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JTMC
3,2 Emerging technology assessment
Modeling effective integration of the internet
and the mobile phones in China
194 Hongyi Chen
Mechanical and Industrial Engineering Department,
University of Minnesota Duluth, Duluth, Minnesota, USA, and
Tugrul U. Daim
Department of Engineering and Technology Management,
Portland State University, Portland, Oregon, USA

Abstract
Purpose – The purpose of this paper is to assess effective integration of two emerging technologies,
new emerging opportunities for them and their diffusion in China.
Design/methodology/approach – A multi-perspective analysis and causal models were developed
to assess the emerging technologies as a result of the integration. In addition, an initial system
dynamics model is developed to explore their diffusion.
Findings – Based on multi-perspective analysis and causal models in both global and national
environments, problems such as security and reliability are identified. System dynamics modeling is used in
this paper to assist such foresight process. Different scenarios are proposed by the modeling to offer possible
solutions facilitating the development of voice and video over wireless area network (VVoWLAN) in China.
Research limitations/implications – While, the purpose of system dynamics modeling is to
demonstrate the application of the methodology, simplifying assumptions are made. To deliver an
accurate foresight model, additional data and modeling details will be required. This will lead to future
works as an improvement of the model.
Practical implications – A multi-perspective analysis and causal models were developed to assess
the emerging technologies as a result of the integration. These models can easily be used by decision
makers evaluating such technologies. The framework suggests that the diffusion of such emerging
technologies like VVoWLAN needs to be planned strategically in order to fully realize the value of the
integration opportunities identified in the first step.
Originality/value – The paper provides a framework for assessing emerging technologies in China.
Keywords China, Telecommunication services, Systems analysis, Emerging markets,
Mobile communication systems, Internet
Paper type Research paper

1. Introduction
Year 2002 was a critical turning point of the internet industry in China. Major Chinese
web sites such as Netease.com and Sina.com became profitable as the first time in 2002,
and increased their profit margins more than seven-fold the next year. Similarly, the
net income of Sohu.com increased from negative $1 million in 2002 to positive
Journal of Technology Management 26.4 million by the end of 2003 (Chen, 2004). Among the driving factors of this turning,
in China the effective integration of mobile phone service with the internet applications has
Vol. 3 No. 2, 2008
pp. 194-210 played a vital role.
q Emerald Group Publishing Limited
1746-8779
In the first place, the first online payment in China was enabled by the innovation
DOI 10.1108/17468770810881121 of payment through mobile phone in 2002, in the absence of credit card systems.
After that, mobile phones have served as a major payment methods for all the Emerging
web-based services and part of the e-business goods. In addition, the innovative idea of technology
sending all kinds of information in short messages from the web sites to the mobile
phones has stimulated the popularity of the internet in China since 2002. assessment
Another effective integration of mobile phone and the internet is the IP telephone
system in wireless environment. The use of internet to transmit voice packages greatly
decreased the cost of making long distance calls by mobile phones. Currently, the 195
IP telephone system used in China is still “Network IP” system where IP network is
used inside the telephone system to transport user traffic and control signal (Yang and
Kriaras, 1999). A transmission machine is depended to transfer calls from the
traditional mobile phone network to the IP network. However, with the rapid
development of wireless area network (WLAN) technology in China, “End-user IP”
system in which calls go directly from users’ terminal through the IP network to the
receivers’ terminal (Yang and Kriaras, 1999) can be used to further reduce the cost of
long distance calls for both customers and service providers. In addition, new
applications of the integration between the internet and the mobile industries are also
seen in developing mobile internet and mobile business.
As a result of the future integration applications of the internet and the mobile
industries, new technologies will be emerging. On corporate levels, emerging
technologies represent either opportunities or threats to companies. Strategic planning
of emerging technologies is an important part of every business plan. On the national
level, to ensure the successful diffusion of the emerging technologies, carrying out
a careful technology foresight is vital. In fact, most countries have realized the
importance of technology foresight, and countries like the USA, Japan, Australia,
New Zealand, Korea and many European countries have been conducting technology
foresight activities mostly under the organization of their central governments
(Blind et al., 1999; Heraud and Cuhls, 1999). Technology foresight, as a strategic
planning at national level, looks into the long-term future of technology with the aim
of identifying the areas of strategic research and the emerging generic technologies
likely to yield the greatest economic and social benefits (Martin, 1995).
In the next two sections, successful examples and new opportunities of effective
integration of mobile phone services with the internet to support each other’s
development in China are presented and discussed. Multi-perspective approach and
causal models are applied to assess the new technologies as a result of the integration
of two industries. National level strategic planning of critical technologies such as
voice and video over wireless area network (VVoWLAN) is demonstrated by system
dynamics modeling in Section 4. Then the assessment results and model findings
conclude the paper.

