David WolfBy David Wolf
The Central Government has, with the greatest respect, recently gone a little odd about setting and owning technology standards.

In what appears to be a coordinated, policy-driven campaign, China's bureaucrats have embarked on a coordinated effort to create their own home-grown standards that would see the government determining everything from TV signals to operating system software to microprocessors.

Now don't get me wrong — I'm all for technological standards. Agreeing upon common specifications is the glue that keeps our innovation-happy industry from consuming itself in a fit of mutual conflict and end-user frustration. But there is a fine line between the righteous desire to bring order to chaos and the insidious urge to control an industry for one's own purposes.

The line becomes even finer if you accept as legitimate (as I do) the government's desire to establish China as a net exporter of intellectual property, rather than a net importer, and to hold out as a carrot to domestic innovators the lure of global markets as a means to drive domestic research and development.

Most of the government's efforts in this area have been good to outstanding. But it doesn't take an IEEE Fellow to tell you that in several cases of standards-setting, China's regulators face choices that while appearing to help local industry at the expense of the multinationals, actually are set to damage China's own technology sector and make their products unnecessarily costly to individuals and enterprises.

– Forcing local carriers to adopt TD-SCDMA in some form would deprive of the benefit of lower and falling infrastructure and handset costs for W-CDMA and CDMA-2000 1x systems (the other two standards are global, thus providing economies of scale.) It would also raise overhead for those domestic handset manufacturers who now own 40% of the CDMA/3G mobile market in China, thus making their phones more costly, and raise prices for the consumer due to higher costs to the carrier and the manufacturer.

– Allowing the Ministry of Health to impose an electro-magnetic emissions standard on carriers and manufacturers that is ten times stricter than the standard endorsed by the WHO and supported by global research could also deal a serious blow to the local industry. Carriers, handset and infrastructure manufacturers, and ultimately consumers would have to pay for the retooling of China's mobile phone industry and the reconstruction of entire networks just as PRC manufacturers are reaching the point where they can compete globally for market share and carriers for capital.

– The creation of a purely domestic standard for the "digital home" will again force local manufacturers to develop products conforming to local and global standards. Given the comparatively small market for such products in China, the end result will inevitably be higher equipment costs for those of us digitizing our homes here. Further, we have to face problems of incompatibility between locally bought gear and that bought overseas. And in the end, it will mean fewer homes digitized, less revenue for local companies, and a growing digital divide.

– Please apply all of the issues above to the proposed China Wireless-LAN standard.

There are enough bad policy decisions in the history of technology to demonstrate the kinds of costs China would face if it made bad decisions now. America's expensive digital HDTV standard is a bad joke that has ensured television will remain analog and standard definition for a long time yet. China's original ETACS mobile phone standard delivered abysmal service to handsets that cost orders of magnitude more than in Hong Kong. And Japan's radio standard for mobile phones makes phones more expensive in Tokyo than anywhere else and prevents any roaming from elsewhere.

With apologies to my friends at Hebrew National, let us hope the decisions of China's technology regulators live up to a higher standard.

About the author:
Silicon Hutong is an ongoing series of thoughts and commentaries by David Wolf, President and CEO of Wolf Group Asia'a management advisory firm providing strategic communications counsel to technology, media, entertainment, and telecommunications companies in Greater China and the Asia-Pacific region. David's opinions are his own and do not reflect those of either WGA or it's clients. Past articles can be found at www.chinatechnews.com, the Silicon Hutong Blog can be found here and David himself can be contacted at [email protected].

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