With the world’s eyes on North Korea right now, it’s important to remember the role of China in this story.  As the North’s primary ally, China will be playing a critical role in the coming months and years as the leadership transition plays out.

But equally as interesting is the more informal role of China and the bottom-up changes happening across the surprisingly porous border.  For that, I must point our readers to Robert S. Boynton’s terrific analysis of North Korea’s “Digital Underground”, which appeared in April’s The Atlantic.  In a country where the Internet is more heavily restricted than China, this digital underground operates on radios and USB drives, and it’s partly driven by open markets:

The famine [of the mid-1990s] encouraged the spread of open-air markets throughout North Korea. They had begun appearing after Kim Il Sung’s death in 1994. People lucky enough to farm small plots of land sold their extra produce. Riots broke out when the police tried to shut the markets down, so the government decided to look the other way. As the markets spread, they soon became places where one could buy not only rice, but also bootlegged South Korean soap operas and used electronics.

Consider also this piece that Choe Sang-Hun ran last year in the New York Times:

To build the networks, recruiters slip into China to woo the few North Koreans allowed to travel there, provide cellphones to smuggle across the border, then post informers’ phoned and texted reports on Web sites.

The phones, Choe reports, operate on Chinese mobile networks and therefore are only useful within a few miles of the China-North Korea border.  While the information is limited and perhaps tainted, it’s more information than was ever accessible before.

It got me thinking more about border effects on communications usage.  Some, like the New York Times, attribute the recent peaceful resolution in Wukan to the media savvy of Wukan residents, who are regularly exposed to Hong Kong media just across the border:

Mainland Chinese news media were barred from reporting on Wukan, but dozens of reporters for foreign publications arrived here last week after being alerted to the protest by an article in the British newspaper, The Daily Telegraph. They slipped through a police cordon by traveling on motor rickshaws along winding dirt roads and, in one case, by hiring a boat to reach the harbor.

China telecommunications expert, Marc Laperrouza, tips us off to an unconfirmed bit a of juicy news about the Chinese telecommunication market: China Telecom is being investigated for anti-monopoly infringement! You don’t hear of state-owned enterprises the stature of China Telecom being investigated for monopoly infringement very often so this is pretty big news. Mark explains the charges:

Its sin(s)? Abuse of dominance in the broadband market or more specifically charging other broadband service operators discriminatory network access fees. For those not versed in competition law jargon it means that the company is taking advantage of its position in the market to squeeze out competitors (usually by forcing them to resell services to the final customer under the cost of production).

But like Mark, I am very curious why China Telecom? Is just doesn’t make sense.

The real question is why China Telecom’s counterpart (China Unicom) does not incur a similar investigation, given that both companies have nicely divided the country in two – the South for China Telecom and the North for China Unicom

While both China Telecom and China Unicom have divided the country in two, China Telecom was probably singled out first because they have the most subscribers – 73.7 million subscribers, compared with 779,000 users at China Unicom.

But it appears that in more recent news, China Telecom and China Unicom have been pressured by the anti-monoplogy probe to release statements admitting that they were improperly charging customers and would increase broadband speed. We have an explanation from, Li Qing, China’s National Development and Reform Commission’s  deputy director of the commission price supervision and anti-monopoly department:

These two companies clearly occupy a dominant position in the market…They use this dominant position to charge their rivals higher fees while offering favorable prices to companies that are not competing with them. According to antitrust law, we call such behavior price discrimination.”

And as with most monopolies, companies do not have incentives to offer optimal services. China has some of the slowest broadband speeds in the world despite having the most internet users out of any country. Anyone who has lived in China has become accustomed to slow internet speed.

But even governments needs incentives to break monopolies. The question is, why now? Is is possible that the government now sees the economic incentives to speed up service? Star Chang at Micgadget seems to think so:

An investment banker who cannot send an e-mail to his client or a supplier who cannot reach his buyers are a few examples of potential money loss that occurs on a daily basis. China Internet business will constantly need to deal with internet speed problems, a situation which is a loss for China and for the world. A huge population with fast internet connection speed will help drive innovation and will put China on the map as one of the most attractive business locations in the world. China must provide with faster and freer internet connection, making easier for people in China to engage in global business and to connect with the rest of the world.

But anything that involves faster access to any types of information comes with strings in China. I’m wondering how information will be filtered in an era of faster and more accessible internet? Earlier this year, Kaiser Kuo and others joked that we should all move to Chongqing  for the first International Cloud Computing Special Zone:

The special zone, covering about 10 square kilometers, is the only area in China that is directly connected to the outside Internet through optical fibers without being filtered, according to the Southern Weekend.