2. Literature search
When we look at the early development of the internet industry in China, we will find
that the year 2002 is a critical turning point: it is the end of the “free internet-based
services era” in China (News in Chinese, 2002a), Chinese web site companies began to
break even and make profits in late 2002, and the monthly increasing rate of internet
users in China reached the highest point in 2002. This turning is driven by the
combination of several influencing factors, and among these factors, the effective
integration of mobile phone services with the internet-based services is a critical one.
JTMC Online payment is a vital part for web site companies to charge for web-based
3,2 services and sell goods online. However, it had been a difficult problem for China’s web
site companies due to the lack of a credit card system. No bank offered credit cards in
China in the real sense until February 2004 (News, 2004). Before this point, the so-called
“credit cards” used in China were actually debit cards with a certain overdraft limit.
For the debit cardholders of some major banks, it was until the end of 2003 that they
196 were given the convenience to use their debit cards to make payment online on a
limited number of major web sites. This triggered another problem – online payment
using debit cards required higher internet security because fraudulent payment from
a debit card or a bank account could not be traced easily. However, security issue has
been among the most concerned problems for China’s internet users.
In dealing with the problems, an innovative idea of making online payment by
mobile phones was introduced by a web site company 263.net, when it began to charge
for its e-mail services in April 2002. The company announced that customers would
have two payment options: one option would be sending the payment through the post
office. The second would be by mobile phone. Subscribers who chose to pay by mobile
phones had to register with their mobile phone number online. A password was sent to
that mobile phone, and the subscribers activated their e-mail accounts by using that
password. Every month, the charge for the e-mail service was drawn from the mobile
phone account, which meant that the subscribers paid their monthly e-mail charges
conveniently as part of their phone bills. Since the monthly charge is not a large
amount (usually 60 cents to $2.40 per month), it proved to be no problem even to the
subscribers who did not sign contracts with wireless companies but used prepaid cell
phone cards ranging from $6 to $12. Because of the high percentage of mobile usage in
China, this innovation became popular and started to expand immediately. Mobile
phone payment is no longer limited to e-mail service. Registration fees to web sites,
downloadable cell phone ringing music, web space for picture uploading, and many
other web-based services are paid by mobile phones.
Payment by mobile phone made online payment possible in the absence of credit
card system in China. It is a successful example of the integration of mobile phone
industry with the internet-based services. This critical “component innovation”
(Betz, 2003) in Chinese IT industry is now widely used as a major online payment
method. It also created new business opportunities because new businesses emerged as
“middle-men” between web sites and wireless companies to deal with the mobile phone
payment transactions.
After years of losses since their founding, the Chinese web site companies that
survived the burst of dot.com bubble began to realize the importance of making profits
instead of only worrying about the market growth (Betz, 2003). Among them, three
major web sites sina.com, netease.com and sohu.com aimed at breaking even and
starting to make profits in year 2002 (News in Chinese, 2002b). Different strategies and
development models were followed by them. Although, the web site advertisement was
still a major part of their revenue source, a variety of new services were put forward to
create profits. Among these new services, short messaging service (SMS) is the most
attractive one and has the most potential given the huge customer base in China and
the revenue sharing contract between China Mobile and the web site companies.
The mobile phone industry is a fast growing industry in China. User number of
China Mobile, a state-owned company and one of the operators in the duopoly Chinese
mobile communication market (Yan, 2003), increased at 60 per cent per year from late Emerging
1990s to the beginning of 2000s (Ministry of Information Industry, 2002). In addition,
with the fast development of SMS functions, more and more mobile phone customers
technology
began to use the SMSs. The program “Monternet” introduced by China Mobile that assessment
integrated the mobile phone SMS with the internet industry got popularity (Yan, 2003).
The contract of this program specified that China Mobile would only take 15 per cent of
the total revenues generated by this program and would take the whole responsibility 197
of losses from unpaid subscription bills (News in Chinese, 2002a). Seeing the huge
customer base and the high percentage of revenue share, most of the web site
companies were more than happy to participate in such program. To apportion its
limited network capacity, China Mobile had to limit the access to the most valuable
information providers, and the three major web sites were among them (Yan, 2003).
Using the Monternet program, Sina.com developed more than 60 new services that
can be accessed through mobile phones by SMS. Sohu.com provided its customers with
services such as sending e-mail notice, daily news digest, stock information, and many
personalized services in the form of SMS. Netease.com founded a special department
exclusively dealing with the mobile phone short message services. New services such
as online game through mobile phone access with a $120 daily price for the winner,
customer participated picture message design, and wireless stock market were put
forward by Netease.com to attract customers.
As an attractive point, the SMS from the cooperation between the mobile phone
industry and the internet industry has severed as one of the key revenue sources for
the web site companies. It also stimulated the growth of internet users: according to the
statistical report, the monthly increasing number of internet users in China reached the
highest point in year 2002, as shown in Table I (CNNIC, 1997-2005). About 8.8 per cent
of them use the SMS frequently, and 4.4 per cent of them access the internet mainly for
using the SMS. From the perspective of the mobile industry, SMS was one of the
value-added services offered from China Mobile to boost revenue from its subscribers
(Yan, 2003). It is regarded as an innovative business model to accelerate the diffusion of
mobile phones in China (Kshetri and Cheung, 2002).
VoIP stands for voice over internet protocol. As the term says VoIP tries to let go voice
through IP packets and, in definitive through internet. VoIP started from making and
receiving voice calls using the internet and was extended to multimedia services and
inter-working with public switched telephone network (Yang and Kriaras, 1999). The
IP telephone market has been officially opened in China since April 1999 (Lovelock,
2001) first for landline phone users and was available to mobile phone users later.

