1. A UK Trade & Investment Mission to China and Korea Wireless Telecomms in China & Korea Assessment, Conclusion, Recommendations Walter Tuttlebee Mobile VCE

2. A UK Trade & Investment Mission to China and Korea Assessment & Conclusions Lessons to benefit UK Trade & Investment ? Policy Objectives & Characteristics (in China / Korea) Policy Implementation & Outcomes (in China / Korea) Implications for the UK What works in Asia won’t work here, but… …the UK has different strengths on which we need to build Recognising the Issues Clear Lessons Recent Changes in UK Policy & Environment Building for the Future – what could or should be done ?

3. A UK Trade & Investment Mission to China and Korea Assessment & Conclusions Policy Objectives & Implementation in C/K Clear, similar, but different, national policy objectives Economically and socially driven Looking beyond industrialisation to the knowledge economy, with major focus on (and success in) developing R&D base Common Implementation characteristics Technology innovation driven by future services, not in isolation Specific service and technology priorities, jointly owned by Government and Industry Specific, long-term, R&D programmes, jointly funded by Government and Industry at very substantial levels Commitment to and mechanisms for commercialisation Consistent implementation over time, with ability to make mid- course corrections and to live with conflicts and inconsistencies

4. A UK Trade & Investment Mission to China and Korea Assessment & Conclusions Policy Outcomes C/K (1) Technology Investment In both countries the clear lead and support given by Government has been matched by industry commitment in terms of financial investment and, in the case of China, significant foreign direct investment. Technology Innovation Korean and Chinese industry and research institutes today hold significant patent portfolios in WiMAX, TD-SCDMA and 4G as a direct result of these investments, reducing their future reliance on overseas IPR Standards Both countries contributed large volumes of technical results, creating an opportunity for future licensing exploitation. Both will submit strong technical proposals in response to the 2008 ITU call wrt 4G, substantiated by experimental testbed results.

5. A UK Trade & Investment Mission to China and Korea Assessment & Conclusions Policy Outcomes C/K (2) Domestic Market Creation Korea - has successfully created a new mobile TV service for its consumers and a new market for its own manufacturers, of ~4.2m handsets to March 2007, a 9% population penetration. Its industry is strongly positioned to address the global mobile TV opportunity, irrespective of technical standard (DMB, DVB-H or MediaFLO). China - is poised to use the Olympic opportunity to create a domestic 3G market for its TD-SCDMA technology, which will initially be dominated by its own local industry. Longer term, if the market does become significant, it is possible that a few key international players, such as Siemens, will also be beneficiaries, with local companies losing market share, as has occurred in the 2G handset market.

6. A UK Trade & Investment Mission to China and Korea Assessment & Conclusions Policy Outcomes C/K (3) Exports Korea has achieved the export targets specified in its IT 8-3-9 plan, apparently ahead of schedule. Export contribution from WiBro to date is minimal, Mobile TV has been greater, and WCDMA handset exports significantly greater. China has enjoyed growth in telecoms exports, although its policies have addressed technologies that have yet to be commercialised. Industry Implications Telecom Manufacturers continue to play a growing role in both countries’ economies, at a time when counterparts in US/ Europe have seen significant cost pressures and consequent mergers (eg Nokia-Siemens, Alcatel-Lucent). The fact that Telecom Operators in in both countries are now looking overseas for growth is a new trend, not so evident in 2004

7. A UK Trade & Investment Mission to China and Korea Assessment & Conclusions Policy Outcomes C/K (4) Regulation In both countries the historic separate regulation of broadcasting and telecoms is causing tensions in the era of service convergence. Whilst this has been “managed” to date, structural changes in regulation may be anticipated within the next few years, if both countries are to fully capitalise on their policy investments – this will erode an advantage currently enjoyed by the UK which we could exploit.

8. A UK Trade & Investment Mission to China and Korea Assessment & Conclusions Implications for the UK Telecom manufacturing in the UK is a minimal activity by comparison with Korea or China, but … Telecoms is an essential enabler of the digital economy, which we neglect at our peril. The UK has: World-leading telecom operators & broadcasters, with mature capabilities to operate global networks and services. Great innovation – the UK’s light touch regulation, (free market vs control), leads to service innovation, enabled by cooperation, creativity and commercial deals, as well as technology. World leading research - University education and research in telecoms remains remarkably strong in the UK - and has contributed to most telecom manufacturers having R&D in the UK. A need for a technology capability for network-centric warfare

9. A UK Trade & Investment Mission to China and Korea Assessment & Conclusions Recognising the Issues & Opportunity Every country recognises that ICT is the enabler of the digital economy – including Korea, China & the UK …but how to seize the opportunity ? 2004 Report Conclusions: “Strategic action is urgently needed if the UK is to retain its role as a global knowledge-based economy…over the next decade”. It did not propose the adoption of Asian policies It did identify the need to develop a clear and coordinated UK response and identified the opportunity for the UK to provide a lead in Europe. It stimulated much discussion amongst UK industry players, but at that time met with limited resonance in Government