Kaiser’s joke points to something that would be good for all of us to keep an eye on – that is the future of cloud computing in China. Faster and more affordable internet can only get so fast if China’s internet infrastructure does not switch to cloud computing. But Jin Ge and I have been discussing the viability of home-grown cloud computing when Chinese netizens have low trust in cloud services from Chinese providers. When it’s already known that your information online is surveilled in China, who will be willing to save even more personal information online? According to Jin Ge’s latest article on China Bubble Watch, Cloud Computing Turned into Real Estate Business in China, no one is putting any information on the cloud servers. He points out that that the popularity of cloud servers are actually part of the real estate machine in China:

The first thing people should know about cloud computing in China is that it is again driven by state capitalism. Once the technocratic officials of China become aware of the concept of cloud computing, they immediately see the potential of applying their magic formula of “fixed asset investment+government subsidy+cheap loan” on it, because after all cloud computing does involve some large physical infrastructure. The story is quite similar to what happened to the concept of “Internet of Things”.

In April 2011, the government of Chongqing became the first to annouce its plan to invest 40 billion yuan on a cloud computing center that will be the largest in Asia. The plan is called “Yun Duan” (Top of Cloud). Then Shanghai, Beijing, Shenzhen and Guangzhou all followed suit. Shanghai plans to build a “Asia Pacific Cloud Computing Center”,  its plan is called “Yun Hai” (Ocean of Cloud), Beijing has a plan called “Xiang Yun” (Cloud of Blessing), Shenzhen has a plan called “Kun Yun” (Cloud of Flying Fish), Guangzhou has a plan called “Tian Yun” (Cloud of Sky), Ningbo has “Xing Yun” (Galaxy Cloud), Wuxi has “Yun Gu” (Cloud Valley), Hangzhou has “Yun Chao Shi” (Cloud Supermarket) ……

If Jin Ge is right, then we will see a cloud-computing bubble accompanying the yet-to-come real estate bubble.

From the clouds to the ground, 2012 looks like it’s going to be an exciting year for mobile  industry. China Telecom is going abroad to offer mobile services for the transnational elite who travel between China and North America. China Unicom just launched a new mobile internet platform, the Wo-plus Opening System. Let’s see how long China Mobile 600 million 2G users can wait for 3G before switching to Unicom or Telecom. Now that China is the world’s largest smartphone market, how will the future of hardware and software evolve? We already have a glimpse from HTC of their new Sina Weibo smartphone. And then to top if off, both China Telecom and China Unicom may lower broadband prices!

With all these technical and market changes, one of the big questions for 2012 is will Chinese citizens will be relieved of telecommunications costs? Or will 2012 could be the equivalent to the 1996 Telecommunications Act in the United States where institutions benefited more from telecommunication reforms than individuals? [1] We’ll have to see who benefits from thee anti-monopoly investigation.

With the stable divisions of China Unicom, China Mobile, & China Telecom, we don’t hear of potential industry shake ups like this very often. I imagine that Chinese Telcom scholar, Eric Harwitt, is giddy with news. But luckily we have  Marc Laperrouzag, so we won’t have to wait a few years for a book or paper to be published to stay up to date on the details.

Let’s hope for faster and more equitable broadband access in 2012! 新年快乐!

_______

[1] In my analysis of the US 1996 Telecommunication Act, I argued that the act did little to democratize communication for individual citizens. It failed to add Internet access to the scope of communication mediums covered by the Act; placed additional economic burdens on individual telephone subscribers; and auctioned off the spectrum of bandwidth for wireless services to the most wealthy telecommunications companies, who in turn charged high rates for wireless services to recoup costs. The act established the Universal Service Fund (USF) which mandated companies to create affordable telephone access, not information access, for individuals. While the USF was aimed at telephony services for  individuals,  E-rate, a sub-programof the USF, subsidized Internet access for schools and libraries, not individuals.

In my recent trips to China, I’ve spotted various instances of Angry Birds merch and kids from all over playing the game on their PCs. According to their CEO, they’ve been downloaded (through official channels) 50 million times in China already. It seems that the phenomenon has not gone unnoticed at the head office. From TNW:

Angry Birds are officially going to roost in China after Rovio opened an office in Shanghai, which becomes its first ever international base.

…

Just last month the company took the unusual step of teaming up with an unofficial Angry Birds theme park which had opened in China, while all manner of fake items have sprouted up across the country – like this 7 inch tablet on Geek.com - demonstrating the huge appeal and potential profits that the company could make in China.

Don’t sue the pirates; work with them. Love it.

(Photo from CNNGo by Ye Xiumei.)

Over the past few months, I have been seen so many major breaking stories turn out to be rumor-fueled.  The small number of stories that I have written about were largely about rumors.  So I have two reactions on this debate.

