China MONTHLY NEWSLETTER - OIC · China Telecom Newsletter is published monthly by Information...

Vol. 13 No. 12 December 2006

China Telecom Newsletter is published monthly by Information Gatekeepers Inc.

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In This Issue...

ChinaT E L E C O M

MONTHLYNEWSLETTER

TOP NEWS

Number of fixed-line users in China reaches 370 millionChina’s Ministry of Information Industry stated that the

number of landline users in China had reached 370 million.The nation’s mobile-phone base reached 440 million, taking

2005 20100

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China digital set-top box market(millions of units)

Source: In-Stat

China Netcom to switch from

H.264 to AVS for IPTV.... 2

Ericsson secures optical

backbone network contract

with Central China Power

Grid ................................ 3

ZTE wins WDM deal ...... 5

Beijing Quan Tong Chang to

launch ‘Intragroup Call’ .. 6

3TNet launches new

broadband information

network ........................... 7

ZTE’s new generation

‘green’ base stations reduce

power consumption ........ 8

Intelsat renews China

Central Television contract

for global programming

distribution ...................... 9

Copyright 2006 Information Gatekeepers Inc. 320 Washington St. Brighton, MA 02135 Tel: (617) 782-5033 Web: www.igigroup.com

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China Telecom Newsletter December 2006

the overall telephone volume to over 800 million.The MII also said that the Chinese telecomindustry grew from July to September.Revenues from the postal and telecom businessreached $67 billion in the period, an increase of11 percent compared to the same period a yearago. Total subscribers reached 280 million inSeptember and are likely to go past 300 millionby this year’s end.

China Netcom to switch from H.264 to AVSfor IPTV

China is conducting trials for IPTV in fivecities, of which one trial uses AVS, whereas theothers use H.264. Netcom said that it wouldchange over to AVS from H.264 after the codectrials finish. This month, the Chinesegovernment will begin another round of testsfor AVS, which should finish in January 2007.Netcom said that it would favor equipmentsuppliers who agree to upgrade its system withAVS free of cost in return for potential long-termcontracts. In addition, Netcom plans to use AVS-based IPTV in 20 cities in 2007, and expects 6million IPTV users in five to seven years, or 40percent of its present broadband users.

The technical performances of H.264 andAVS are believed to be almost the same.However, some chipmakers are skeptical.Unlike MPEG-4/H.254, AVS might not chargeparticipation fees for using codec in subscription-based services, title-by-title duplication ofcontent, or free over-the-air broadcasts.

China Mobile, China Netcom, and ChinaTelecom sign deals to purchase TD-SCDMAhandsets

China Mobile, China Telecom, and ChinaNetcom have reportedly signed deals with 15mobile-phone manufacturers to purchasearound 9,000 TD-SCDMA mobile phones. Itforms a part of a trial for the homegrown 3Gtechnology. The sale price for the mobile phonesis $315 per handset. Twelve of the 15manufacturers happen to be domestic firms,

which include Levono, ZTE, Datang, LG,Samsung, and Motorola. These threecompanies are intending to give orders for anadditional 10,000 TD-SCDMA mobile phonesnext month.

China Unicom adds 1.29 million newsubscribers in October 2006

China Unicom added 1.29 million newsubscribers in October, compared to 1.23 millionnew subscribers in September. 924,000subscribers were added to the GSM, network,compared to 894,000 new GSM additions inSeptember.

The GSM subscriber base therebyincreased to 104.04 million. The CDMAsubscriber base increased over the month by361,000 subscribers, from 35.40 million to 35.76million. The operator had 139.8 millionsubscribers at the end of October.

SUBMARINE CABLES

China Telecom, China Netcom and ChinaUnicom join Asia-Pacific consortium to build$500 million next-generation optical cabledirectly linking US and China

China Telecom, China Netcom and ChinaUnicom signed a construction and maintenanceagreement with a consortium that includesKorea Telecom, Chunghwa Telecom andVerizon Business to build the first next-generation undersea optical cable systemdirectly linking the US mainland and China.

