HONG KONG-Trunked radio has been the Cinderella of Hong Kong’s wireless communications in recent years, compared with the fast-growing mobile-phone technologies, but things may soon change. China’s industrialization is opening the door to a potentially large market for transport and industrial communications, and digitalization will soon bring a wave of new investment.
For the past five years, the number of handsets on trunked radio networks licensed by the Office of the Telecommunications Authority (OFTA) has remained almost static and currently stands at 9,175 units, all analog. The three main operators are China Motion with about 3,500 handsets (and an additional 7,000 in China); Hutchison, also with 3,500 handsets; and Mobile One with 800. Two smaller operators, Kantal and Townlink, provide another 1,000 handsets between them, while the Hong Kong Airport Authority (HKAA) services 1,900 handsets, 1,300 of which are charged commercially.
Hong Kong businesses are small, and corporate customers typically have 12 to 20 users. Main users are the numerous truck fleets that bring Chinese goods to Hong Kong’s world-class containers terminals. Minibuses and taxis are also trunked radio users, while various organizations operating at Hong Kong’s International Airport also employ trunked radios.
Digital migration
Commercial trunked operators are now facing the move from analog technologies to digital systems, such as Terrestrial Trunked Radio (TETRA), GSM-Pro, EDACS from Ericsson, and Project 25, said Tony Wong, executive director and chief operating officer (COO) of Mobile One.
“Digital systems will mostly have TDMA, providing better channel utilization, enabling us to serve more users. New speech CODECs (code/decode) will provide better voice quality. Digital systems will provide cross-platform capabilities with cellular systems, including WAP (Wireless Application Protocol), GSM and GPRS (General Packet Radio Service). With more bandwidth and support for data packets, IP (Internet Protocol) networks, such as the Internet and corporate intranets, will be available,” said Wong.
The Hong Kong Police began switching to a Nokia TETRA system in 2000, with completion set for 2004. The fire and ambulance services share another large public-sector trunked network that is switching from analog to a TETRA system. Interoperability with the police system is in the cards, said Jolly Wong, head of systems engineering and research at the Hong Kong Police.
TETRA is an International Telecommunication Union (ITU) standard of European origin that provides a 28.8 kilobits per second (kbps) data speed, enabling two-way mobile data between police officers and their command and control center, for example.
Hong Kong Electric recently awarded a US$49 million contract to Motorola to build a Project 25 trunked network operating at 800 MHz. Project 25 is a U.S.-based digital standard.
Commercial networks will eventually have to invest in digital systems to meet changing customer demands, said Paul Pang, international project manager of China Motion Telecom. “Our customers are demanding digital services such as GPS (global positioning system) and mobile data, and digital trunk networks are now being planned in the PRC (People’s Republic of China). If we want to stay in the industry, we have to go with it,” Pang said. “The trunk radio market has been pretty stagnant, and the introduction of digital will inject more growth into it.”
Cellular merger
One option for customers that merges trunked radio with cellular is GSM-Pro, a cellular overlay system that provides some trunking functions, such as group call and hands-free operation, developed by Ericsson.
GSM-Pro is no substitute for true trunked networks, said Tony Wong. “A trunk handset gives you push-button communication within one or two seconds, with an individual or a selected group,” he said. “Cellular requires dialing for three to four seconds, with the possibility of a busy signal, and metered calls. Another limitation is that GSM-Pro only calls groups of up to six handsets, while trunk can access hundreds. Trunk handsets have larger buttons and louder speakers than cellular, more suitable for industrial use.”
However, Tony Wong suggested it is at least possible that cellular systems may provide more direct competition for trunked systems in the future, as competitive pressures force operators to maximize their return on investments (ROIs) to serve the most subscribers without duplicating infrastructure.
One operator that has considered cellular as a possible alternative is the HKAA, which manages an analog trunked system with a capacity of 2,600 handsets. HKAA is licensed to provide trunked radio services at the airport, as are Hutchison and China Motion.
The existing HKAA system is not compatible with any other system, analog or digital. “There is no plan to move to a digital system,” said Alan Cheung, electronic systems maintenance manager. “We are observing the possible advantages offered by cellular technology due to its more dynamic service penetration and lower cost. Cellular services could be a highly competitive alternative to trunk radio, if they were equipped with efficient group-call facilities.”
Hong Kong’s UHF trunked spectrum, typically 200 MHz to 800 MHz, has been virtually free up to now, but this may change. “The Telecommunications Authority (TA) says it will impose a fee for 2G (second-generation) spectrum in two years to bring it into line with the 3G (third-generation) spectrum market. Since trunk is very different from 3G and uses a lot less frequency, we hope the TA does not increase our costs,” said Tony Wong.
China market potential
China will shortly become the world’s largest cellular market, and the demand for commercial and industrial communications, including trunked systems, will grow in proportion. So, although trunking is a small market in Hong Kong, China will constitute a substantial market.
Hong Kong operators are attracted to the Chinese market, but it has been closed up to now, said Tony Wong. “In five years, China plans to allow outside participation in joint ventures for telecommunications operations,” he said. “We should like to expand our trunk operations to Shenzhen, Guangdong and even further.”
The Chinese market may not be easy to enter, now that technical skills are no longer in short supply, continued Tony Wong. “Five years ago, China needed technology, but nowadays it is not a big issue. We can contribute operational experience, competitive marketing and financial engineering. Compared to large multinational players, we have the advantage of flexibility and no language barrier.”
China Motion, a Hong Kong-listed company, is already in the Chinese market. In 1996, the group’s directors set up a trunked service in Hong Kong, with a financially separate but parallel corporate structure over the border, so the operating subsidiaries can provide cross-border trunked services. Today, China Motion has infrastructure supporting 7,000 handsets in the Pearl River Delta area north of Hong Kong.
“The market for digital trunk radio in China will be quite big, but the average income is lower. To meet the competition, the big equipment vendors have to offer a good price and package,” said Siu Chi Ho, Hong Kong/China project manager of China Motion.
