http://esa.un.org/unup/) using a narrow definition of city. A broader definition of city would encompass greater urban areas. In that case, China would have a far larger number of cities with greater than 1 million people and more cities that are larger than Toronto.

Page 5 of 39

China’s Wireless Communications Market April, 2007

Mobile Penetration by Province in 200415

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Nationw ide

Eastern Seaboard Provinces Beijing

Tianjin

Liaoning Shanghai

Jiangsu

Zhejiang

Fujian Shandong

Guangdong

Hainan Interior Provinces

Hebei

Shanxi Jilin

Heilongjiang

Anhui Jiangxi Henan Hubei

Hunan Western Provinces Neimenggu

Chongqing

Sichuan Guizhou

Yunnan

Tibet Shaanxi

Gansu

Qinghai Ningxia

Xinjiang

- Provincial and city governments in secondary regions are often anxious to encourage local development. Finding the right champions in those governments can result in unusually favorable conditions for the right western businesses. Moreover, these large provincial and municipal governments can be customers of significant size in their own right.

Page 6 of 39

China’s Wireless Communications Market April, 2007

“The mountains are - However, the risks, in some cases, are also higher. Some of those high, and the emperor same regional governments – being far from Beijing and central is far away.” authority – have a history of operating in a less than “regular” fashion. - old Chinese adage

The Rural / Urban Divide

- The Chinese government considers the growing income gap between urban and rural dwellers a serious concern, worrying both that this divide will create social unrest and that it is a root cause of a growing trend for rural workers to illegally migrate to cities. By the end of 2003, there were 3 times the number of fixed phone sets per capita in the cities than in the countryside and, by the end of 2004, the gap had widened to 3.2 times (in western China, there are almost 7 times more fixed phone sets per capital in cities than in countryside). The overall trend is negative and of serious concern. At present, 8.8% of administrative villages are still without telephones.16

- There is an even bigger difference in the distribution of mobile phones between the cities and the countryside; 80% to 90% of mobile phone users are located in cities and towns. In other words, per capita mobile phone ownership in the cities is roughly ten times greater than in rural areas.

- Over the last several years, China Mobile has pursued a strategy of rapidly acquiring new customers from the vast, under-serviced population in China’s rural areas. This strategy – in alignment with the highest political priorities of the Chinese government – has lead to rapid growth of China Mobile’s subscriber base but, as was correctly anticipated, the fact that these rural populations have less disposable income eroded key indicators, such as Average Revenue Per Unit (ARPU) and average Minutes of Usage (MOU).

- The momentum of growth in the central and western regions, as well as the rural market, is expected to remain strong in 2007.17 65% of Chinese citizens – over 900 million people - do not yet have a cell phone,18 and yet China Mobile is already the world’s largest mobile services operator. As incomes continue to rise and cell phone acquisition becomes a priority for more and more of the remaining 900 million people, and as value added services emerge to gain a larger percentage of each mobile users’ wallet, the opportunity for China’s two licensed mobile operators seems almost limitless.

Page 7 of 39

China’s Wireless Communications Market April, 2007

The National Telecom Operators

Market Shares for Telecom Operators – first half 200619

China Others; Netcom; 2.30% 14.40%

China Mobile; 42.70%

China Telecom; 27.40%

China Unicom; 13.20%

Basic Overview Subscribers Operator Network Financials (2006) Note (2006) (contract subscribers) 65.26 million; Revenue: GSM nationwide (prepaid subscribers) $42.7 billion service China Mobile GPRS 235.96 million ; See below for EDGE20 21% increase from (total subscribers) 200522 more details 301.23 million21

Page 8 of 39

China’s Wireless Communications Market April, 2007

Subscribers Operator Network Financials (2006) Note (2006)

GSM Revenue (2005): v GPRS (total subscribers): $13.03 billion 142 million25; nationwide CDMA Revenue (2006E): $14 service China Unicom 23 CDMA20001x billion* (Extrapolated See below for GSM: 105.87 million from results of the first GSM1X/World 26 more details Wind (Dual mode – CDMA: 36.49million three quarters 2006 since Aug 2004) 24 and 4Q2005)

28 Revenue (as of 3Q Operates in China Fixed Line 223 million 27 2006): $19.04 billion, the southern Telecom 29 PAS/PHS 62.2 million WLL users up 4.5% from 2005. provinces; Revenue (as of 3Q Fixed Line: 119million Operates 2006): $9.7 billion32 Broadband Services: mainly in 30 Revenue (2006E): $12 China Netcom PAS/PHS 14.29 million31 northern billion* (Extrapolated provinces (as of September from results of the first

2006) three quarters)

China Tietong Fixed Line: 18.19 Revenue (2006): $2.3 (formerly Fixed line, million billion GSM-R trial China broadband up 12.5% year-on- 2004 Railcom) ADSL: 3.14 million year 33

Relevant Recent Events: China Mobile

- China Mobile’s gains in market share are disproportionately due to recruitment in rural areas and particularly China’s western hinterland.34 China Mobile increased its capital spending 17 percent to $12.5 million in 2006 to expand networks in rural areas.35

- China Mobile will participate in the testing and rollout of additional TD-SCDMA networks. Overall, China’s telecom operators (including China Mobile) expected to spend about $2 billion on TD- SCDMA networking building in anticipation of 3G rollout. 36

- China Mobile has been interested in expansion into international emerging markets via acquisition for some time now. In January, that interest finally became reality with the announcement that China Mobile will acquire an 89% stake (worth $330 million) in a Pakistani wireless company called Paktel, currently owned by Millicom International Cellular.37

- China Mobile is planning a stock market listing on the Shanghai market (currently listed on both the HK and NYSE)38

- Trio recently announced that China Mobile will be buying TD-SCDMA mobile phones from Trio with an expected sale price of approximately $360 per hand set.39

v From January – November 2006, GSM postpaid and prepaid subscribers increased 5.60 million and 4.30 million respectively. On the other hand, CDMA postpaid increased 3.16 million and the prepaid subscribers increased to 251,000.

Page 9 of 39

China’s Wireless Communications Market April, 2007

- Nokia announced that they have won a GSM expansion contract with China Mobile (ZheJiang). The contract, worth approximately $50 million, will improve operational efficiency for China Mobile (ZheJiang) and boost GSM coverage.40

- On Thursday, March 1, 2007, China Mobile asked equipment providers to submit informal bids, kicking off a round of bidding for TD-SCDMA equipment.41

Relevant Recent Events: China Unicom

- Reports in March 2007 suggest that China Unicom may take a stake in Taiwanese mobile operator Asia Pacific Broadband Wireless (APBW), which operates CDMA2000 2.5G and 3G networks and, as of December 2006, had a million customers. The price is rumored to be approximately $210 million.42

- In January 2007, Unicom was reported to have made deals with seven handset manufacturers for an estimated 2 million entry-level handsets. These handsets would be targeted at customers in rural areas, who are also able to afford value added services.43

- In November 2006, Nokia announced that the Shanghai branch of China Unicom demonstrated a range of advanced data services based on Nokia’s EGPRS solution. Enabling data connections at up to 474kbps, EGPRS expands possibilities for connecting data networks to mobile phones. New products that were unveiled at a press conference in Shanghai included Near Field Communication (NFC), push e-mail, vCard and WAP browsing.44

- In October, the government of Macau awarded third-generation (3G) mobile telephony licenses to Hutchison Telephone Macau, China Unicom’s local subsidiary Macau Unicom and local operator Companhia de Telecomunicacoes de Macau.45

- In August, 2006, press published by the Ming Pao Daily News and the Hong Kong Economic Journal suggested that China Telecom may buy China Unicom's CDMA network to give it access to the booming wireless segment. In fact, this would not be the first speculation that China's top telecoms operators – China Telecom, China Mobile, China Unicom and China Netcom – may conduct a major asset reshuffle as part of a wider government restructuring agenda. Specifically, rumours suggest that Beijing may split Unicom and merge its CDMA network with Netcom, while its larger GSM network would go to China Telecom.46

New Standards, New Technology and Operator Accountability Shape the Basic Industry

Third Generation Network (3G)

- 3G networks have been long awaited in China as a prerequisite to offering a richer array of value added services. The timing of 3G license issuance has been speculated upon, tentatively announced and then re-set numerous times. According to China Mobile executives’ statements in February, 2007, China’s government will not issue 3G licenses until the fourth quarter of 2007 or in 2008.47

- According to estimates published in May 2006, the total anticipated 3G market size in China will reach $41.3 billion within 5 years after the launch of 3G in China. Many wireless players such as

Page 10 of 39

China’s Wireless Communications Market April, 2007

Telecom Communications and TOM Online, KongZhong Corporation, and Dragon Capital Group in China anticipate great opportunities in 3G.48

- Many of the decisions related to infrastructure development are being made at the municipal or provincial level. For example, Chongqing plans to invest $87.6 billion in over three hundred major projects in the coming five years, with an estimated $516.4 million earmarked for 3G development.49 Companies wishing to sell infrastructure equipment into the 3G market may find that large municipal governments or local telecom groups may be good market entry points. 52 - Analyst firm “Research in China” issued Chinese 3G Standards: 2006 Penetration as provided by MII a report that predicted, if 3G licenses WCDMA; 70% had been issued in 2006, there would 65% have been 6.2 million 3G users recruited in the first 12 months; three years later, 60% they estimate the number of 3G 50 subscribers would reach 128 million. 50%

- In October 2002, MII issued Document 40% No. 479, entitled “Announcement of Spectrum Allocation for the Third- generation Mobile Service”, which 30% indicated that the spectrum with the CDMA2000 1X; 20% TD-SDMA; bandwidth of 155MHz was allocated to 20% TD-SCDMA, while only 60MHZ each 15% was allocated to WCDMA and CDMA2000.51 TD-SCDMA, WCDMA, 10% and CDMA 2000 are the three potential 3G standards to be adopted in China. 0% TD-SDMA CDMA2000 1X WCDMA

TD-SCDMA

- TD-SCDMA (time division synchronous code division multiple access) is a mobile telephony standard, developed in China, for wireless network operators who want to move from a second generation (2G) wireless network to a third-generation (3G) one. TD-SCDMA, as a homegrown standard, has extended financial and policy support from the Chinese government and is expected to grow to dominance with 3G rollout.