The new system, to be named Trans-Pacific Express (TPE), will use the latest opticaltechnology to provide greater capacity andhigher speeds to meet the dramatic increase indemand for IP, data, and voice communicationswith the Asia-Pacific region.

The new fiber-optic cable can support theequivalent of 62 million simultaneous phonecalls, more than 60 times the overall capacityof the existing cable directly linking the UnitedStates and China.


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While TPE will initially provide capacityof up to 1.28 terabits per second (Tbps), thesystem will have design capacity of up to5.12Tbps to support future Internet growth andadvanced applications such as video and e-commerce. In another first, individual customerscan access the cable system at wavelengths ofup to 10 Gigabits per second (Gbps), theequivalent of nearly 121,000 simultaneousphone calls.

Verizon Business is the only US-basedmember among the initial parties of theconsortium. The TPE cable also provides morediversity from other undersea routes and moreefficient connections to a number of countriesin Asia where Verizon Business has largebusiness customers.

“This state-of-the-art cable will supporthigh-speed traffic to the world’s fastest-growingregion — the Asia-Pacific,” said Fred Briggs,Verizon Business executive vice president ofoperations and technology. “Our leadership inthis project builds on our important existingrelationships in China, further recognizes theemergence of China as a diversecommunications hub for Asia, and reflects ourcompany’s commitment to help U.S. and otherglobal companies compete worldwide.”

Construction of the new cable system,which will extend more than 18,000 kilometers,will begin in the first quarter of 2007. Completionis scheduled in the third quarter of 2008. Theproject represents an investment by consortiummembers of more than US$500 million.

“In addition to a diverse route directly toChina, this cable will add capacity and thehigher-speed service customers aredemanding,” Briggs said. “We also will improveprovisioning intervals and reduce latency fortraffic between the United States and manycountries in the region.”

The cable will have a landing pointprovided by Verizon Business at NedonnaBeach, Oregon, on the US West Coast and willland on the China mainland at Qingdao and

Chongming. TPE will also have landings inTanshui, Taiwan, and Keoje, South Korea.

FIBER OPTICS

Ericsson secures optical backbone networkcontract with Central China Power Grid

Ericsson has been selected by CentralChina Power Grid Co. Ltd. (CCPG) as the solesupplier for its East-West Corridor OpticalTransmission Project. Ericsson will be providing10G and 2.5G SDH equipment and relatedservices.

Under the contract, Ericsson will supplyits most advanced Optical MultiService transportand switching platforms to build an opticaltransmission backbone network for CCPG.

Upon completion of the network, thetransmission capacity of Central and SouthWestern provinces in China will be greatlyenhanced, local electric resources utilized, andlocal telecommunications improved. Mostsignificantly, it will help improve the supply ofpower to economically booming areas of Centraland South Western China.

The East-West Corridor OpticalTransmission Project is the most important oneof CCPG’s 11th Five-Year Plan. The opticaltransmission network to be constructed will passthrough Hubei and Sichuan provinces andChongqing Municipality, covering 55 stationsand 1,500 kilometers. The entire project is dueto be completed and put into operation by 2009.

Mats H Olsson, president, EricssonGreater China, said, “The contract has furtherstrengthened our long-term solid relationshipwith China’s power industry. With our worldleading optical solutions and experiences, wewill be able to support CCPG in providing safe,secure and high-performance power servicesto over 380 million users across Central andSouth Western China.”

Ericsson has so far supplied the SDHOMS3200 series, OMS1600 series, OMS1200series, SMA series3/4, and PCM to China’s


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major power companies, including ChinaSouthern Power Grid Corporation, State GridCorporation of China, and its subsidiariescovering North and East China, as well as tonumerous provincial and local powercompanies.

The contract highlights the benefits of theMarconi acquisition to Ericsson’s customers,who value having a strategic partner and aprovider of full-service broadband solutionsincluding cutting-edge microwave and opticaltransport networks, broadband access, andIMS.