My first reaction is that the proliferation of rumors has caused me personally to lose interest in catching up with current affairs.  When at least 9 out of 10 major breaking stories turn out to be rumors, it is not surprising that my enthusiasm is going to wane.  I don’t want to be misled and I don’t want to mislead others.  I suspect that this applies to many other people.  So how can this be good when people are turned off by current affairs and politics?

My second reaction is that even the few significant stories with elements of truth are getting destroyed by the insertion of rumors.  For example, the case of Guo Meimei Baby should have led to a serious examination into the workings of the Red Cross Society of China.  Instead people can caught up in a frenzy with calling up the Australian embassy to look out for a fictional Norwegian passport.  And who fabricated that rumor?  A reporter with the newspaper <China Business> who said that he did it because he did not want the story to die down.  If you had forwarded that post, are you upset at being so easily deceived?  Are you contrite about misleading your followers?  At least, it was possible to check on the Norwegian passport and show that it was fake just as I did.  But what about some of the other current assertions about the interlocking companies?  What is true and what is false?  I can no longer tell …

Read Soong’s full post about rumor mongering.

Ending today. Hong Kong’s annual art fair featuring works from galleries from all over (with Asian galleries dominating). Well attended by locals passing by, visitors flying in and from early reports, also by prominent buyers and sellers.

Above: A local favorite that blends traditional Chinese landscape painting with modern Hong Kong skyscrapers. I wonder if people unfamiliar with Hong Kong “get it”?

But: I’m bummed I missed this coral reef installation. Will remind myself to do a bit of research instead of just wandering about next time.

More information about the fair from ARTHK11.

The story goes that Wang Momo (王卯卯), an undergraduate at the Communication University of China, was doodling on her blog one day and came up with a peculiar yet distinct rabbit-like creature. Built with Snoopy proportions, it also had no mouth and only had slits for eyes. Its name was Tuzki (兔斯基). Three months later, Wang made an animated emoticon of it. (Emoticons are icon-sized images used to express emotion or to “make a face” in text-only online conversations. They are especially popular in China.) Over the course of the following year, Wang continued to animate Tuzki performing various actions, adding to the arsenal of the Tuzki set.

The emoticons took off. It appeared all over people’s online conversations on QQ and MSN Messenger, in various forum posts, and brought 30 million visitors to Wang’s blog. Wang, on her part, continued adding to the emoticon set and experimented with placing Tuzki in new and intricate illustrations.

By the end of 2007, Tuzki became so popular that the commercial world noticed him. Motorola hired Wang and Tuzki for their campaign promoting their new Q9h phone.

By summer of 2008, Wang finally graduated from the Communication University of China. She promptly landed herself a gig at the Time Warner office in Hong Kong, with Tuzki in tow. (Time Warner owns Cartoon Network and DC Comics, amongst other things.) There, she published a Tuzki book, wrote various comics involving the rabbit and continued to place him in different product endorsements. The book, I, Tuzki, U? (我兔斯基你) sold 160,000 copies.

(Comic strip caption reads: A blocked digestive system causes sickness. A blocked mind causes madness.)

After spending a year at Time Warner, Wang quit, citing a desire for more personal and creative freedom. Yet Time Warner cleverly held onto Tuzki.

Both parties have moved on after they split up. Time Warner have continued developing the Tuzki brand in their recent Tuzki Snap iPhone app and Tuzki Milk Mogul Facebook game. Wang, on the other hand, has since published a second book using a different character, and no longer posts about Tuzki on her personal blog (though the rabbit still makes an appearance in the sidebar).

On the surface, the story of Tuzki may seem like a happy one: Time Warner has landed itself with one of China’s hottest licensed characters and Wang has become a celebrity illustrator with a solid fan following.

Yet, in reality, the story of Tuzki is a case study of failure in the cartoon industry in China. Nothing Wang or Time Warner has made rivals the sheer impact and unique personality of the early Tuzki emoticons. The animated commercial ads are cute, comics strips enjoyable and mobile apps popular, but none possess the same draw or distinct mark of the original. And what’s worse, none have added more depth to the Tuzki character. At this rate, the charismatic, mouth-less rabbit may never transcend its status as an massively-popular internet fad of 2007. Tuzki may forever remain as mysterious as when he first appeared, an expressive rabbit-like creature without a mouth but with some really great moves.

See the original article here.

Some time around 1686. (Via China Rhyming.)

Al Jazeera celebrates International Women’s Day by interviewing Baidu’s VP of search, Ms Wang Mengqiu. Includes a bunch of nice shots of the Baidu complex.

(Via Danwei.)

“Crazy Mouse… the very first Xbox Live Arcade game produced by a Chinese studio.

The action/puzzle title was developed by Shanghai-based Ultizen Games as part of the Chengdu Incubation Center, a collaborative initiative involving Microsoft and local enterprises in order to produce Xbox projects.”

Via Game | Life.