- Supporting data transmission at speeds up to 2 Mbps, TD-SCDMA combines support for both circuit- switched data, such as speech or video, and also packet-switched data from the Internet. The standard combines time division multiple access (TDMA) with an adaptive, synchronous-mode code division multiple access (CDMA) component.53

- In early March, Chinese telecom operators and equipment makers started construction of a large- scale trial network featuring the TD-SCDMA standard in three mid-sized cities, in addition to ongoing commercial trials in Shanghai and Beijing.54

- Analyst firm Research in China issued a report that predicted that, assuming 3G licenses are issued in a timely manner, the number of TD-SCDMA users would grow as below: 55

Page 11 of 39

China’s Wireless Communications Market April, 2007

- In February 2007, the TD-SCDMA 60,000,000 54,000,000 alliance announced that China will build more TD-SCDMA networks in a 50,000,000 second round of testing involving the launch of more types of data services. During the first round of testing, the 40,000,000 alliance signed up more than 20,000 30,500,000 users. That number is anticipated to 30,000,000 dramatically increase with the second round of testing, in as-yet-unnamed coastal cities. China Mobile, China 20,000,000 Telecom and China Netcom will 11,000,000 participate in the second round (with 10,000,000 the bulk of investment coming from 2,000,000 China Mobile). The three telecom 20,000 operators are planning to invest an 0 estimated $2.25 billion in TD-SCDMA 2006 2007 2008 2009 2010 network build out. Number of TD-SCDMA users56

- TD-SCDMA will provide a strong domestic benefit to Chinese mobile phone manufacturers - the majority of TD manufacturers are domestic, including Lenovo, TCL, Bird and Amoi. 57

Wireless Local Loop (WLL) – PHS / Little Smart / Xiao Ling Tong

- “Little Smart” – the popular English brand name for XiaoLingTong – is a version of the personal hand phone system (PHS) which originated in Japan in the late 1990s. Xiaolingtong connects existing fixed line networks through micro-cell radio, which enables wireless access of the wired telephone system. Little Smart handsets look like mobile phones, but their phone numbers look like fixed-line numbers. They can generally be used only within the local calling area. Xiaolingtong has received a warm welcome in China, due to its convenience and, more importantly, its low cost (calls are charged like a fixed-line phone). In many smaller cities, Xiaolingtong is a serious competitor to traditional mobile phones.

- Xiaolingtong does not need a mobile operator license and it has, therefore, become a development priority for many local branches of China Telecom. China Telecom’s many provincial branches and Netcom both offer Xiaolingtong services. China Netcom’s Personal Assistant / Personal Handset business (as of 3Q of 2006) $9.7 billion (2006E: $12 billion)58

- The Chinese government, particularly Ministry of Information Industry, has tended to favor the traditional mobile services vendors, indicating that Xiaolingtong is a dated technology, the adoption of which limits the potential of China’s mobile industry.

- Xiaolingtong can support data transmission and value-added services such as SMS (“Little Smart messages”), MMS messages, “Smart Assistant”, wireless Internet access, downloads of pictures and music, as well as ring tones.

- According to MII, as of October 2006, there were 93.4 million Personal Hand Set (PHS) users, compared to 85.3 million at the end of last year (9% year over year growth). China Academy of Telecommunication Research of MII (CATR) estimates there will be 300 million more users added in

Page 12 of 39

China’s Wireless Communications Market April, 2007

the following years. These users are mainly middle and low-end users, an ideal target user group for Little Smart. 59

- Southern China's Guangdong Province and eastern China's Jiangsu Province were the top two provinces in terms of PHS user base, with both over 10 million subscribers by October 2006.60

- At first, Xiaolingtong was viewed as a strategic segue to the future 3G market for the fixed-line telecom operators (who have no license in the mobile space). Both China Telecom and Netcom perceived Xiaolingtong as an opportunity to develop a “mobile” user base and experience in the “mobile” market. A year ago, China Telecom and China Netcom announced that they will invest about $748.5 million in 2006 to optimize the Little Smart network.61 However, with falling mobile tariffs and a growing number of inexpensive wireless handsets, many speculate that Xiaolingtong’s days are numbered. Despite the fact that the number of users is still rising, both China Telecom and China Netcom recently announced a gradual reduction in investments in Xiaolingtong.62

- The main providers of Xiaolingtong handsets are UTStarcom and ZTE. As of November 2006, there are dual-mode cell-phones compatible with Little Smart and GSM available in the market.63

SCDMA/ Village Wireless Communications/ Da Ling Tong

- SCDMA is a wireless access technology developed by Beijing Xinwei Telecom Technology Co., Ltd. SCDMA is a highly efficient technology, requiring much fewer base stations to cover the same geographical area than the existing technology currently deployed in China. SCDMA operates in both the 400 MHz and 1800 MHz spectrum, with up to 3-kilometer base station (1800 MHz) coverage, 95 percent success ratio in base station switching, a 100 kilometer/hour mobile speed limit, and 0.05W transmission power.

- This technology has specifically been endorsed by the Chinese government to help develop rural mobile networks. The SCDMA technology is the only recommended wireless access technology for China’s “Phone to Every Village” project.vi

- As of 2005, there were 2 million SCDMA subscriptions. SCDMA has been deployed in over 100 cities across 29 provinces.

China's Mobile Multimedia Broadcasting (CMMB) Industrial Standard

- China's State Administration of Radio Film and Television (SARFT) announced the issuance of China's Mobile Multimedia Broadcasting (CMMB) industrial standard. "The standard is used for the mobile multimedia broadcasting business, which offers broadcasting TV programming and information services to different types of mobile and portable terminals," SARFT said in a statement. CMMB includes transmission technology, video, audio, channel transmission and protocol components. STiMi (Satellite Terrestrial Interactive Multiservice Infrastructure), a transmission technology developed by the Academy of Broadcasting Science of SARFT, is the key component of China's CMMB system. Shanghai Media Group (SMG) and China Central Television (CCTV)'s CCTV.com are the only two mobile TV license holders in the country.64

vi “Phone to Every Village” is the State Government’s 2020 Long Term Development Plan to expand telecom infrastructure to the countryside.

Page 13 of 39

China’s Wireless Communications Market April, 2007

A Chinese WAPI Standard

- WLAN Authentication and Privacy Infrastructure (WAPI) is a homegrown, proprietary encryption and authentication solution developed in part by the Chinese computer industry and in part by military- and government-controlled entities.

- Asia Times reports that two non-governmental wireless integrators have agreed to use WAPI as their preferred standard over 802.1Xvii and 802.11iviii, apparently. There’s also been an increase in the number of firms involved in the WAPI Industrial Alliance: Once 11, there are now 22. One of the arguments made for developing a domestic standard, which is not an unusual step in China, is to reduce payments to foreign holders of intellectual property.65

WIMAX

- Worldwide Interoperability for Microwave Access (WIMAX) is a standards-based technology that can provide easy and economical wireless access to the Internet, even to far away customers (i.e. in rural areas where the current broadband technologies cannot feasibly reach).

- WIMAX is similar to WiFi, but unlike WiFi, which has a range of 200 Meters, WIMAX has a range of 30 miles. WIMAX is a complementary technology to WIFI and 3G, though it’s expected that the three will converge in the future. WiMAX has an excellent opportunity to expand China’s market for fixed, portable, and mobile broadband access. Though traction in the 802.16-2004ix (fixed) market will be important, the real success of WiMAX in China will depend on the much larger 802.16(e) marketx.66

- picoChip has announced a partnership with the Institute of Computing Technology (ICT) of the Chinese Academy of Sciences in an effort to collaborate with the acceleration of WiMAX in China.67

Greater Control over Mobile Services

- The Ministry of Information Industry (MII) has announced that in order to become cell phone subscribers, people will soon have to register with their ID cards. Detailed regulations are expected to be published shortly.68

- One issue that is increasingly pressing is that SMS is used to sell illegal goods and services. MII is asking the telecom companies to find out the quantity of illegal short messages sent by those mobile value-added service providers and the users affected, as well as the amount of fees involved.

- MII requires that MVAS companies be punished according to the degrees of their violations of the regulations.69

vii IEEE standard for port-based network access control, that provides authentication to devices attached to a LAN port for point to point connections. viii IEEE standard specifying security mechanisms for wireless networks. ix IEEE Standard for local and metropolitan area networks Part 16 addresses the Air Interface for Fixed Broadband Wireless Access Systems x The IEEE standard for metropolitan area networks deals with mobility.