Beijing Power selects ECI Telecom toupgrade its communications system for2008 Olympics

ECI Telecom announced that BeijingPower has chosen ECI to upgrade its opticalcommunications network in preparation for the2008 Olympics. ECI’s proven track record ofsupplying highly reliable solutions for powercompanies, both in China and around the world,helped ECI win this competitive bid. This followsanother 2008 Olympics-related contract thatwas awarded to ECI earlier this year by BeijingSubways to upgrade its communicationssystem.

In preparation for the Olympics, BeijingPower is building new power stations,connecting multiple Olympics sites andupgrading its current communicationsinfrastructure. ECI’s XDM optical solution willbe used to expand this network, providingBeijing Power with additional bandwidthcapacity to handle peak demand during theOlympic Games.

This highly reliable and scalable networkwill be used for internal communications andfor data communications in order to monitor thepower stations and generators.

The network will be managed by ECI’sLightSoft network management system,enabling Beijing Power to easily provision andcontrol new services.

“As hosts to the world’s most importantsporting event, we can’t afford to take risks withour communications infrastructure,” said Mr. LiuRun Sheng, director of Beijing Power ’sDispatching Center. “Of all the companies weevaluated, ECI offered the most robust andreliable solution. Moreover, ECI is well-established in China and came to us withexcellent references.”

“We’re proud that our optical solution wasonce again chosen by a major utility companyin China for this high profile event,” said AvielTenenbaum, president of ECI Telecom’s AsiaPacific Regional Business Unit. “This flexiblesolution gives Beijing Power the ability to supportthe huge bandwidth requirements for the 2008Olympics, ensuring that their criticalcommunications run reliably.”

ZTE GPON system on show at ITU TelecomWorld 2006

ZTE exhibited the ZXA10 GPON (Gigabitpassive optical network) system at ITU TelecomWorld 2006, along with its newest wireless,access, core, and terminal products.

The ZTE ZXA10 C220 optical lineterminator (OLT) GPON system and F seriesterminals provide stable, high-quality opticalaccess for new services such as IPTV andHome Gateway.

The ZTE GPON system conforms to ITU-T G.984 standards, with the ability to handlehigh-density, high-bandwidth, and high-volumetraffic, supporting high-quality multicast and DBAand providing high-bandwidth data and Internetaccess, VoIP, IPTV, and CATV services.

ZTE produces a series of OLTs and ONTs(optical network terminators) meeting therequirements of FTTH, FTTB, FTTO, FTTCab,and other applications. The ZXA10 GPONsystem can also support EPON (Ethernetpassive optical network) and GPON mixed-inserts in one frame.

ZTE’s EPON system was exhibited. Itconforms completely to IEEE 802.3ah, providing


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a high-quality optical solution. First implementedat the end of 2004, ZTE’s EPON products arenow widely used in the Guangdong, Shanghai,Guangxi, Hubei, and Shanxi branches of ChinaTelecom; the Sichuan and Guangdong branchesof China Netcom; and with ITESS in TheNetherlands. The ZTE EPON system coversapplications of FTTH, FTTO, FTTB +LAN,FTTCab, and mixed-inserts in MSAN/MSAG.

ZTE wins WDM dealZTE has exclusively won a contract to

build five national WDM trunk lines for ChinaNetcom as part of the operator’s 2006 long-haultransmission network improvements. Thisagreement follows the successful constructionof five national trunk lines for China Netcom in2005.

The five new national trunk lines willcover 10 Chinese provinces. With deploymentof the network, China Netcom will achievegreatly increased network capacity on thebackbone layer and improved operationalcapability, enabling it to compete more stronglyin the highly competitive Chinese market.

ZTE will supply its Unitrans series ZXWMM900 DWDM equipment to build the network.With the adoption of multiple industry-leadingtechnologies such as ERZ, large-power EDFA,enhanced FEC, dynamic power equalization,distributed dispersion management, automaticcompensation of line attenuation, and Lamanamplifiers, the equipment solves problems suchas long-term wavelength stability in large-capacity and long-haul transmission, low signal-to-noise ratio, and diversified spares. Thisenables single-span transmission over 300kmand super-long-haul non-REG transmissionover 5000km, delivering high reliability andsecurity over the entire network.