Year Internet users (M) Increasing rate (million people/month)

December 1997 0.62

December 1998 2.10 0.12
December 1999 8.90 0.57
December 2000 22.50 1.13
December 2001 33.70 0.93
December 2002 59.10 2.12 Table I.
December 2003 79.50 1.70 Internet user number
December 2004 94.00 1.21 1997-2004
JTMC Currently, VoIP is the major method used for long distance calls among Chinese people
3,2 in both wired and wireless environments. Compared to making normal international
calls using the mobile phone, making VoIP international calls using the mobile phone
cost only one-third of the price. Because of this, by the end of 2004, the total minutes of
VoIP international calls are more than three times of the total minutes of normal
international calls on the mobile phones (Ministry of Information Industry, 2002).
198 The total minutes of VoIP international calls increased at the speed of 80 million
minutes/month.
The IP telephone system currently being used in China is “Network IP” where
IP network is used inside the telephone system to transport user traffic and control
signal (Yang and Kriaras, 1999). To use VoIP on the mobile phones, customers need to
dial a special number first to be connected to the IP network through a transmission
system. It has been an effective approach given the early situation in China regarding
its limited internet use. However, the increasing popularity of broadband internet
access including WLAN among Chinese people has brought new opportunities for the
IP telephone companies to achieve more cost efficiency by reducing the transmission
system between the two networks.
Successful integrations between the mobile phone industry and the internet
industry such as the mobile phone online payment, the web-based SMS, and the VoIP
calls on mobile phones have supported the developments of both industries. New
opportunities for more effective integrations of these two industries are seen with the
development of technologies in both industries. Here are the details.
The mobile internet is defined as wireless access to the digital contents of the
internet via mobile devices (Chae and Kim, 2003). Developments in both the user
population and the technology of the mobile internet have been advanced in the world.
In fact, the number of mobile internet users in Japan has surpassed those using
stationary internet, and the number of mobile internet subscribers in South Korea was
more than half of the total mobile phone users and 39 per cent of the total population at
the end of 2001 (Chae and Kim, 2003).
Technologies behind the mobile internet are wireless application protocol (WAP)
and general packet radio service (GPRS). WAP is a specification that allows mobile
users use their mobile phones to pick up e-mail and access databases over the internet
(Frolick and Chen, 2004). The Chinese nation-wide WAP service was launched in
May 2000 by China Mobile. However, the use of WAP service has not been as popular
as the basic but easy-to-use technology SMS among Chinese users due to its limitations
such as being slow and expensive. GPRS, the technology underlying the “iMode”
service offered by NTT DoCoMo in Japan, is an add-on to Global System for Mobile
Communication (GSM) platform. Comparing to WAP, GPRS is much faster in that it
was designed to run on 3G networks. According to a forecast by Schwab Soundview,
the Chinese mobile communication market will enter the 3G era in 2005, and the
number of 3G mobile phone users in China will reach 80 million by then (Market
Report, 2004). Therefore, great opportunities for better integrating the mobile phone
industry with the internet industry in offering better mobile internet access is made
achievable.
In addition, with the fast development of both the mobile phone technology and the
WLAN technology such as Wi-Fi (IEEE 802.11b), mobile phones that are capable of
accessing WLAN will further improve users’ mobile internet accessing experience.
In fact, the world first GSM/Wi-Fi dual network, GSM 850/900/1800/1900 four Emerging
frequencies smart phone was developed and put into the market by a Taiwan mobile technology
phone manufacturer in October 2004 (Product information, available at: www.sogi.
com.tw/newsogi/sogiindex.asp?pro_no ¼ 1263). The phone set allows people to assessment
access the internet in places where Wi-Fi signals are available just as using a personal
computer (PC). The only difference is that the size of the phone set is too small in
comparison to PC screen. This makes the mobile internet users less patient in internet 199
