Wi-Fi Leaders Want to Zap Beijing's WAPI

By Roy Mark

February 24, 2004

UPDATE: As China plans to impose a proprietary encryption scheme for WLANs within its borders, Wi-Fi players are crying foul and asking Washington for help.

The wireless technology industry asked the Bush Administration and congressional global trade leaders Tuesday to take a tougher stance with China over Beijing's December decision to impose a proprietary encryption scheme for wireless local area networks (WLAN) within Chinese borders.

China, the world's fastest growing wireless market, plans to implement the standard on June 1. Known as Wired Authentication and Privacy Infrastructure (WAPI), the scheme is incompatible with the open global wireless security standard (IEEE 802.11 and 802.11b) used by chipmakers and electronics manufacturers.

Amid widespread complaints over China's efforts to enforce intellectual property rights, equally concerning to the 802.11 WLAN industry is Beijing's mandate to limit the WAPI code to a half dozen or so nascent Chinese WLAN companies.

The WAPI licensing terms include requiring foreign companies to share their proprietary and sensitive materials through co-production deals.

In a letter to U.S. Trade Representative Robert Zoellick, the Information Technology Industry Council (ITI), the U.S. Chamber of Chamber, the National Association of Manufacturers, the Semiconductor Industry Association and other key wireless players ask Zoellick to raise the issue with his Chinese counterpart so a quick resolution can be reached.

Also receiving the letter were Representatives Philip Crane (R-IL), chairman of the House Ways and Means Committee Subcommittee on Trade; Charles Rangel (D-NY), ranking member on the House Ways and Means Committee; and Sen. Max Baucus (D-MT), ranking member of the Senate Finance Committee.

Crane, Rangel, and Senators Craig Thomas (R-WY), chairman of the Senate Finance Committee Subcommittee on International Trade, and Gordon Smith (R-OR) responded by sending a letter to Yang Jiechi, Chinese Ambassador to the United States, encouraging Beijing to work with the United States and the international standards community on a "mutually acceptable resolution."

The congressional members wrote, "Requiring U.S. manufacturers to partner with certain Chinese competitors, while freely providing encryption information to Chinese companies, raises grave concerns about the WTO (World Trade Organization) consistency of the new standards and specifically whether the WTO rules on national treatment are being followed." China joined the WTO in December of 2001.

Since the Chinese trade dictate, some of the world's biggest brands have been negotiating with Beijing to forge a compromise or at least win a deadline extension. Little progress has been reported, Washington has remained silent and the deadline is just three months away.

One of the implications of the new Chinese trade policy, which the WLAN industry surely underscored in private talks with U.S. trade officials, is a threat by the Wi-Fi Alliance to "consider" suspending wireless chip sales to China. The Alliance is the global organization formed to certify interoperability of WLAN products based on the 802.11 specification.

Alliance members include Motorola , Advanced Micro Devices , Nokia and Cisco Systems .

ITI has been working with the U.S. Information Technology Office (USITO) and the Institute of Electrical and Electronics Engineers (IEEE) on international standards development. The trade group has also encouraged the Chinese to actively participate in the international standards community to come to a resolution that is acceptable to all interested parties.

"Forcing foreign manufacturers to co-produce with Chinese competitors to meet a unique mandatory regulation in order to enter the Chinese market is unacceptable," ITI President Rhett Dawson said during a media briefing. "We hope the Chinese will participate in the international standards development process to achieve one global security standard for wireless products."

Several weeks ago, the White House warned it was considering a WTO complaint about Beijing tax policies the U.S. claims are keeping American chips out of the China market. The issue is considered separate from the WAPI standard dispute.

An estimated 53 million mobile handsets were sold in China last year. That number is expected to grow to 80 million within the next 36 months. Taiwan and other Asian nations building their own technology industries are reported to be in active negotiations with the Chinese over licensing the WAPI standards.

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