Page 14 of 39

China’s Wireless Communications Market April, 2007

Other Emerging Technologies

4G: FuTURE (Future Technology for Universal Radio Environment) Project

- In January 2007, China Daily reported that 4G technology was rolled out in Shanghai by “FuTURE Project,” a consortium of ten leading domestic institutions. It provides wireless data transmission speeds of up to 100 megabytes per second, and was built at a cost of $22.4 million.70 Worldwide commercial availability is expected for 2010.71

- In January 2006, Wei Guo, a member of the FuTRUE project group and a professor at the University of Science and Technology of China, said that "this is the largest 3G testing system in the world, and it integrates such technologies as IPv6 Core Networking, High Definition Business of IPTV (Internet Protocol Television) and Mobile Communication Switching."72

HSDPA

- HSDPA is the upgrade from WCDMA, with a higher data transmission rate, which favors the development of mobile broadband data services. HSDPA is also able to increase system capacity, and to provide better services to high-rate users on the same wireless carrier frequency. It provides a smooth migration path for higher Universal Mobile Telecommunications System (UMTS) data transmission rates and higher capacity, like EDGE to the GSM network.

- The development of HSDPA can be divided into three stages, i.e. basic HSDPA, enhanced HSDPA, and future HSDPA. Future HSDPA has not been defined yet and is still in the research process under The Third Generation Partnership Project (3GPP). Moreover, the equipment for the second stage still needs to be perfected and improved.

- HSDPA offers serious cost benefits: only one fifteenth the costs of GPRS and one fifth of W- CDMA.73

RFID

- RFID – a related but tangential market – may be a dramatic development in China. Although the market has taken longer to emerge than anticipated, as manufacturer to the world, Chinese manufacturers are set to be the point of acquisition of trillions of tags, once the price of tags falls to levels that support massive manufacturing application. Walmart’s plans to implement RFID will be a large part in driving adoption of RFID throughout the supply value chain.74

- In a more immediate opportunity, the logistics of being manufacturer to the world – port operations and transportation – are under huge strains in China and RFID is seen as a major component of solving these issues. RFID vendors – whether of tags, information systems, readers or SIs – may find opportunities within this area of the Chinese market.

- Finally, RFID is also seen as a way to efficiently manage China’s large population. The Gold Card Project of MII is issuing identification using RFID ultimately to every Chinese citizen. By 2008, China's IC card shipment will reach 1.91 billion pieces, 2.49 times of that of 2005; while the shipment volume will reach $3.7 billion 2.66 times of that of 2005.75 Factors like the 2008 Beijing Olympic Games and other major events will further drive mainstream use of RFID for such things like tickets.

Page 15 of 39

China’s Wireless Communications Market April, 2007

Relevant Sectors

Handset Market

- In 2006, the mobile phone market in China reached $22.45 billion and increased by 15% compared to last year, the latest research from Gfk, finds.76

- China has well over 450 million users carrying over 1,000 different handset models, from the highest of the high end to the lowest of the low end.77

- In 2006, China produced a total of 450 million mobile phones, the majority of which were exported.78

- The total number of handsets sold in 2005 Market Share – Handset Sales (units) in China China in 2006 increased 40% y/y to 120 million units (from 85.4 million in 2005).79

- In 2005, of the 85.4 million units sold, 78.7 million were GSM and 6.7 million CDMA.

- China Unicom announced in December Others; 25% Nokia; 24% 2006 that its CDMA/GSM dual mode handsets gained increasing popularity with high-end users, with sales over 1 million units, and revenue over $449.1 million.80

- See Appendix 1 for more information on Konka; 3% the major domestic vendors. Haier; 3% Motorola; 13%

- The market for handsets is crowded. 25% Amoi Mobile; are sold by players with less than 3% of 4% Samsung; 10% the handset market, such as Jingpeng, Lenovo; 4% Yulong, Telsda, Gionee, MalataZ Mobile, Ningbo Bird; TCL; 4% Qiaoxing, SED, Zhong Shan G-Star 6% Communication, Skyworth, Gaotong, Sony-Ericsson; Huawei, Aux, A Hong, Daxian Telecom. 4%

Wireless Value-Added Services (WVAS)

- The Chinese are comparatively sophisticated users of their cell phones. In 2006, over 33 billion SMS messages were sent in China. On auspicious occasions, particularly the Chinese New Year, the mobile services networks are jammed as hundreds of millions of Chinese people wish all of their friends and families well with SMS messages. China Mobile dominates the WVAS market, though Unicom – with their dual network of GSM and CDMA – will drive VAS for cross-network users.

- Mobile phone customers sent 33.8 billion text messages in January 2006, up 65.7% from January 2005.81 According to a January 2007 report by MII, there were over 500 billion text messages transmitted over 350 million cellular phone users in 2004. By the end of 2005, there were over 12 million MMS subscribers and 8.58 million active users. 82

Page 16 of 39

China’s Wireless Communications Market April, 2007

- The main growth in the market will be driven by such new technological developments as convergence and 3G rollout, as well as economic developments, such as strong economic growth, rising spending, and foreign investment.83

- A 2004 report by analyst firm IDC Breakdown of WVAS Sub-Segments forecast that the mobile value added (provided by MarketAvenue)87 services market would reach $7.7 $16,000 billion in 2006, growing to $10.7 billion Cdn $ millions in 2009, with a CAGR from 2004 to $14,000 2009 of 18.6%.84 $12,000 - In January 2007, research firm Ovum, $10,000 using data up to mid 2006, estimated that the wireless value added services $8,000 market in China reached $9 billion in $6,000 2006, growing to $13.4 billion in 201085, a compounded annual growth $4,000 rate of 10.3%. Ovum’s 2006 estimate $2,000 outpaced IDC’s expectations by over 15%; a good sign for the market. $0 2003 2004 2005 2006F 2007F - In December 2006, another market LBS $3 $19 $33 $85 $242 research firm, Market Avenue, Mobile Games $45 $91 $140 $207 $283 reported overall market estimates for MMS $29 $120 $221 $412 $721 2006 as exceeding $10 billion 2006 (up 40.3% from 2005), growing 32% in IVR $67 $140 $294 $456 $619 86 2007 to $13.45 billion. Market Mobile Music $110 $233 $381 $588 $792 Avenue’s estimates of potential WAP $73 $427 $692 $1,148 $1,751 contributions of MMS and SMS (combined in 2006 at $7.6 billion and SMS $2,591 $4,092 $5,534 $7,227 $9,052 $9.8 billion in 2007) dramatically • LBS – Location Based Services; exceed the estimates provided by • MMS – Multimedia Messaging Service; Ovum, who recently forecast that SMS • IVR – Interactive Voice Response; and MMS will account for $8.4 billion • WAP – Wireless Access Protocol; of revenue in 2010. • SMS – Short Message Service

- Large global content providers such as Sony Music, Disney and AOL are providing mobile content for the Chinese market through domestic partnerships. Local companies that play a significant role in China’s Wireless Value Added Services markets include Sina, Sohu, Tom, Tencent, NetEase, Linktone, Mtone and KongZhong. (See Appendix 1 for more information).88

- Detailed analysis of each of the Wireless Value Added Services markets is beyond the scope of this document. However, a useful document for additional reference is by Peng Luo, entitled “The Business Potential of Mobile Entertainment in China Market”, published at the Royal Institute of Technology, Sweden in 2005. It provides additional valuable information including revenue splits between partners in various Chinese WVAS projects, such as Super Girl and Mobile Rock.

Mobile Ring Tone and Colour Ring Back Tones (CRBT)

- By the end of 2005, the mobile ring tone market reached $419.1 million. Sales of colour ring back tones (CRBT) totaled $748.5 million in 2005. Research in China – another analyst firm with a report in this space – predicts that the CRBT market, unlike other VAS markets, will not grow significantly in coming years.89

Page 17 of 39

China’s Wireless Communications Market April, 2007

- Mobile music is receiving early attention and market share is increasing remarkably.90 According to Research in China, in April 2005, China Mobile announced that it has partnered with A8 Limited and MTV China to develop a Chinese wireless music market. At the beginning of May, China Mobile launched its M-Dream based music channel. “Research in China” believes that China Mobile’s music is mainly provided by large service providers such as Tencent and Sina. For the record companies, this is a significant development space.91

Mobile Video and TV

- Ovum also predicts that multimedia content, such as mobile TV and music, will rapidly become mainstream in China after 3G rollout, as well as location-based services, mobile blogging, and mobile payment services.92

- Beijing was the first city in China to launch a commercial Digital Multimedia Broadcasting (DMB) service in January 2005. Shanghai Media Group (SMG) received the city’s first mobile TV trial license from SARFT in April 2005. Its DMB network operates from a single transmission point located on the Oriental Pearl Tower covering 95% of the city.93

- According to data from Norson Telecom, the number of Chinese mobile phone TV users was 500,000 in 2006 and will reach more than 52 million in 2008. It generated $1.9 million in revenues in 2005 and explosive growth to $194.6 million by 2008 is predicted.94 MII forecasts that the mobile TV market will hit $374.2 million by 2011, based on only 8% of subscribers using the service.95

- An issue in this space is the unauthorized broadcast of mobile content. China's State Administration of Radio Film and TV (SARFT) is increasingly aggressive in regulating DMB.96 In September 2006, SARFT issued an industry standard called the CMMB (China Mobile Multimedia Broadcasting) system, claiming that the transmission technology - the key part of the standard - has been resolved. According to SARFT's timetable, in mid 2007, construction of a terrestrial demonstration mobile multimedia network (ground data link and interchange network) will be completed and trials will begin. In addition, mobile phones, PDAs, and MP4 players, will be tested, followed by commercial launch in the third quarter. By the first half of 2008, the satellite system will be integrated into this network and will form a nationwide network for formal operation. If all goes to plan, mobile phone TV will be ready for the 2008 Beijing Olympic Games.97

- As of July 2006, Chinese users have three options for mobile-video services: a GPRS-based service from China Mobile, China Unicom's CDMA 1X-based streaming-TV service and the recently launched T-DMB-based mobile-TV service in Shanghai.98

Fixed Mobile Convergence

- Analyst firm In-Stat recently predicted that Fixed Mobile Convergence (FMC)xi will grow slowly at first in China, and then experience swift growth after the commencement of 3G services between 2008 and 2010. For the Chinese business market, FMC subscriber totals will increase from 400,000 in 2005 to 5.6 million in 2010. 99

xi Fixed to Mobile Convergence (FMC), currently one of the crucial strategic issues in the telecommunications industry is the way to connect the mobile phone to the fixed line infrastructure. With the convergence of mobile and fixed line networks, telecommunications operators can provide services to users irrespective of their location, access technology, and terminal.