surfing (Yuan and Zhang, 2003). Therefore, special web sites are suggested to be
designed to favor the mobile internet users by including only the relevant personalized
information.
The rapid growth of the mobile internet has significant implications for
e-commerce. m-Commerce is usually regarded as an extension of e-commerce or the
“wireless e-commerce” because it often leverages the existing internet technology and
infrastructure. m-Commerce was first introduced by a Finland telecom operator,
Sonera, to provide customers with the wireless technology to conduct commerce in a
wireless fashion (Frolick and Chen, 2004). A statistic analysis predicted that many of
the initial applications of m-commerce would be likely to emerge in Europe and
Asia because of the high-mobile phone adoption (Dholakia and Dholakia, 2004).
The popularity of NTT DoCoMo in Japan is a case in point.
While, people were talking about proliferating wireless devices like the mobile
phones as new tools to support mobile payment (Frolick and Chen, 2004) and charging
m-commerce balances from the telecommunication bill (Chou et al., 2004) mobile
phones have already been taking care of most online payment transactions in China.
Therefore, the infrastructure for m-commerce payment system has been established in
China. However, mobile phone payment method is currently limited to small
transactions. To move all the e- and m-commerce payments to the mobile phones,
higher security system needs to be established.
Besides, the payment issue, many rules of the stationary e-commerce should not be
simply transferred to the mobile environment. Instead, m-commerce should emphasize
on different features that e-commerce does not have, such as personal touch and
time critical services (Yuan and Zhang, 2003). As a supplement to e-commerce,
m-commerce targets at users, who are on the move and are more time-sensitive to
transactions (Frolick and Chen, 2004; Yuan and Zhang, 2003). For example, a new
service called wireless rebidding offered jointly by eBay and InPhonic sends SMS alert
to a mobile phone any time a subscriber’s bid is outbid (Martin, 2001). A successful
m-commerce model should be an effective integration of the advantages of the
internet-based e-commerce and the mobile handheld devices.
In the global wireless communication industry, the fast development of WLAN
technology has popularized the topic of VoIP through WLAN. Besides, the Taiwan
dual-network phone manufacturer, Texas Instruments and the US VoIP pioneer,
Vonage, also announced their work on an integrated platform for the development
of a high-performance WLAN IP phone in the Broadband World Forum (2004) in
September and Senia (2004).
It is expected that the combination of voice over wireless area network (VoWLAN)
with mobile phones will start to enter the market of home users in 2006, and by 2009
mobile phones with VoWLAN function will account for 30 per cent of all the mobile
phones and 18 per cent will be used to actually use the VoWLAN function (Betz, 2003).
JTMC Figure 1 shows the increasing trend of VoWLAN mobile phones forecasted by
3,2 In-Stat/MDR in June 2004 (News in Chinese, 2002b).
As it is mentioned before, the IP telephone system currently being used in China is
“Network IP” in which a transmission system is depended to transfer voice packets
from the telephone network to the IP network. In contrast to network IP, end-user IP
calls go directly from users’ terminals through the IP network to the receivers’
200 terminals (Yang and Kriaras, 1999). It further decreases the operation and maintenance
costs for long distance calls by eliminating the transmission system. As the WLAN
technology, especially the WiMax technology, gets popular in China, end-user IP can
be achieved more effectively. WiMax (IEEE 802.16) is a new wireless technology
standard that provides wireless broadband internet connections over a distance of up
to 50 kilometers from a central tower (Roush, 2004). Compared to Wi-Fi, the currently
wide used wireless standard, WiMax not only has more coverage, but also has higher
speed, which is 70 Mbit per second. To help expand the internet access in China, Intel
Corporation landed WiMax agreements with Chinese two cities, Chengdu and Dalian,
in June (Electronic News, 2004). A mobile phone capable of accessing both 3G and
WiMax VoIP after the WiMax blanket the major cities in China will bring seamless
roaming and low-cost calls to benefit Chinese customers.

