China Wi-Fi encryption rights holders named

Eleven firms only

Wi-Fi equipment makers that want to support China’s own encryption standard, announced last month, will be have to work with one of 11 designated firms. The Chinese authorities’ announcement of the local firms’ control of the technology aroused fears – or perhaps paranoia – among western vendors that this would severely disadvantage them in the rapidly growing Chinese market.

The Standardization Administration of China announced last month that, from December 1 2003, any company shipping 802.11b or 802.11g Wi-Fi gear to the country for use in hotspots or enterprises must support its homegrown encryption standard, Wired Authentication and Privacy Infrastructure (WAPI). Support for WAPI is not included in any international Wi-Fi standards, but Chinese sources argue that its technology is superior, especially for its markets and character sets, and that it should have been incorporated into IEEE specifications.

Critics say that, by placing the technology in the hands of 11 companies – including Huawei Technologies, which is having a disruptive effect on the western networking suppliers such as Cisco – rather than making it open, China is creating the danger that the 11 firms will charge exorbitant royalties or will delay sharing developments with partners, in order to give the advantage to Chinese players. Another fear is that companies will have to reveal technical secrets to their Chinese partners in order to support WAPI.
US embassy officials, under pressure from the Wi-Fi industry, have already raised these issues with the Chinese authorities.

Chinese Wi-Fi sales are estimated to be worth $72.5m this year. China is in the top three investors in Wi-Fi in the Asia-Pacific region, which accounted for 18 per cent of the world total by units shipped in the third quarter, according to Synergy Research Group.

China is increasingly looking to set its own technology standards in order to take a more leading role in setting the hi-tech agenda and to reduce its dependence on western innovations, and its royalty payments.

© Copyright 2003 Wireless Watch

Wireless Watch is published by Rethink Research, a London-based IT publishing and consulting firm. This weekly newsletter delivers in-depth analysis and market research of mobile and wireless for business. Subscription details are here.

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