Page 18 of 39

China’s Wireless Communications Market April, 2007

WAP

- By the end of 2004, the number of domestic active Wireless Application Protocol (WAP) users in China had reached 15 million and Analysys International projected that by the end of 2005 the number of registered WAP users reached 35 million.100

Wireless LANs

- Analyst firm, In-Stat, predicts WLAN equipment revenues in China to increase at a near 33% CAGR, from about $62.7 million in 2004 to almost $186 million by 2008.101

- China Netcom deployed the first wireless LAN service in China in 2001, though foreign equipment providers still hold the lion’s share of the WLAN market in this region with a combined 70% share of overall revenues.102 Cisco led the Chinese WLAN market in Q2 2004 with a share of 21%, followed by Huawei-3Com, D-Link (Taiwan) and Netgear each with shares of 16-17%.103

- Growth potential of WLAN in China is expected to be significant. It is believed the market will grow 50% a year through 2006 and the number of hotspots may triple to 6,000 by 2008.104

- Equipment Developers: Cisco, Nokia, Avaya, Intel, Huawei, ZTE & DATANG.105

Near and Long Term Prospects

- The mobile telecommunications equipment market in China is a complex and substantial market. Cisco, Huawei, Alcatel, Siemens, Nortel and Nokia all have dominant roles with the mobile operators, as well as the fixed-line operators offering WLL services. Except in narrow niches, small or midsize foreign equipment vendors often have difficulty selling equipment to the Chinese operators. Albertan companies that can address a niche within the mobile network equipment market – especially in 3G related technologies where substantial network demand is expected - may be able to sell into the Chinese market by partnering with the major telecom equipment vendors.

- Vendors with advanced technologies – for example UWB, HSDPA – may find a warm reception directly with the mobile operators. However, historically there is a bias toward funding local companies for next generation development. Foreign vendors may find their meetings less profitable than hoped, though extremely informative for the Chinese mobile operator or equipment vendor.

- Alberta companies with solutions targeted at helping content providers with content delivery and management are in a position to sell to companies like Sina, Sohu, Tom and Tencent. While large, they do not approach the mobile operators in scale, and they are comparatively nimble organizations.

- Selling content directly into the Chinese market is problematic on several levels. Most importantly, content is tightly regulated by both the Ministry of Information Industry and the Ministry of Culture. International content providers – Disney, Time Warner, MTV – address the mobile content market via local partnerships; channeling their content through companies like Sina and Sohu. Alberta content providers may find a market for specialized content through these vendors.

- Alberta companies that hold intellectual property or provide applications or components related to next generation cell phone development may also find opportunities with the Chinese or foreign cell phone vendors. With the focus on rural subscribers, the handset vendors are under unprecedented

Page 19 of 39

China’s Wireless Communications Market April, 2007

price pressures and their profits are falling. Alberta companies that can help address this gap may find an opportunity with both foreign and domestic handset manufacturers in China.

- In the enterprise market, mobile convergence – including such things as push email, location based services, and IVR – are starting to see some traction. However, the horizontal (i.e. broadbased) enterprise market in China requires sustained effort to find success. Often smaller foreign companies who do not have immediate brand advantage find that local competitors – who have substantial advantages in terms of costs, local knowledge and relationships - rapidly emerge once the market has been demonstrated. Vertical and niche markets in the enterprise mobile solutions space (for example enterprise mobile solutions specifically designed for the petrochemical or geological industries) are less susceptible to this kind of displacement and are perhaps a better option for Alberta businesses. Deep industry knowledge can differentiate the Alberta business from the great numbers of general entrepreneurs in China, serving as a barrier to entry. Moreover, customer trust and brand can be established more quickly in a narrower market where relationships can be developed on the basis of common interest and expertise.

Page 20 of 39

China’s Wireless Communications Market April, 2007

Key Contacts

In China Ministry of Information Industry State Administration of Radio, Film and (信息产业部) Television (国家广播电影电视总局) 13 West Chang An Avenue No. 2 Fuxingmenwai Street Beijing, China 100804 Beijing China 100866 Tel: 86-10- 660177061 Tel: 86-10-86093114 http://www.mii.gov.cn http://www.chinasarft.gov.cn/

Ministry of Commerce Radio Management Bureau of Ministry of (商务部) Information Industry No.2 Dong Chang'an Avenue (信 息 产 业 部 无 线 电 管 理 局) Beijing China 100731 No.80 Bei Lishilu Street Tel:86-10-65284671 Beijing China 100037 Fax:86-10-65599340 Tel ：86-10-68009019 http://www.mofcom.gov.cn/ Fax ：86-10-68009056 http://www.srrc.org.cn/ Ministry of Science and Technology (科学技术部) State Intellectual Property Office No.15B Fuxing Road, (国家知识产权局) Beijing China 100862 No. 6 Xituchenglu, Jimenqiao Tel: 86-10-58881800 Beijing China 100088 http://www.most.gov.cn Tel: 86-10-82083114 http://www.sipo.gov.cn

Canadian Government Alberta International Offices in China: Consulate (Guangzhou) Suite 801, China Hotel Office Tower Alberta China Office Liu Hua Lu, Guangzhou 510015 China Canadian Embassy, Contact: Cathy Yao, Commercial Officer 19 Dongzhimenwai Dajie, Beijing, China 100600 Tel.: (86-20) 8666-0569 Tel: 86 10 6532 3536 Fax: (86-20) 8667-2401 Fax: 86 10 6532 1304 E-mail: [email protected] Email: [email protected] Internet: http://www.guangzhou.gc.ca Website: www.albertachina.com Consulate General of Canada (Hong Kong) CNPC - Alberta Petroleum Centre Trade Commissioner 2nd Floor, Science & Technology Building, 13/F Exchange Square, Tower I 20 Xue Yuan Road, Beijing, China 100083 Central, Hong Kong Tel: 86 10 6209 8533 Contact: Brian Wong, Trade Commissioner Fax/: 86 10 6209 8529 Tel.: (852) 2847-7414 (General) Email: [email protected] Fax.: (852) 2847-7441 Website: www.capc.cn Email: [email protected] Internet: http://www.hongkong.gc.ca Alberta Hong Kong Office Room 1004, Tower Two, Admiralty Centre, Canadian Commercial Corporation (CCC) 18 Harcourt Road, Hong Kong 50 O'Connor St., Suite 1100 Tel: 852 2528 4729 Ottawa, ON K1A 0S6

Page 21 of 39

China’s Wireless Communications Market April, 2007

Fax: 852 2529 8115 Tel.: (800) 748-8191 or (613) 996-0034 Emai;: [email protected] Fax: (613) 995-2121 Website: www.alberta.org.hk Internet: http://www.ccc.ca

Alberta Taiwan Office Export Development Corporation (EDC) 13 Flr, 365 Fu Hsing North Road, Taipei, Taiwan 151 O'Connor St. Tel: 886 2 2715 3637 Ottawa, ON K1A 1K3 Fax: 886 2 2715 1717 Tel.: (800) 880-1884 or (613) 598-2992 Email: [email protected] Fax: (613) 598-3098 Website: www.alberta-taipei.com Internet: http://www.edc.ca

Fisher, Stan Industry Canada (IC) Executive Director Spectrum, Information Technology and International Trade Operations Telecommunications Sector International, Intergovernmental and Aboriginal Relations Business Development Office 4th fl Commerce Place 300 Slater St. 10155 - 102 Street Ottawa, ON K1A 0C8 Edmonton, AB Contact: Michael Cleary, Manager, Market Development T5J 4L6 Tel.: (613) 991-4903 Phone: 780 427-6628 Fax: (613) 990-3858 Fax: 780 422-9127 E-mail: [email protected] E-mail: [email protected] Internet: http://strategis.gc.ca