3. Methodology
Linstone (1999) proposed the multiple perspectives approach in technology
assessment, in which organizational, personal, and technological perspectives are
being considered while evaluating a technology. Each perspective yields insights
about the system not obtainable with the others; this realization motivates our entire
effort. Using only one perspective is analogous to seeing a 1D representation of a 3D
object. Integration of the three perspectives reflects the fact that the whole is more than
the sum of its parts. A balance of attention to all three perspectives is clearly desirable;

Cellular Voice Devices w/WLAN

(Units in Thousands)

225.000

600

0
2004 2005

0
Figure 1. 2004 2005 2008 2007 2008 2009
Global trend of WLAN cell
phone manufacturing Source: In-Stat/MDR, 5/04
we seek to avoid gross imbalances so often evident when technologists grapple with Emerging
issues that are not purely technological. technology
Linstone explains the multiple perspectives through how we would see an
organization from multiple perspectives. From a technical perspective we see it as assessment
a hierarchical structure. The organization perspective would see it as a weak or
powerful unit with a strong or weak leader with different types of social networks. The
personal perspective would see the same organization as an opportunity to gain 201
prestige or as job security (Linstone, 1999).
His approach is followed in this paper to assess the integrations of the Internet and
the mobile industries in China as discussed in the previous section. Table II
summarizes the advantages and the issues worth attention from technical,
organizational and personal perspectives (Linstone, 1999).
Among the issues, security is the most important one. To effectively enhance
communications and reduce costs for customers without exposing them to risks of
financial and data theft, security is the first problem that should be solved. The
mobile telecommunication and the internet industries are both growing very fast in
China. The effective integration of these two industries has played critical role in
the development of both industries, especially during the turning of the Chinese
internet industry in 2002. The innovative ideas of mobile phone doing online
payment, SMS stimulating the internet use and creating revenues, and IP telephone

Advantages Issues

Technical perspective
IP is a common platform for data New emerging technologies, lack of
voice/multimedia services standardization
Less expensive mobile internet access and Encryption does not meet China’s standard
long-distance calls through WLAN Security and reliability issues
Total output bandwidth needs to be increased
dramatically
Intangible and unproven benefit/ROI for
companies
High start-up cost companies
Organizational perspective
Access real-time data and enable timely decisions In case of financial or data theft, the responsible
in the organizations part is not known
Stimulate the growth of both mobile and the New regulations need to be established
internet industries Impact on traditional service providers such as
Decreases cost and increase revenue to provide landline phone will reduce
value to business
Enhance communications between organizations
and between organization and customers
Organizations can move toward a more virtual
and efficient model Table II.
Personal perspective Taxonomy of
Mobility Small-sized devices are easily lost or stolen multi-perspective
Transparency of locations Lack of security assessment of the
Timely access to information Health issues integration of the mobile
Low cost long-distance calls Privacy issues and the internet
Seamless roaming Spam industries
JTMC system in mobile environment saving costs for long distance calls are successful
3,2 examples of the integration.
With the fast development of technologies and the dramatic increase of the user
numbers in both industries, more opportunities are seen for future cooperation between
these two industries to stimulate further growth and better serve people in China, and
the mobile internet, m-commerce and the VoWLAN are among them. However,
202 although there are big advantages brought by these technologies, problems such as
security and reliability need to be solved before the successful application of these
technologies. To assess the critical technology as a result of the integration of mobile
communication and wireless internet access, causal models evaluating the global
environment and Chinese environment are also developed, as shown in Tables III
and IV. The trend of adopting emerging technology that combines mobile phone, VoIP
and WLAN is obvious. However, the security issue is still among the top ones.
Although, the Chinese IP telephone market has been opened formally since April 1999
(Lovelock, 2001) and is widely used in both wired and wireless environments today, a
transmission system has to be dependent on to transfer voice packages from the traditional
telephone line (or network) to the IP network. It has been an effective approach given the
early situation in China regarding its limited internet use. However, the increasing
popularity of broadband internet access including WLAN among Chinese people has
brought new opportunities for the IP telephone companies to achieve more cost efficiency.
IP is regarded as the future platform for voice/multimedia services owing to the
advantages it brings (Yang and Kriaras, 1999):
.
efficient use of network resources;
.
one single core network to manage and maintain;

