You could call it The Standard That Never Was. China's fledgling encryption standard for wireless local-area networking was delivered a setback and perhaps even a mortal blow on 21 April, when the People's Republic agreed to indefinitely postpone a requirement that all Wi-Fi chips sold in China adhere to the homegrown standard. The agreement was reached in a meeting between the China-U.S. Joint Commission on Commerce and Trade during an official visit by Chinese Vice Premier Wu Yi to Washington, D.C.
Besides settling a contentious issue that had prompted diplomatic intervention by top Bush administration officials, the Wi-Fi agreement has defused trade tensions over electronics that have been growing in the past few months. U.S. chip makers hailed the decision. In exchange for indefinitely postponing the deadline for using its Wired Authentication and Privacy Infrastructure, or WAPI, standard and for pledging to crack down on intellectual property violations, China got the United States to agree that it will ease restrictions on the export of some high-technology U.S. products to China.
Hailing the agreement, George Scalise, president of the Semiconductor Industry Association in San Jose, Calif., said in a written statement that it was "a very important development that will help grow world markets."
At issue, prior to the agreement, was China's insistence that all Wi-Fi chips sold after 1 June within its borders comply with the WAPI standard. What's more, China demanded that, to make WAPI goods, foreign companies would have to partner with domestic firms and share intellectual property.
China's leaders claimed that it needed its own encryption standard because of security problems with Wi-Fi. The initial flavors in the IEEE 802.11 family were indeed insecure, but that problem is supposed to be taken care of with the release of variants like 802.11g. As a result, many foreign firms, and most of those with big stakes in Wi-Fi, believed that China was really trying to give domestic players an unfair advantage. The foreign suppliers did not wish to design and produce wireless chip sets customized for just one market, however large, and they intensely disliked the requirement that they disclose proprietary information.
For instance, Intel Corp., Santa Clara, Calif., which reportedly has spent more than US $300 million worldwide promoting Centrino, the integrated chip set pairing Wi-Fi with the Pentium and its famous "Intel Inside" slogan, strongly objected to the Chinese demands. Together with chip maker Broadcom, it said that it would stop selling chips in China altogether after the 1 June deadline.
At least for the time being, the opponents of WAPI appear to have prevailed, with the Bush administration and the IEEE playing, in effect, the roles of bad and good cops, respectively. In March, U.S. Secretary of State Colin Powell, along with Commerce Secretary Donald L. Evans and U.S. Trade Representative Robert Zoellick, joined the campaign on behalf of U.S. chip makers. In a letter to Chinese Vice Premiers Wu and Zeng Peiyan, they urged China to drop the adoption of WAPI.
Meanwhile, the IEEE Standards Association struck a conciliatory tone. IEEE Standards President Jim Carlo said that, as in any international standards dispute, the association would not take a position, though it is "trying to move more worldwide in terms of our vision and scope" to include other nations like China.
As part of the agreements of 21 April, China has pledged to work with international standards bodies on revising the WAPI standard so as to make it more smoothly compatible with Wi-Fi chip sets. To that end, IEEE Standards was to host a meeting in May in the southern Chinese city of Shenzhen, where some 50 Chinese and U.S. IEEE members discussed the standards process in China.
Do China's recent negotiations with the United States mean that WAPI is dead? Not necessarily, according to experts. Anne Stevenson-Yang, the managing director of the United States Information Technology Office, a nonprofit trade association in Beijing, calls the WAPI agreement "ambiguous." While she's inclined to believe that China will not press forward with WAPI, it could just be playing for time so as to give domestic companies some leeway in making WAPI-compliant equipment.
And "even though China is not going to make foreign makers abide by the WAPI standard, they still might push for it by imposing it on Chinese companies," adds Victor Shih, a China expert who teaches political science at Northwestern University in Evanston, Ill.
At this stage of the game, the whole debate over Wi-Fi and WAPI is a little theoretical, but it won't be mere theory for long. Wi-Fi's presence in China is confined right now to larger cities like Beijing and Shanghai, where some cafes offer free wireless access and households can subscribe for unlimited Wi-Fi service for around $15 per month. But Wi-Fi use is expected to increase rapidly with dramatically growing laptop sales [see photo, " Wireless Ready"]. In 2003, Chinese consumers bought 1.5 million notebook computers, 250 percent more than in the previous year, according to Norson Telecom Consulting in Beijing.