Canadian Embassy in Beijing International Trade Canada (ITCan) 19 Dongzhimenwai Dajie 125 Sussex Dr. Chaoyang District Ottawa, ON K1A 0G2 Beijing 100600 China Internet: http://www.itcan-cican.gc.ca Contact: Shirley Ong, Trade Commissioner E-mail: [email protected] Asia Commercial Relations Division (WOA) Contact: Hai Xia Cui, Commercial Officer Contact: Stéphanie Berlet, Trade Commissioner E-mail: [email protected] Tel.: (613) 996-2974 Tel.: (86-10) 6532-3536 Fax: (613) 944-3049 Fax: (86-10) 6532-4072 E-mail: [email protected] Internet: http://www.beijing.gc.ca Export Controls Division (TIE) Consulate General (Shanghai) Tel.: (613) 996-2387 Tower 4, Suite 604, Shanghai Centre Fax: (613) 996-9933 1376 Nanjing Xi Lu Internet: http://www.dfait-maeci.gc.ca/eicb/menu-en.asp Shanghai 200040 China Contact: Tina Shih, Trade Commissioner International Business Opportunities Centre (IBOC) Email: [email protected] Contact: Tim Connolly, Special Projects Officer Contact: Sandra Jiang, Trade Commissioner Tel.: (613) 996-1814 Tel.: (86-21) 6279-8400 Fax: (613) 996-2635 Fax: (86-21) 6279-8401 E-mail: [email protected] E-mail: [email protected] Internet: http://www.e-leads.ca Internet: http://www.shanghai.gc.ca Market Research Centre (BMR) Consulate (Chongqing) Contact: Sean McLean, Trade Commissioner and Senior Suite 1705, Metropolitan Tower Market Analyst Wu Yi Road, Yu Zhong District Tel.: (613) 996-0688 Chongqing 40010 China Fax: (613) 943-1103 Contact: Peter Liao, Commercial Officer E-mail: [email protected] Tel.: (86-23) 6373-8007 Internet: http://www.infoexport.gc.ca Fax: (86-23) 6373-8026 E-mail: [email protected] Market Support Division (BMM) Internet: http://www.chongqing.gc.ca Contact: Catherine Côté, Trade Commissioner Tel.: (613) 996-1891 Fax: (613) 943-8820

Page 22 of 39

China’s Wireless Communications Market April, 2007

Appendix 1: Main Players in Related Segments of the Wireless Communications Markets

Value Added Services Players

Sina Corporation 20F Beijing Ideal International Plaza, No.58 Northwest 4th Ring Road, Haidian District, Beijing 100080, China Tel: (86-10)82628888 Fax: (86-10)82607166 http://corp.sina.com.cn/eng/sina_intr_eng.htm

- SINA Corporation (NASDAQ: SINA) is a leading online media company and value-added information service (VAS) provider for China and for Chinese communities worldwide. With a branded network of localized websites targeting Greater China and overseas Chinese, SINA provides services through five major business lines: SINA.com (online news and content), SINA Mobile (mobile value-added services), SINA Community (community-based interactive services and games), SINA.net (search and enterprise services) and SINA E-commerce (online shopping). These products offer an array of services including online media and entertainment, online fee-based VAS/wireless VAS, and e-commerce and enterprise e-solutions for personal, business, and government use.

- The company has close to 2,000 employees in its offices in six cities throughout Asia and the U.S. and maintains a network of four localized Web sites.

- SINA MOBILE

- Sina Mobile emerged in early 2002 as another major business line of SINA by integrating the advantageous resources of the former SINA Wireless, Memestar, Crillion and StarVi. As a leading mobile VAS provider in China, Sina Mobile provides over various platform services including SMS, MMS, Colour Ringing Tone (CRT), IVR WAP and KJAVA/BREW. Its products range from subscription to dating, gaming, and downloads. The content is provided by famous brands such as Time Warner, BANDAI, HELLO KITTY and WALKGAME.

- SINA mobile’s partners include China Mobile, China Unicom, China Telecom and China Netcom.

SOHU Corporation Vision International Center #1 Unit Zhongguancun East Road, Haidian District, Beijing, 100084, P.R. China Tel: 8610 - 6272 6666 http://www.sohu.com/about/English/aboutsohu.htm

- SOHU.COM Inc. (NASDAQ: SOHU) is China's premier online brand that has a portal network for news, search, e-mail, wireless messaging, instant messaging, browsing, games and shopping. SOHU has built one of the most comprehensive matrixes of Chinese language web properties

Page 23 of 39

China’s Wireless Communications Market April, 2007

and proprietary search engines, consisting of the mass portal and leading online media destination (www.sohu.com); interactive search engine (www.sogou.com); leading online mapping service provider (www.go2map.com); online alumni club (www.chinaren.com); games information portal (www.17173.com); real estate website (www.focus.cn); and wireless value- added services provider (www.goodfeel.com.cn)xii. These network of web properties offers the vast SOHU user community very broad choices regarding information, entertainment, communication and commerce.

- SOHU corporate services consist of online advertising on its matrix of websites as well as paid listing and bidding listing on its in-house developed search directory and engine. SOHU also offers three types of consumer services. SOHU offers wireless value-added services such as news, information, ring tone and picture content sent over mobile phones. The company also operates two massive multi-player online role-playing games and manages a business-to- consumer e-commerce platform.

- SOHU.COM was established by Dr. Charles Zhang, one of China's Internet pioneers.

- SOHU invests back in brand and product through exclusive online content agreements with Disney, NBA, China Open, Formula One, B.A.R. racing team, AFC Asian Cup, AC Milan, Miss World 2004 and China Daily. 106

TOM Online Inc. 8th Floor, tower W3, Oriental Plaza, No. 1 Dong Changan Avenue, Dong Cheng District, Beijing 100738, PRC Tel. : 8610 65283399 Fax : 8610 85181169 www.tom.com

- TOM Online Inc. (Nasdaq: TOMO, Hong Kong GEM: 8282) is a leading wireless Internet company in China providing value-added multimedia products and services. A premier online brand in China targeting the young and trendy demographics, the company’s primary business activities include wireless value-added services and online advertising. The company offers an array of services such as SMS, MMS, WAP, wireless IVR (interactive voice response) services, content channels, search and classified information, and free and fee-based advanced email. As at September 30, 2006, TOM Online is the only portal in China that enjoyed a top three ranking in every wireless Internet segment.

- TOM was one of the first players in this market to provide wireless interactive voice response (IVR) services and is now the biggest IVR provider in terms of market share.

- TOM Online acquired interests in Wu JI Network, the leading IVR service provider in China, on November 19, 2003 and became one of the first players in China to provide wireless IVR services. 107

xii In May 2004, SOHU acquired Beijing G. Feel Technology Co., Ltd. (‘Goodfeel”), a leading Chinese provider of value-added mobile data services for Wireless Applications Protocol (WAP). In a joint branding promotional campaign in May 2003, SOHU.com teamed up with CMCC and Motorola Inc. to jointly introduce short messaging and multimedia messaging services at the Mount Everest, where some twenty international teams had gathered to commemorate the first human conquest of the world’s highest mountain half a century ago.

Page 24 of 39

China’s Wireless Communications Market April, 2007

Tencent 16th Floor, Yinke Building, No. 38 Haidian Street, Haidian District, Beijing, 100080 PR China Tel. : 8610 62671188 Fax : 8610 62671188 http://www.tencent.com

- Tencent, founded in November 1998 in Shenzhen, is one of the first Internet Instant Messaging (IM) software developers in China, and a leading provider for Internet and mobile value-added services with a focus on IM and related value-added services.

- In 1999, Tencent launched its first IM software – Tencent QQ. Tencent integrates across different platforms such as Internet, mobile and fixed networks to cater for the communication needs of user. Users can communicate in real time with each other via the IM platform with their PCs, mobiles and fixed phones as well as various terminal devices. Not only can users communicate via texts, images, audio, video, and email, but they can also have access to various Internet services and mobile VAS designed to enhance community experience, including mobile games, dating , content downloads and other entertainment services. 108

NetEase SP Tower D, 26th Floor, Tsinghua Science Park Building 8, No. 1 Zhongguancun East Road, Haidian District Beijing 100084, PR China Tel. : 8610 82558163 Fax : 8610 82618163 http://corp.163.com/eng/about/overview.html

- Guangzhou NetEase established in May 1997.

- Through its subsidiaries and contracts with affiliates, NetEase operates a leading interactive online and wireless community in China and is a major provider of Chinese language content and services through our online games, wireless value-added services and Internet portal businesses. The average daily page views for the month ended September 30, 2005 exceeded 614 million. The company generates revenues from fees they charge users of online games and wireless value-added and other fee-based premium services, as well as from selling online advertisements on the NetEase Web sites. Basic service offerings are also available on the NetEase Web sites without charge to users.

- NetEase Wireless

- Through arrangements with the two principal mobile network operators in China, China Mobile and China Unicom, NetEase offers a wide range of services which allow users, for example, to receive news and other information such as stock quotes and email, download ring tones and logos for their mobile phones and participate in matchmaking communities and interactive games. SMS, MMS, IVRS and WAP are the mobile services they offer. 109

Linktone 6th Floor, Harbor Ring Plaza, 18 Central Tibet Road, Shanghai 200001, PR China Tel. : 8621 53853800 Fax : 8621 53853826 http://61.129.68.130/company/aboutus_en/overview/overview.html

Page 25 of 39

China’s Wireless Communications Market April, 2007

- Founded in October 1999, Linktone’s current focus on SMS allows potential access to virtually all China’s GSM subscribers. Linktone’s consumer services focus on entertainment, messaging and personalized information.