10. A UK Trade & Investment Mission to China and Korea Assessment & Conclusions Lessons from 2007 Reinforced these earlier conclusions, adding new evidence Clear objectives have shaped straightforward policy goals in China & Korea, accompanied by specific objectives Detailed approaches to achieving these goals have been developed through Industry/Government analysis and consensus. These approaches have been implemented consistently over several years Whilst not without conflicts and inconsistencies, and despite less than 100% success, these policies have moved both countries significantly closer to their objectives Tangible economic benefits and international recognition, for both Industry and Government of these nations, has been realised

11. A UK Trade & Investment Mission to China and Korea Assessment & Conclusions The UK Environment – The Right Time Many parts of UK Government now recognise the issues and have begun to take independent action – the need for this to become joined-up is also recognised Technology Strategy – the establishment of the industry-led Technology Strategy Board. The TSB has shown clear drive and initiative, establishing specific new priorities and mechanisms. Research Impact – an escalating priority has been given to the economic impact of publicly funded research by Treasury. University-Industry Engagement - EPSRC has developed new mechanisms, such as Strategic Partnerships with industry, to increase knowledge transfer Ofcom – has endeavoured to take a converged approach to the regulation of communications and broadcasting, whilst increasingly recognising the impact of spectrum on economies of scale and national competitiveness UK T&I – Recognise need for refreshed strategies

12. A UK Trade & Investment Mission to China and Korea Assessment & Conclusions Starting the Debate What might be a possible strategic response to strengthen the UK’s future economic prospects? “What might be an appropriate (simple) national objective for the UK?” “Within the framework of recent UK developments how might this be achieved?” We want to stimulate a debate involving Government, Industry and other key players, to accelerate the development of such shared goals and approaches Policy objectives jointly owned by Industry & Government, and Implementation actions that logically flow from these

13. A UK Trade & Investment Mission to China and Korea Assessment & Conclusions Building on National Strengths Global Operators Telcos (Vodafone, BT, Inmarsat) and Broadcasters ( BBC, BSkyB) – players who compete and collaborate at the leading edge of service convergence and innovation A Strong Research Base Internationally recognised University research capability, R&D centres of many of the major international communications manufacturers, and collaborative research mechanisms across borders & cultures (Mobile VCE) Forward-looking Spectrum & Telecommunications Regulation Highly developed Service Economy & Creative Industries Clear Government Commitment to strengthening and exploiting the science base The strongest for a long while

14. A UK Trade & Investment Mission to China and Korea Assessment & Conclusions What is Needed ? A Clear Agreed Objective with full Industry and Government commitment, both in principle and financially, flowing out of consensus Structures to facilitate effective dialogue between Industry and Government to create detailed implementation approaches, building upon the agreed objective Mechanisms to support Technology Pull-through eg enabling experimental trials of innovative research for ‘not-yet-proven’ business cases (but not ‘basket cases’ !) Coordination of Regulatory and Industry Policy requiring the involvement of Ofcom, BERR and other agencies and bodies – so that successful trials can be rapidly commercialised Engagement of Multiple Government Departments / Agencies to include all who can benefit

15. A UK Trade & Investment Mission to China and Korea Assessment & Conclusions Mechanisms ? The Knowledge Transfer Network ? One possible forum for industry dialogue; however implementation clearly exceeds the TSB-defined remit of a KTN and requires much wider Government participation, support and funding. An Innovation Platform ? Possibly … but not in isolation Wireless telecoms is a fundamental transformational capability for many (all ?) of our industries The integration of the above discrete steps into an overall national wireless telecoms initiative could be highly effective in underpinning, working with and providing a technology enabling framework for existing and emerging Innovation Platforms, leveraging wireless, telecom and other ICT technology across them all, impacting multiple industries and attracting inward investment.

16. A UK Trade & Investment Mission to China and Korea Assessment & Conclusions A Way Forward ? Let’s start talking… Other countries will, in all probability, set the standards agenda for products and manufacturing for future telecoms such as 4G China and other Asian countries have invested and continue to invest both significantly and strategically in ICT, in a logical and consistent manner, harmonising Government and Industry activity and perspectives to grow manufacturing exports. The UK has a historic opportunity to prepare itself for the next decade by leveraging wireless telecoms, to the benefit of our diverse and strong service economy, creating an environment to retain and attract manufacturers’ R&D inward investment The UK should grasp this opportunity for strategic coordination and thereby ensure a significant participation in the next stage of the wireless telecoms and wider industry evolution.

17. A UK Trade & Investment Mission to China and Korea Presentation Downloads All of today’s presentations will be available from early next week from: http://www.mobilevce.com/calendar.php Visit the above webpage Find the entry for this event, dated 10 th August 2007 (part way down the page, near top of the section ‘Past Meetings & Events’) Click on ‘View Agenda’ You may download each presentation by clicking on the relevant Agenda item Thank you