-November 16, 2006, Netease

The following speech is given by He Ruijuan (sales & marketing director of TD Tech) on November 16, 2006 at the “3G in China” Global Summit 2006

Distinguished leaders and experts, just now the speaker expatiated on the 3G’s macro industry environment as well as related policies and technology. Now I’m honored, on behalf of TD Tech, to have this opportunity to share with you our views about the TD-SCDMA products and what we have done in preparation for TD-SCDMA commercialization.

The first part is an introduction of the role TD Tech plays in the TD-SCDMA industry, the strengths of 3G, and TD Tech’s preparations for TD-SCDMA commercialization.

TD Tech is the result of large-scale cooperation between Siemens and Huawei, the two manufacturing giants of communications equipment. Founded on March 18, 2005, TD Tech is engaged in TD-SCDMA R&D, manufacturing, service and marketing. Its mission is to focus on our customers’ needs, promptly offer quality solutions, and jointly build a bridge for success. Now the company has completed its structure with R&D, testing, marketing, service, and HR management among others. Among our 600 employees, more than 70% has master degrees or above, ensuring that the company operate at the highest quality and efficiency.

The R&D of TD-SCDMA products started from 1998. As Siemens, one of our parent companies, offered the TD-SCDMA program as early as the second quarter of 1998, we embarked on the path of TD-SCDMA from then, which is filled with opportunities and challenges. In 2004, Siemens and Huawei signed a mutual cooperation contract, so Huawei’s joining us with its stable mature products and the platform doubled our strength. Backed by our parent companies’ long years of technological know-how in the TD-SCDMA industry as well as TD Tech’s technological innovation and investment for eight successive years, our company has become an important member in the TD-SCDMA industry, and also one of the companies that have received the most licenses of TD-SCDMA patents.

Whether a product or technology is good or bad depends largely on how it suits the market. So now let’s take a look at the characteristics of 3G networking. As we all know, after ten years of continuous construction and optimization, the 2G network now offer very good sound quality, with over 99% wireless connection rate and less than 0.18% dropcall rates It also has 100% coverage of all the main provinces and cities nationwide, and key areas within cities also reach continuous coverage. As 2G and 3G will co-exist for a long time, users expect a lot from 3G, and GSM quality has become the benchmark for comparison with 3G quality. Both existing mobile operators and new mobile operators, though in different ways, invest more rationally now under the general environment of communications industry. Rational investment and substantial rewards are the targets of all operators.

In terms of business, 3G’s diversified business coverage is the trump card as well as the source of profits for operators. TD-SCDMA can more easily support high speed data business due to its TDD-based format and uplink-downlink incompatibility . For 2G and 3G networks to coexist for the long-term, the roaming and handoff between them is very attractive and necessary. Statistics shows that, by October 2006, the number of mobile users had reached 440 million in China. This fast growing market has paved the way for 3G development. It is estimated that the number of 3G users will grow to 170 million in the next five years. Such a large market poses a large demand for the construction of the entire network as well as scale and quantity.

In view of the above factors, TD Tech has made the following preparations for TD-SCDMA industry and products. First, we have a complete series of base stations which can realize key coverage from cities to towns, districts and hot traffic spots at the present time. The multi-scene coverage equips TD-SCDMA with the ability of large-scale networking. In addition, introduction of new technology, including HSDPA, will largely improve the network quality and enhance the support to high-speed data business. Both Siemens and Huawei have abundant experience in 3G and have applied it throughout the world on large scale. That provides us with strong support to apply TD-SCDMA to realize various 3G functions. We believe, with the help of out parent companies, TD Tech will offer more 3G businesses of TD-SCDMA that satisfy users’ needs.

As for product R&D, RAN (radio access network) is based on a very stable and successful platform, and the new-generation RNC2.1 will take the lead in the field. Currently the high-quality design fully guarantees the product stability and reliability. We’ve also done a lot for G-network roaming. For instance, we add handoff measurement on the side of the system and adopt flexible resource management, so as to meet different strategies like TD-SCDMA priority or GSM priority, support single signaling as well as inter-system handoff and integration, and achieve GPRS compatibility. At present, TD Tech’s TD-SCDMA products can realize roaming and handoff between the GSM and TD network. In supply capacity, TD Tech’s base station equipment is manufactured by Shanghai Siemens Ltd., one of Siemens’ largest manufacturing bases worldwide. It has a complete QC system and a vast purchasing system. With the extensive support from those two companies, TD Tech excels in providing supplies and maintains a strict system to ensure both supply quality and timely delivery.

As for solutions, we have professional consulting teams for network solutions and well-trained engineers to offer specific solutions directed at every individual problem to ensure TD meet its customers’ needs. For network design, we have cooperated with FORSK of France to develop a complete TD-SCDMA network planning tool, which can be used for network estimation, including capacity estimation and pre-planning of networks. We have also done a great deal regarding equipment installation and follow-up maintenance. With specialized installation teams and complete service network throughout the country, we can implement the 3G service system and promptly and efficiently satisfy customers’ needs.

3G will soon be launched in China and TD-SCDMA will have a clear market prospect in China. Encouraged by this, TD Tech is stepping-up product R&D. We have a definite and long-term objective for product R&D. Backed by the R&D experience and research of our parent companies, we have largely increased our efficiency. The LCR2.1 version we put forth in the third quarter this year is directed at large-scale commercial use and has been fully verified in the large-scale network testing of TD-SCDMA application organized by the three major ministries. We did especially well in the testing of the third stage, which further proves that LCR2.1 can offer sufficient guarantees for large-scale networking capacity and effectiveness. At the same time, TD Tech has set up an open lab inside the company to work hand in hand with suppliers of terminal repeater, antenna and other equipment to improve TD-SCDMA, so as to lay a sound foundation for the large-scale commercial use of TD-SCDMA.

Distinguished leaders and experts, just now the speaker expatiated on the 3G’s macro industry environment as well as related policies and technology. Now I’m honored, on behalf of TD Tech, to have this opportunity to share with you our views about the TD-SCDMA products and what we have done in preparation for TD-SCDMA commercialization.

TD Tech is an initiator and enabler of the TD-SCDMA industry as well as one of the important members in that field. Our products are stable, reliable, and suitable for commercial use. They can provide practical commercial usage and functionality according to different needs of customers. It is our hope to take the lead in the TD-SCDMA industry and move mobile world forward. Thank you all.