- Linktone has also established itself as a provider of innovative enterprise solutions. In May of 2002, Linktone partnered with McDonald’s Corporation (China) to launch a first of its kind, nationwide SMS promotion for the 2002 World Cup Tournament in Japan and Korea. Linktone has also worked to promote feature films, television programs, major entertainment events, and consumer goods. 110

Mtone Wireless Room 508, Block A, He Qiao Mansion, No.8, Guanghua Road, Chaoyang District, Beijing, 100026 China Tel:（8610）5925 3188 Fax:（8610）5925 3288 http://www.mtone.com/Services.htm

- Founded in Silicon Valley in 1994, Mtone has been a pioneer in China's mobile value added services market and commercialized the first wireless stock trading system and mobile information services with China Telecom in 1998. Mtone specializes in providing multiple services including online multi-user gaming that drive customer to customer interactions including competition, socialization, communications, and role playing all integrated into virtual environments and games. These capabilities support music, sports, humor, and other mobile entertainment applications. The company was the first to provide wireless data information services in China in 1998 and was first to offer commercial wireless mobile stock trading worldwide in mid 1998. In addition to its own service applications, Mtone works with the other content providers to allow these partners to distribute their content using the broad coverage, countrywide customer service, billing capability, as well as market knowledge of local provinces. The company has developed content for delivery via SMS, MMS, WAP and KJAVA to the largest cellular phone market in the world. 111

KongZhong Corporation 33rd Floor, Teng Da Mansion Building, 168 Xi Wai Da Jie, Hai Dian District, Beijing, 100044 PR China Tel : 8610 88576000 Fax : 8610 88575900 http://www.kongzhong.com

- Kongzhong Corporation is a leading provider of advanced second generation (2.5G) wireless value-added services in China. Being the strategic partner of China Mobile, China Unicom, China Telecom and China Netcom, KongZhong has gained the leading position in terms of revenues of WAP, MMS and JAVA.

- KongZhong delivers a broad range of services in three major categories, consisting of Interactive Entertainment, Media and Community.

- KongZhong has established relationships with handset manufacturers, as well.

- KongZhong has established strategic relationships with the leading wireless content providers such as Japan’s Index and Korea’s Olarks. The company also entered agreements with many

Page 26 of 39

China’s Wireless Communications Market April, 2007

prominent international mobile game providers including Japan’s Namco Limited, France’s Gameloft and Britain’s Macrospace.

- In January 2004, Kong published its mobile media brand KongZhong Media, which is based on 2.5G technology platforms and aims to provide all kinds of information including news, entertainment services, stock and bond information, military and literature events, sports and fashion news. (In August 2004, KongZhong Media successfully broadcast the 2004 Athens Olympic Games to domestic mobile users; October 2004, KongZhong Media issued Motorola V# Launch, China’s first commercial advertisements published through mobile phones to domestic users.) 112

Device Manufacturers

Lenovo No. 6 Shang Di Chung Ye Road, Haidian District, Beijing 100085 PR China Tel : 8610 58868888 http://www.lenovo.com.cn/

- Lenovo is an international technology company formed as a result of the acquisition by the Lenovo Group of the IBM Personal Computing Division.

- Lenovo develops, manufactures and markets cutting-edge, reliable, high-quality PC products and value-added professional services that provide customers around the world.

- In China, Lenovo commands more than one-third of the PC market, covering all segments. Its leading-edge PCs are highly acclaimed for their user-friendly, tailor-made designs and customized solutions for various customer needs, including the Tianjiao and Fengxing consumer desktops and Yangtian and Kaitian enterprise desktops. Lenovo also has a broad and expanding product line encompassing mobile handsets, servers, peripherals and digital entertainment products for the Chinese market.

- In 2004, Lenovo became the first Chinese company to join the Olympic Partner Program. As a worldwide sponsor with the International Olympic Committee, the company will be a major supplier of computing equipment – such as desktop and notebook computers and servers – and funding in support of the 2006 winter games in Turin and the 2008 summer games in Beijing.113

TCL Mobile Communication Co.. Ltd. 8/F, TCL Industrial Building, No.6 ELing South Road HuiZhou,GuangDong 516001,China Tel: 86-752-2288333 Fax: 86-752-2265428 www.tcl.com

- TCL Mobile Communication Co., Ltd, set up in March 1999, is a high-tech enterprise engaged in R&D, design, manufacturer, sales and service in the handset industry. It has since established a leading brand presence in domestic markets, and business has expanded considerably in all areas to support customer needs and the growth of the telecommunications industry in China.

- In 2002, the sales of TCL mobile exceeded US$1 billion, which enabled TCL to be among the top three in China’s mobile phone market. In addition, TCL became No.1 among China’s mobile

Page 27 of 39

China’s Wireless Communications Market April, 2007

phone manufacturers.114

Ningbo Bird No. 999 Dacheng East Road, Fenghua City, Zhejiang Province 315500 PR China Tel : 86-0574-88918812 Fax: 86-0574-88927489 http://www.chinabird.com/

- Ningbo Bird is a high technology company established in October 1992 which produces primarily mobile phones, palm computers and system equipment. Bird has a total of 30 branches, 400 site offices and 15,000 sales agencies, with 2400 repair centers to cover all of China.

- In 2005, Bird first integrated advanced technology to introduce an MP4 series of mobile phones, combining the entertainment technologies of cameras, videos, music playing and movie viewing functions, which are one more massive upgrade in design after the MP3 series. Bird has established a high quality assurance system and passed the ISO9001 in 1999, acquired the 2000 version of the ISO9001 quality certificate in July 2002. While Bird is a leading mobile phone manufacturer in China, Bird is also exporting to the international markets for 60 countries including: France, Italy , Russia, India, Mexico and Brazil.

Amoi 45 Tiyu Road, Xiamen Fujian 361012 PR China Tel : 86592 5058123 Fax: 86592 5091166 http://www.amoi.com/index.asp

- Amoi is focusing on 3C industries, namely Communication, Computer and Consumer Electronics. Its six business divisions have established an extensive range of products, including mobile communication, consumer audio and video systems, portable systems, as well as IT and electronic equipment. Many popular digital products are designed and manufactured by these 6 business divisions which work in a highly effective and low cost system though ERP from research, procurement, and manufacture to sales.

- In 2003, Amoi achieved continuous and sustainable growth in the mobile phone market and PHS sale became one of the top 3 of China. Meanwhile Amoi had expanded its business to new areas and developed its line of Notebook PCs, flat panel TVs and Mp3 players. In 2004, Amoi focused on digital 3C and high-end digital TV & digital camera development. Amoi is also entering the automotive electronics market.

ZTE Corporation ZTE Plaza , Keji Road South , Hi-tech Industrial Park , Nanshan District , Shenzhen , P.R.China , 518057 Tel : +86-755-26770000 Fax : +86-755-26771999 Email : info@mail.zte.com.cn www.zte.com.cn

- Founded in 1985, with global headquarters in Shenzhen, and operations in more than 100 countries, ZTE is a leading global provider of fixed line and mobile telecommunications equipment and network solutions. ZTE's product range is the most complete in the world -

Page 28 of 39

China’s Wireless Communications Market April, 2007

covering virtually every sector of the fixed line, wireless and terminal markets.

- ZTE is the fastest growing telecoms equipment supplier in the world, and China's only listed telecoms manufacturer, with shares publicly traded on both the Hong Kong and Shenzhen Stock Exchanges. With its three product series, i.e. wireless, network and terminal (mobile phone), ZTE is capable of providing global customers with diversified integrated telecommunications networking solutions and a wide range of professional services. By the end of 2004, the wireless capacity of ZTE CDMA equipment exceeded 20 million lines, and accordingly ZTE has become the biggest telecommunications equipment exporter in China.

- By now ZTE is the only Chinese mobile phone manufacturer that provides products of the three systems, i.e. GSM, CDMA and PHS. In a bid to grasp key technologies in mobile phone R&D, ZTE has independent intellectual properties to all the core software, hardware circuits, core chips and overall design & integration.

- The international market is becoming ZTE's most important strategic market. ZTE's diversified products like WCDMA, CDMA, NGN, GSM, switching, access, and optical transmission have already successfully entered over 60 countries.

Telecom Equipment Providers

ZTE Corporation (see above)

Datang Telecom Technology Co., Ltd. International Business Department Tel：+86-10-62301267 Fax：+86-10-62301160 Email：[email protected] http://www.datang.com/english

- Datang Telecom Technology Co.,Ltd. is a high-tech enterprise share-held by the CATT (China Academy Telecommunication Technology). It was registered and founded in the new technology development zone of Haidian District, Beijing, September 21, 1998. In October of the same year, the company s stock " Datang Telecom" was listed in Shanghai Stock Exchange, with stock code " 600198 ". The company’s registered capital was US$52.9 million, the legal representative is Mr. Zhou Huan.

- Datang telecom is mainly engaged in microelectronics, communication equipment systems, telecommunication toftware and hardware, system integration, and microelectronics . Datang Telecom has formed up industries with proprietary intellectual property rights, such as the key technologies including the SP30iEX for Switching Access, SOC for IC and Microelectronics, software, next generation wireless communication and so on.

Huawei Technologies Co., Ltd. Bantian, Longgang District Shenzhen 518129, P.R.China Tel : +86-755-28780808 http://www.huawei.com/

- Huawei Technologies is a leader in providing next generation telecommunications networks, and

Page 29 of 39

China’s Wireless Communications Market April, 2007

now serves 31 of the world's top 50 operators, along with over one billion users worldwide. Huawei's products and solutions encompass wireless products(HSDPA/WCDMA/EDGE/ GPRS/GSM, CDMA2000 1xEV-DO/CDMA2000 1X, TD-SCDMA, WiMAX), core network products ( IMS, Mobile Softswitch, NGN ), network products (FTTx, xDSL, Optical, Routers, LAN Switch), applications and software(IN, mobile data service, BOSS), as well as terminals(UMTS/CDMA). Major products are designed based on Huawei's ASIC chipset and utilize shared platforms to provide quality and cost-effective products.