Force Trend Impact/effect

Increased adoption of WLAN Wireless VoIP will enjoy larger Demand for wireless VoIP
technology coverage area, better quality phone will be increased
Fast improvement on wireless and lower cost
standards (Wi-Fi) and WiMax)
Increased competition makes VoIP adoption will start Companies will move towards a
companies seek for better vertically from companies to more virtual and efficient model
communication at lower cost customers
Increased competition in the Innovation and imitation More traditional wireless
telecommunication industry become more and more vital to communication service
survive the competition providers will adopt and offer
wireless VoIP
Dramatic cost savings speed up VoIP will become a new Traditional service providers
customer adoptions of VoIP standard for voice will lose market share and
communication revenue.
Relative regulations, tax issues
will be established
VoIP phone has no local area code Area code and even country Customers enjoy more mobility
restriction code will not be restricted and transparency
Worldwide attention to terrorism Need for anti-terrorism and 911 Security issues have to be
Table III. issues emergency contact will be solved before VoIP technology
Global causal issues facing VoIP users replace traditional
relationships communication technology
Force Trend Impact/effect

Increased VoIP usage (messaging, foreign
phone card companies)
More voice and video traffic move to the
internet
Security and encryption of Wi-Fi has not met
Chinese government standard
Enforced standardization meets the criteria of
“Technical barrier to trade”
More choices make people switch to lower
cost service providers
Broadband, especially Wi-Fi subscription will
be increased dramatically
Chinese government demanded WAPI
standard to all devices sold and manufactured
in China
Traditional communication service will lose
customers. And VoIP will be a government
initiative
Internet output bandwidth has to be increased
dramatically
Incompatibility of WAPI with Wi-Fi and
WiMax slowed down the adoption
Security and encryption of Wi-Fi and WiMax
need to be improved

relationships
assessment
technology
Emerging

Chinese causal
203

Table IV.
JTMC .
lower cost of transport and service infrastructure;
3,2 . multimedia support; and
.
easier and quicker introduction of new services.