ZTE optical networking products havebeen deployed by 130 operators in over 70countries. According to the latest statistics fromtelecoms industry analyst firm Ovum-RHK, atthe end of June 2006 ZTE’s long-haul DWDM

system installations ranked in the top three inthe world, and ZTE was the fastest-growingmainstream optical network vendor between2004 and 2006.

PMC-Sierra introduces first end-to-endEPON silicon solution with key ChinaTelecom features

PMC-Sierra Inc. announced theavailability of the industry’s first EPON opticalnetwork unit (ONU) and optical line terminal(OLT) silicon devices that support ChinaTelecom-defined algorithms and features for theChinese telecom market. The new PAS6301ONU for customer premises equipment and thePAS5201 OLT for central office equipmenttogether provide an end-to-end EPON solution.The two system-on-chip (SoC) devices are thefirst to be designed to meet new China Telecomstandards that define data encryption anddecryption algorithms, quality of serviceprocedures, and classification protocols, makingthem ideal for emerging high-volumedeployments in China. These devices extendPMC-Sierra’s product leadership in high-volumeEPON devices by providing the first enhancedForward Error Correction (FEC) in both ONUand OLT devices, enabling higher split ratio andlonger physical links in the access network. Inaddition, the PAS6301 includes voice-over-IPservice support to lower the cost of providingvoice over fiber. Both devices support largepacket buffers for higher-quality IPTV broadcastcapabilities, which is a significant improvementover previously available devices.

“We are pleased that a market leadersuch as PMC-Sierra has introduced EPONdevices that support the features that we havedeemed important for our marketplace,” saidDirector Wang Zuo Qiang of the NetworkTechnology Department of China Telecom. “Wehave worked with the industry to define acomplete set of features and algorithms so thatequipment deployed in China will be compatiblewith our requirements.”


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“These new EPON SoCs demonstratePMC-Sierra’s commitment to all Asian markets,”said Victor Vaisleib, general manager of theFTTH Business Unit at PMC-Sierra. “Theyprovide key feature integration for supportingChina Telecom FTTH deployments as well asproviding extended feature sets that result in alower BOM cost for the system vendors.”

“PMC-Sierra is first to market with end-to-end EPON product enhancements thatcomply with important market-orientedspecifications,” said Jeff Heynen, directinganalyst for broadband and IPTV with InfoneticsResearch.

“According to our research, PMC-Sierrais the volume leader in FTTH devices withmillions of devices deployed in Japan. Thesenew devices will position them to support futuredeployments in China as well.”

Samples of the EPON PAS6301 ONUand PAS5201 OLT devices are available now.The PAS6301 ONU is available in a PGBA 456package, and the PAS5201 is available in a BGA376 package. For more information, contact aPMC-Sierra sales representative at http://www.pmc-sierra.com/contactSales. Acomprehensive support package, includingdatasheets and application notes, is availableat www.pmc-sierra.com/ftth-pon.

NeoPhotonics appoints Michael Sophie toboard of directors and chair of auditcommittee

NeoPhotonics, a supplier of opticalnetworking components for long-haul, metro,and access (such as FTTX) networks,announced the appointment of Michael J.Sophie to the company’s board of directors andchair of the audit committee.

Mr. Sophie currently sits on the boardsof directors for McData Corporation, a providerof storage networking solutions; BCDSemiconductor, an analog and mixed signal ICproducts company; and Postini Inc., a providerof on-demand message management services.

Mr. Sophie also serves as audit chair for eachof these companies.