- At the end of 2006, Huawei had over 61,000 employees, of whom 48% are dedicated to R&D. Huawei's global R&D centers are located in Bangalore, Silicon Valley, Dallas,, Stockholm, and Moscow, in addition to those in Beijing, Shanghai, Nanjing, Shenzhen, Hangzhou and Chengdu.

Foreign Players China Offices

Alcatel - Lucent 19-21/F, Tower E2, Oriental Plaza No. 1 East Chang An Avenue, Beijing 100738, P.R. China Tel: 86 10 6528 8688 Fax: 86 10 8518 821882 [email protected]

Avaya Ms. Yang, Shanghai Office Tel : 8621 61206911 Email : [email protected] www.avaya.com

Cisco Systems Inc. Level 19F-21F, Tower E1, The Towers, Oriental Plaza No. 1, East Chang An Ave., Dong Cheng District, Beijing, P.R.C., 100738 Tel: +86 (10) 8515 5000 Fax: +86 (10) 8518 1881 http://www.cisco.com/web/about/index.html

D-Link China 8th Floor, No. 641, Tianshan Road Shanghai, PR China 200336 Tel : +86-021-52068899 Fax: +86-021-52063299 http://www.dlink.com.cn

Ericsson 9A, 26A Hanwei Plaza NO.7, Guanghua Road, Chaoyang District Beijing 100004 Phone: +86 10 6596 9000 Fax: +86 10 6561 1700

Motorola NO. 108 Jian Guo Road

Page 30 of 39

China’s Wireless Communications Market April, 2007

Chaoyang District Beijing 100022 PR CHINA

Nokia No.5 Donghuan Zhonglu Beijing Economic & Technological Development Area, Beijing Xing Wang Industrial Park 100176 Beijing China Tel: +86 10 6787 8899 Fax: +86 10 6787 4438 www.nokia.com In 2004, Nokia continued to be the No. 1 player in the Chinese mobile equipment market, partly due to expansion in rural areas, company Chairman and CEO Jorma Ollila said at a news conference.

Nokia’s sales in China, its second-largest market, jumped 44 percent to US$3.6 billion in 2004, according to a company statement.

The company was also the largest telecom exporter in China last year—a position it has held since 2000—with exports up 56 percent to a record US$3.3 billion, Ollila said.

Nortel Beijing Headquarters Nortel Networks Tower Sun Dong An Plaza No 138 Wang Fu Jing Street Beijing 100006 China Tel: +86 10 6510 8000 Fax: +86 10 6528 0701

Samsung 20235 23th E Floor, ZhaoFeng Building, 1800 ZhongShan West Rd., Shanghai, P.R.China. Tel. 021-6440-1420 FAX No. 021-6440-1421

Siemens 7, Wangjing Zhonghuan Nanlu, Chaoyang District, Beijing 100102 Tel: (010) 64768888 Fax: (010) 64764901

Telecom Operators

(January 2006)The mobile operator market is divided between two companies: China Unicom which focuses on CDMA technologies and offers a service platform based on BREW from Qualcomm (40%), and China Mobile which uses GSM technology and offers the Monternet portal based on a Java platform from Motorola (60%).115

Page 31 of 39

China’s Wireless Communications Market April, 2007

China Mobile Communications Corporation ( China Mobile or CMCC) 60/F, The Center, 99 Queen's Road Central Hong Kong Tel: 852 3121 8888 Fax: 852 2511 9092 http://www.chinamobile.com

- CMCC was officially founded on April 20th, 2000 and is directly under the leadership of the central government. It is a key state-owned enterprise focusing on the mobile business, and is now the largest mobile network operator in China.

- CMCC has a registered capital of 51.8 billion RMB, assets over 320 billion RMB and 120,800 employees.

- CMCC deals mainly in mobile voice, data, IP telephone and multimedia service. It also has the right to operate Internet services and possesses international gateways. Besides the basic voice services, it provides multiple value-added services such as fax, data, IP telephone, etc.

- CMCC has succeeded in shaping nationwide famous brands like “GoTone”, “Shenzhouxing”” and “M-Zone”. The network access numbers of CMCC are 139, 138, 137, 136 and 135. 116

China United Telecommunications Corporation (China Unicom or CU) Jia 133 Xi Dan Bei Da Jie Xicheng District, Beijing 100032 PR China Customer Service : 10010 http://www.chinaunicom.com.cn/chinaunicom.

- CU was established on July 19, 1994.

- CU not only concentrates on mobile services, but also possesses fixed network and services. Nevertheless, it is the second largest mobile network operator in China.

- Its wireless Internet service brand “Uni-Info” provides a wide range of wireless VAS such as news, weather forecasts, stock info, foreign exchange rates, as well as railway and flight schedules.

- CU has introduced many new features such as “10158 Voice SMS” which gives users not used to writing short messages an alternative of saying and hearing short messages. “OTA-STK” service further satisfies SMS application demands among its users. 117

China Netcom Communications Corporation (CNC) Block C, 156, Fuxingmennei Street, Beijing, 100031, China Tel: +86-10-66169571 Fax: +86-10-66110009 http://www.chinanetcom.com.cn/en

- China Network Communications Corporation is a telecommunications enterprise in China and the fixed telecommunications service partner for the 2008 Olympic Games. On May 16th 2002, CNC was established on the basis of the former China Telecom Group Corporation and its affiliated telecom companies in the 10 Northern provinces (autonomous regions and municipalities), China Network Communications Shareholding Company Limited, Jitong Communications Company Limited, according to the Scheme of Telecom System Reform of the

Page 32 of 39

China’s Wireless Communications Market April, 2007

State Council. CNC is dedicated to the development of broadband communications, among which services or brand names such as "CHINA169", "CNC-Community", "PHS Value-added" and the service access number "10060" have penetrated into almost all households.

China Telecommunications Corporation (China Telecom) No. 31Jinrong Street, Xicheng District, Beijing, 100032, PR China Tel : +86-10-58501800 Fax : +86-10-58501060 China Telecom Global Services Center : 8621-50581000 (English) http://en.chinatelecom.com.cn/corp/index.html

- China Telecommunications Corporation (China Telecom) is an extra-large state-owned telecom operator organized according to China's telecom industry reform scheme. As a principal telecom enterprise and the greatest basic telecom operator of China, China Telecom owns the largest fixed-line telephone network in the world which covers the cities and towns as well as the rural areas of China. Member units of China Telecom include 31 provincial (municipal and autonomous regional) enterprises which provide telecom services nationwide.

- China Telecom's main businesses currently include: operating various kinds of domestic and international fixed line telecom networks, including local wireless loops; providing telecom network-based voice, data, image, multimedia and information services; carrying out account settlements for international telecom services and developing overseas markets; carrying out some services which are related to telecom and information businesses such as system integration, technology development, technical service/advice, information service consultation, advertisement and publishing; production, sales, import and export of telecom equipment; designing and implementing telecom projects; operating other services which are required by the market development provided that provision of such services would have been authorized or permitted by the government of the country.

China Tietong Telecommunications Corporation (formerly China Railcom) 21/F, Yuetan Mansion, No. 2, Yuetan North Street, Xicheng District, Beijing 100045 Tel. : 8610-51890088 Fax : 8610-51847576 http://www.chinatietong.com/english/index.htm

- At January 20, 2004, it was shifted from the Ministry of Railways to the administration of the State-owned Assets Supervision and Administration Commission (SASAC) and its name was changed to "China TieTong Telecommunications Corporation." Ever since its incorporation, China TieTong is a major state-owned basic telecommunications operator.

- With total assets of $6.3 billion and a staff of 72,000, China TieTong has established 31 provincial braches (including those located in the autonomous regions), 316 municipal branches and five holding subsidiaries. China TieTong in addition to varied value-added services, currently also offers basic telecom services to the public, including: domestic/international voice, data, image and multimedia communications, and domestic communications resource leasing services.

Network Profile

- From 2001 to 2003, China TieTong has basically completed the construction of trunk transmission network, switching network, data network, MANs and the infrastructure for railway communications and interconnection. Therefore, China TieTong has reinforced its capability to

Page 33 of 39

China’s Wireless Communications Market April, 2007

provide telecommunications services to the public, and transformed from a dedicated railway communications provider to a public provider. Currently with its varied services covering nearly 300 LANs nationwide, China TieTong has 150,000 kilometers of communications lines (including 100,000 kilometers of fiber cables), nearly 30,000 ports for various data services and 3600 kilometers of digital microwaves. In addition, its total switch capacity exceeds 18 million lines

China Satellite Communications Corporation (China Satcom) 42, Xueyuan Road Haidian District, Beijing 100083, PR China Tel : 86-010-62026997 Fax: 86-010-62026997 http://www.chinasatcom.com/English/about.htm

- China Satellite Communications Corporation, one of the six basic telecommunications operators in China, was founded on Dec. 19, 2001 under the management of the Ministry of Information Industry. The establishment of China Satcom was a major strategic move aimed at deepening the reform of the telecommunications industry and setting a new start point for further development of satellite communications. The member enterprises of China Satcom include China Telecommunications Broadcast Satellite Corp., China Orient Telecommunications Satellite Company Co, Ltd., China Space Mobile Satellite Telecommunications Co, Ltd., China Posts & Telecommunications Translation Service Corp. and China Telecom (Hong Kong) Chinasat Corp.

- The main services of China Satcom include satellite special services in communications, broadcast and other fields, satellite mobile communications services, Internet services and VSAT services; network services; 3.5G WLAN services; 800MHz trunking services and comprehensive data services based on GPS; audio, data and multimedia services based on satellite transmission technology; some technical services and some import and export services relating to satellite communications services above.