VoIP started with making and receiving voice calls using the internet and was
extended to multimedia services and inter-working with public switched telephone
204 network. Network IP, in contrast with end-user IP, indicating the system where IP
network is used inside the telephone system to transport user traffic and control signal
(Yang and Kriaras, 1999), is what has been used in China.
The increasing popularity of WLAN technology has shed light on the
transformation from network IP to end-user IP in the world wireless communication
industry. In end-user IP, calls go directly from users’ terminals through the IP network
to the receivers’ terminals (Yang and Kriaras, 1999). It is expected that the combination
of VoWLAN with cell phones will start to enter the market of home users in 2006, and
by 2009 cell phones with VoWLAN function will account for 30 per cent of all the cell
phones, and 18 per cent will be used to actually use the VoWLAN function
(InStat/MDR, 2004). Figure 1 shows the increasing trend of VoWLAN cell phones
forecasted by In-Stat/MDR in June 2004.
In addition, as one of the advantages of using IP network to transfer voice and data,
video conversation is enabled. Given the fast popularity of camera phones, camcorder
phones, which are already being manufactured, are likely to be involved in the
VoWLAN application soon. Thus, VVoWLAN is considered as a special technology for
which the development of related system has to be foreseen.
Since, the quality of the video conversation over the IP network depends largely on
the available bandwidth, the total output bandwidth of China turns out to be a critical
determinant factor in the strategic planning. The system dynamics modeling
addresses issues like: in order to satisfy most of the VVoWLAN users, at what annual
growth rate should the total output bandwidth of China increase from 2006 to 2010?
To calibrate the system dynamics model and to reduce the complexity, some major
assumptions are made, including:
.
customers purchase the VVoIP phones depend on the phone price and the
relation between phone price and user number follows that of normal cell phones
(regression and econometrics);
.
about 80 per cent of customers transfer from current mobile international min
users, 20 per cent transfer from current landline international min users;
. unsatisfied users will stop using the phone and come back when quality
improves;
.
about 80 per cent of customers use international min based on cost-based-minute,
20 per cent based on break-even minute;
.
customer perceived product life for a wireless VVoIP phone is two years;
.
cost-based minute usage increases as per minute cost decreases and the relation
follows that of current international minute usage (extrapolation); and
.
Wi-Fi usage will reach 95 per cent by 2010.
4. Results Emerging
The model built in this study is established for demonstration of the methodology. technology
Additional data will be required to develop a model that will deliver an actual
foresight. Figure 2 shows the layout of the basic model. assessment
To test and understand the sensitivity of the model, different scenarios were
developed and run. Scenarios are used to outline some aspects of the future world by
telling stories to emphasize the important dimensions and incorporate uncertainty. 205
Scenarios are used in areas such as analysis of US energy scenarios (Silberglitt et al.,
2003), the future of hydrogen fueling systems Winebrake and Creswick, 2003) and
biotechnology (Sager, 2003). Scenarios may be future histories that may cover dynamic
time trajectory from present to some point in the future or snapshots that may be
structural cross-section at a single time point in future or combinations of both.
Scenarios are used in forecasting, policy, and planning processes as well as in business
and government applications.
Table V provides a summary of the scenarios considered.
The charts shown in Figure 3 provide the results of both scenarios. A third scenario
was adopted after the first group of results (Figure 4).

Output bandwidth bandwidth

increasing rate increasing
mobile Int min
increasing
Internet
Run bandwidth increasing
usable rate 1
bandwidth Percentage

Mobile % Mobile
Vedio&Voice Int min
bandwidth
Table 1 supportable monthly increasing normal int min
users total min rate 2 increasing
user % cell
user % can support transfer
need
WiFi bandwidth other min Normal
Bandwidth min per int min
percentage needed reducing
user
Customer Total
demand Min
customer normal
reducing transfer

normal %
demand for WiFi cost reducing break even cost based
phone increasing minutes minute
Phone
cost
WiFi bandwidth ~
Time 1 service cost
WiFi %
total cost decreasing
Figure 2.
Total WiFi
broadband
users
rate Screen capture of the basic
bandwidth increasing rate
model

Scenario 1 Internet output bandwidth monthly growth rate keeps most likely rate (0.107)
By 2010, can use 50 per cent of all the bandwidth to support 70 per cent of users to use
VVoIP at the same time
Scenario 2 Broadband user increases at current minimum growth rate
Bandwidth increases 11 Mbit as every three broadband users increase
Bandwidth increasing rate decreases
By January and September 2009, can use 50 per cent of total bandwidth to support 70 and Table V.
100 per cent of the users use VVoIP, simultaneously Modeling scenarios
JTMC 1: Customer demand 2: customer reducing 3: demand for WiFi phone increasing

3,2 1:
2:
22000
3: 20000

206 1

1
1: 11000 1
2: 1
3: 10000
3 3 3
2 2 2

2 3

1:
2: 0
3: 0
6.00 21.00 36.00 51.00 66.00
Page 1 Months 12:26 PM Mon, Nov 29, 2004
Customer total number, increasing number and reducing number

1: Customer demand 2: customer reducing 3: demand for WiFi phone increasing

1: 22000
2:
3: 20000 1

1
1: 11000 1
2:
3: 10000

3
2
3
2

2 3

1:
2: 0
3: 0 2 3
Figure 3. 6.00 21.00 36.00 51.00 66.00
Model results for Page 1 Months 5:29 PM Sun, Nov 28, 2004
scenarios 1 and 2 Customer total number, increasing number and reducing number

