China's Wireless Potential Lures Foreign Companies, Says RHK.

Business Editors/High-Tech Writers

SOUTH SAN FRANCISCO, Calif.--(BUSINESS WIRE)--March 3, 2004

Telecom growth in China to date has surpassed all expectations. RHK believes that broadband subscriber numbers in China have reached an inflection point whereby carriers will begin to enjoy growth, for the next 3 years at least, that may mirror the recent extraordinary growth in mobile voice.

As demand for broadband access heats up, all the elements appear to be in place to allow broadband wireless to capture a significant portion of this market. These elements include established standards for 5.8 GHz and 3.5 GHz, issuance of spectrum licenses to multiple carriers to spur competition, decreasing prices for broadband wireless equipment, scarcity of wireline broadband service, and attractive subscription fees for broadband wireless access. Alie Saad, Program Director, Broadband Wireless Group at RHK sees "growing signs that the pace of the telecom infrastructure build-out by the state-owned enterprises (SOEs) will slow down, due in part to a credit crunch at the four state banks of China that have underwritten the majority of the costs."

Broadband subscribers and penetration rate for various countries
(2003)

                                   Broadband       Broadband household
                 Broadband         subscribers      penetration rate
                 subscribers       penetration     (assuming 4-member
  Country        (total)              rate             household)
--------------------------------------------------------------------
Korea (Rep)      10,128,000            21.3%              82.2%
Hong Kong         1,009,426            14.9%              59.6%
Canada            3,515,000            11.2%              44.8%
Taiwan            2,100,000             9.4%              37.6%
Belgium             870,000             8.4%              33.6%
Sweden              700,000             7.8%              31.2%
Netherlands       1,170,000             7.2%              28.8%
Japan             9,092,039             7.1%              28.4%
United States    19,881,549             6.9%              27.6%
United Kingdom    2,643,000             4.4%              17.6%
Germany           3,240,000             3.9%              15.6%
Spain             1,077,405             2.6%              10.4%
France            1,456,000             2.4%               9.6%
China            11,364,000             0.8%               2.9%

Source: ITU, RHK Inc.

Contained in this report are detailed discussions of the following:

-- All the elements appear to be in place for broadband wireless

to capture a significant portion of the broadband access

market.

-- Regulatory Enviroment - SRRC has issued 108 licenses at 3.5

GHz to provide service to 36 cities and will issue another 325

licenses in 2004. Regulation of the 5.8 GHz band is at the

local authority level.

-- Technology Issues - The new Chinese authentication standard,

WAPI, has been released.

-- Competitive Landscape - The licensing process allows three

carriers to deploy wireless broadband in each city in China.

Wireless licenses in a given city are awarded to carriers with

minimum last-mile wireline infrastructure ownership in that

city.

-- Telecom Statistics and Forecast Current telecom statistics and

a market forecast--for base station rollouts as well as

enterprise and SOHO/residential CPE spending--are provided in

this section.

-- RHK Recommendations

For more information regarding this report, please contact RHK Client Services at [e-mail].

About RHK -

    STARTRAX2004 -

    Attend the telecommunications industry's premier event for
    business leaders and technology innovators, April 14-16, 2004.
    Mark Hopkins Hotel, San Francisco
    This year's theme is Broadband:
    Services, Differentiation, and Profits
    Register now at www.startraxconference.com

RHK's first-class international team offers a rigorous understanding of telecom networks, unbiased analysis, a strategic perspective, and real-world operating experience to meet its clients' business challenges. Visit www.rhk.com, or email [e-mail], for more information.