Page 34 of 39

China’s Wireless Communications Market April, 2007

End Notes

1 http://www.emarketer.com/Article.aspx?1004531&src=article1_home 2 http://www.telecomdirectnews.com/do.php/100/22255 3 http://www.telecomdirectnews.com/do.php/100/22255 4 http://www.telecomdirectnews.com/do.php/100/22255 5 http://www.telecomdirectnews.com/do.php/100/22255 6 http://www.globalinsight.com/SDA/SDADetail8099.htm 7 http://www.comsoc.org/livepubs/ci1/public/2005/jan/ciguest_shen.html 8 http://www.pacificepoch.com/newsstories/87451_0_5_0_M/ 9 Reported company financial results 10 http://project.hkkk.fi/helsinkimobility/papers/Mobile%20Applications_1_3.pdf 11 Study Paper on Financial Analysis of the Telecom Industry of China and India, Study Paper No. 1/2005, Telecom Regulatory Authority of India, June 16, 2005. 12 Reported company financial results (http://www.chinamobileltd.com/images/pdf/2006/a_20061021_e.pdf_) 13 Reported company financial results 14 http://www.telecomdirectnews.com/do.php/100/22255 15 http://www.tdscdma-forum.org/en/pdfword/200461412161457733.pdf 16 http://www.cae.cn/english/publications/content.jsp?id=898 17 http://www.telecomdirectnews.com/do.php/100/22255 18 http://www.telecomdirectnews.com/do.php/100/22255 19 http://www.china-cic.org.cn/english/digital%20library/200608/2.pdf 20 http://www.answers.com/topic/list-of-mobile-network-operators 21 http://www.chinamobileltd.com/ir.php?menu=11 22 http://www.pacificepoch.com/newsstories/87451_0_5_0_M/ 23 http://www.answers.com/topic/list-of-mobile-network-operators 24 http://www.mobilecomms-technology.com/projects/unicom-cdma/ 25 http://www.mc21st.com/showEnPost.aspx?newsID=22671 26 http://www.chinaunicom.com.hk/en/home/default.html 27 http://www.answers.com/topic/telecommunications-industry-in-china 28 http://www.mc21st.com/showEnPost.aspx?newsID=22671 29 http://www.pacificepoch.com/newsstories/78365_0_5_0_M/ 30 http://www.answers.com/topic/telecommunications-industry-in-china 31 http://www.pacificepoch.com/newsstories/78365_0_5_0_M/ 32 http://www.pacificepoch.com/newsstories/78365_0_5_0_M/ 33 http://www.pacificepoch.com/newsstories/85468_0_5_0_M/ 34 http://www.telegeography.com

Page 35 of 39

China’s Wireless Communications Market April, 2007

35 http://www.telegeography.com 36 http://www.telegeography.com 37 http://www.fiercewireless.com/story/china-mobile-s-first-foreign-acquisition/2007-01-22 38 http://www.telegeography.com 39 http://www.telegeography.com 40 http://www.telegeography.com 41 http://www.chinadaily.com.cn/bizchina/2007-03/02/content_818200.htm 42 http://www.telegeography.com 43 http://www.telegeography.com 44 http://www.telegeography.com 45 http://www.telegeography.com 46 http://www.telegeography.com 47 http://www.pacificepoch.com/newsstories/89734_0_5_0_M/ 48 http://www.3gnewsroom.com/3g_news/may_06/news_6980.shtml 49 http://www.marbridgeconsulting.com/newsletter/Dec22_2006/wireless.htm 50 http://www.researchconnect.com/buyreport/report_16272.asp 51 http://www.tdscdma-forum.org/en/pdfword/200461412400489465.pdf 52 http://www.researchconnect.com/buyreport/report_16272.asp 53 http://searchmobilecomputing.techtarget.com/sDefinition/0,,sid40_gci939058,00.html 54 http://www.cnii.com.cn/20060529/ca354561.htm 55 http://www.researchconnect.com/buyreport/report_16272.asp 56 http://www.researchconnect.com/buyreport/report_16272.asp 57 http://www.mc21st.com/showEnPost.aspx?newsID=19304 58 Reported company financial results 59 http://fec2.mofcom.gov.cn/aarticle/theoryresearch/200611/20061103818169.html 60 http://www.mc21st.com/showEnPost.aspx?newsID=18523 61http://www.chinatechnews.com/2006/02/21/3442-telecom-operators-will-optimize-little-smart-phs-network/ 62 http://www.telegeography.com/cu/article.php?article_id=16790 63 http://fec2.mofcom.gov.cn/aarticle/theoryresearch/200611/20061103818169.html 64 http://www.interfax.cn/displayarticle.asp?aid=18260&slug=MOBILE%20TV 65 http://www.wifinetnews.com/archives/007083.html 66 http://www.palowireless.com/marketresearch/product.asp?productid=1394298 67 http://blog.tmcnet.com/blog/wimax/wimax/2005_01.html 68 http://www.bjreview.com.cn/forum/txt/2006-12/18/content_51271.htm 69 http://www.chinatechnews.com/2007/02/07/4967-mii-will-investigate-40-wvas-providers/#more-4967 70 http://www.teleclick.ca/2007/01/chinese-government-launches-4g-future-project-in-shanghai/ 71http://www.tmcnet.com/wifirevolution/articles/4803-china-mobile-phone-market-up-15-percent-2006.htm 72 http://english.people.com.cn/200701/31/eng20070131_346405.html

Page 36 of 39

China’s Wireless Communications Market April, 2007

73 http://www.researchconnect.com/buyreport/report_16280.asp 74 http://www.researchconnect.com/buyreport/report_16286.asp 75 http://www.electronics.ca/reports/ic/china_ic_card_market.html 76 http://www.tmcnet.com/wifirevolution/articles/4803-china-mobile-phone-market-up-15-percent-2006.htm 77 http://www.chinatechnews.com/2006/12/17/4739-4739/ 78 http://english.rednet.cn/c/2007/02/06/1124877.htm 79 http://english.rednet.cn/c/2007/02/06/1124877.htm 80 http://www.marbridgeconsulting.com/newsletter/Dec22_2006/wireless.htm 81 http://www.itfacts.biz/index.php?id=P5888 82 http://www.palowireless.com/marketresearch/product.asp?productid=1217294 83 http://www.digitimes.com/telecom/a20070111PR200.html 84 http://www.idc.com/getdoc.jsp?containerId=IDC_P10744 85 http://www.digitimes.com/telecom/a20070111PR200.html 86 http://www.marketavenue.cn/upload/REPORTS_301.htm 87 http://www.marketavenue.cn/upload/REPORTS_301.htm 88 http://im2.do.isst.fraunhofer.de/vasc/SummaryReport/VAS-CHINA-SummaryReport.pdf 89 http://www.researchconnect.com/buyreport/report_18415.asp 90 http://www.palowireless.com/marketresearch/product.asp?productid=1426750 91 http://www.researchandmarkets.com/reportinfo.asp?report_id=312156 92 http://www.digitimes.com/telecom/a20070111PR200.html 93 http://www.bdachina.com/EN/features/AnalysisInfo.aspx?id=109 94 http://www.c114.net/cn-c11404/newsheadline_html/20061027105833-1.Html 95 http://www.digitaltvdesignline.com/news/190300642 96 http://www.interfax.cn/displayarticle.asp?aid=20395&slug=MOBILE%20TV-CMMB 97 http://www.interfax.cn/displayarticle.asp?aid=18260&slug=MOBILE%20TV 98 http://www.digitaltvdesignline.com/news/190300642 99 http://www.itfacts.biz/index.php?id=P7539 100 http://www.palowireless.com/marketresearch/product.asp?productid=1217276 101 http://www.instat.com/r/nrep/2004/IN0401707CHW.htm 102 http://www.instat.com/r/nrep/2004/IN0401707CHW.htm 103 http://www.neowlan.net/eng/arhiv.php?id_novic=49 104 http://www.wirelesschina-beijing.com/2006wireless/bwa_e.htm 105 http://www.instat.com/r/nrep/2004/IN0401707CHW.htm 106 http://im2.do.isst.fraunhofer.de/vasc/SummaryReport/VAS-CHINA-SummaryReport.pdf 107 http://im2.do.isst.fraunhofer.de/vasc/SummaryReport/VAS-CHINA-SummaryReport.pdf 108 http://im2.do.isst.fraunhofer.de/vasc/SummaryReport/VAS-CHINA-SummaryReport.pdf 109 http://im2.do.isst.fraunhofer.de/vasc/SummaryReport/VAS-CHINA-SummaryReport.pdf 110 http://im2.do.isst.fraunhofer.de/vasc/SummaryReport/VAS-CHINA-SummaryReport.pdf

Page 37 of 39

China’s Wireless Communications Market April, 2007

111 http://im2.do.isst.fraunhofer.de/vasc/SummaryReport/VAS-CHINA-SummaryReport.pdf 112 http://im2.do.isst.fraunhofer.de/vasc/SummaryReport/VAS-CHINA-SummaryReport.pdf 113 http://www.lenovo.com/lenovo/hk/en/ 114 http://ir.tom.com/en/news_20050627.html 115 http://im2.do.isst.fraunhofer.de/vasc/SummaryReport/VAS-CHINA-SummaryReport.pdf 116 http://im2.do.isst.fraunhofer.de/vasc/SummaryReport/VAS-CHINA-SummaryReport.pdf 117 http://im2.do.isst.fraunhofer.de/vasc/SummaryReport/VAS-CHINA-SummaryReport.pdf

Page 38 of 39