Key findings of the model can be summarized as: 2.5G þ Video and Voice over IP
phone will be around $300-$329 by year 2010. If Wi-Fi coverage reach 95 per cent by
2010, service cost for 2.5G þ Wi-Fi VVoIP will be $0.02/min (not including internet
access).
Customer demand will be between 20 and 22 million by 2010. This covers 10 per cent
of broadband users and 1.65 per cent of total population. Monthly, minute usage will be
between 3 and 6 billion minutes by 2010. To use 50 per cent of total bandwidth to
 1: Customer demand 2: customer reducing 3: demand for WiFi phone increasing Emerging
1:
2:
22,000
1
technology
3: 20,000
1
1
assessment

207
1: 11,000
2: 1
3: 10,000

2 3

1:
2: 0
3: 0 2 3 2 3 2 3
6.00 21.00 36.00 51.00 66.00
Page 1 3:18 PM Mon, Nov 29, 2004
Months
Customer total number, increasing number and reducing number

1: min per user 2: monthly total min

1: 300
2: 70,00,000
1
2
1
2

1: 150 1
2: 35,00,000
2

1
2

1: 0
2: 0
1.00 17.25 33.50 49.75 66.00 Figure 4.
Page 1 3:50 PM Sun, Nov 28, 2004 Adjusted final
Months
model – scenario 3
Monthly total minute and personal minute usage

support at least 70 per cent of customers using VVoIP at the same time, the internet
output bandwidth has to choose one of the following options:
.
maintain the most likely rate monthly growth rate (scenario 1);
.
increase 11 Mbit as every three broadband users increase (scenario 2); and
.
use different monthly growth rates in scenario 3.

5. Conclusions
The mobile telecommunication and the internet industries are both growing very fast
in China. The effective integration of these two industries has played critical role in the
JTMC development of both industries, especially during the turning of the Chinese internet
3,2 industry from running in debt to making profit. The innovative ideas of mobile phone
doing online payment, SMS stimulating the internet use and creating revenues, and IP
telephone system in mobile environment saving costs for long distance calls are
historically successful examples of such integration. With the fast development of
technologies and the dramatic increase of the user numbers in both industries, more
208 opportunities were seen for future cooperation between these two industries to
stimulate further growth and better serve people in China. The mobile internet,
m-commerce and the VVoWLAN are among the new opportunities.
Based on multi-perspective analysis and causal models in both global and national
environments, problems such as security and reliability are identified. They need to be
solved before the successful application of the technologies as a result of the future
integration of two industries. The big advantages brought by such emerging
technologies call for a careful strategic planning at national level to ensure the
successful diffusion. In order to successfully implement the emerging technologies
such as VVoWLAN, a national level strategic planning, which is a technology foresight
is vital. System dynamics modeling is used in this paper to assist such foresight
process. Different scenarios are proposed by the modeling to offer possible solutions
facilitating the development of VVoWLAN in China.
While, the purpose of system dynamics modeling is to demonstrate the application
of the methodology, simplifying assumptions are made. To deliver an accurate
foresight model, additional data and modeling details will be required. This will lead to
future works as an improvement of the model.

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About the authors

Hongyi Chen, PhD, graduated from Department of Engineering and Technology Management at
Portland State University. Her research interests include decision analysis in engineering and
JTMC technology management with a focus on hierarchical decision modeling, systems dynamics
modeling, technology assessment, technology forecasting and foresight. She has published
3,2 articles in several conferences and journals such as European Journal of Operational Research.
Tugrul U. Daim, PhD is an Associate Professor at the Department of Engineering Technology
Management, in the Maseeh College of Engineering and Computer Science, Portland State
University (PSU). He had worked at Intel Corporation for over ten years managing technology
and product planning and development before joining PSU as a full time faculty. His research
210 interests are focused in technology assessment, forecasting, transfer and roadmapping. He has
published articles in journals such as Engineering Management Journal, Technology Forecasting
and Social Change, Technology in Society, Journal of High Technology Management Research and
Technovation. He is the program co-chair for Portland International Conference on Management
of Engineering and Technology and co author of three books of reading. He is on the editorial
board of IEEE Transactions on Engineering Management, Technology Forecasting and Social
Change and International, Journal of Innovation and Technology Management. Tugrul U. Daim
is the corresponding author and can be contacted at: tugrul@etm.pdx.edu

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