Mr. Sophie recently served as EVP andCOO, and previously as SVP and CFO, ofUTStarcom Inc. of Alameda, California, wherehe had financial and operational managementresponsibility for the company with annualrevenues in excess of $2 billion. At UTStarcom,a manufacturer of telecom equipment for use inworldwide markets, with specific focus inmainland China, Mr. Sophie had directmanagerial responsibility for accounting,finance, information technology, investor andpublic relations, legal, human resources,marketing and sales, and supply chain. He alsocoordinated UTStarcom’s highly successful$216 million initial public offering in 2000 andeffectively positioned the company to investorsduring the company’s rapid growth.

Previously he held high-ranking financialpositions with P-Com Inc. and the Loral,Fairchild Imaging Sensors Division.

“We are pleased to welcome Mike to theBoard and are confident that his leadershipexperience will prove invaluable to thecompany’s growth and our strategic planning,especially with regards to various finance,accounting and control posture objectives,” saidTim Jenks, chairman and CEO of NeoPhotonics.

“NeoPhotonics has enjoyed impressivegrowth over the last two years and has made anumber of acquisitions that position thecompany well for sustained growth in varioussectors of the telecommunications industry,”said Sophie. “I look forward to assisting theBoard as the company enters the next stagesof its development.”

INTERNET

Beijing Quan Tong Chang to launch‘Intragroup Call’

Beijing Quan Tong Chang InformationServices (Beijing QTC) will soon be introducinga broadband phone service called the


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“Intragroup Call” in the Beijing Tianzhu AirportIndustrial Zone. The company expects to makea profit of $1.5 million every year. Tianzhu Zoneand Beijing QTC will work in partnership tolaunch this “Intragroup Call” promotion. Thecompany intends to install the broadband phoneplatform using the Internet, replacing regularphone networks for transmitting calls. The firstinstallation will be done at the managementoffice building in Tianzhu Zone, Blue SkyMansion. Eventually it will be applied to big andmidsized enterprises.

Beijing QTC is also planning to buildbroadband phone networks with the largestcovering area in a period of eight months. Thecompany expects to increase its annual salesby about $1.5 million.

China VoIP expandsCiting growing demand for its voice over

Internet services, Jinan Yinquan Technology Co.Ltd., a wholly owned subsidiary of China VoIP& Digital Telecom Inc., announced that it haslaunched a major, system-wide expansionprogram. The company said it plans tosignificantly increase server capacity, addequipment in cities and provinces that aretargeted for expansion, increase the number ofavailable phone numbers, replace certainequipment to increase speed and efficiency, andadd additional staff at current and futurelocations.

Jinan Yinquan, a technology companyoffering VoIP services in the People’s Republicof China, has been developingtelecommunication solutions for China’sburgeoning Internet industry for more than halfa decade.

“Our mission is to become the premierprovider of VoIP services in the People’sRepublic of China,” said Li Kunwu, presidentand CEO of China VoIP & Digital Telecom Inc.“To accomplish that goal we need to always beseveral steps ahead of our growth so that wewill never be in a position that we cannot

adequately service our subscriber base.Therefore, we are adding two new servers toour current infrastructure, creating additionalcapacity for 500,000 new users. This brings ourtotal infrastructure to 27 servers. All of our newservers will be installed in China Tie Tong’sequipment room, who provide us with thenecessary access to bandwidth, networkinfrastructure and E1 interface. Expansionprograms such as this will be virtually ongoing.”

3TNet launches new broadband informationnetwork

3TNet, a broadband information networkwhich integrates radio, TV, telecom, andInternet, has been launched in various parts ofChina. 3TNet can also provide video-on-demand services. This will allow ChineseInternet users to access interactive broadbandservices at speeds of around 41Mbps. Themajority of Chinese families accessingbroadband services are provided speeds of lessthan 10Mbps, according to the Ministry ofScience and Technology. Via video-on-demand,users can order films along with many interactivedigital services like tele-medical and tele-education services. More than 30 Chinesecompanies, scientific research institutes, anduniversities like China Telecom, the Institute ofAcoustics of the China Academy of Sciences,and Shanghai Media Group participated todevelop the network. It will help to reduceinformation technology costs.

WIRELESS

Nokia signs contract with ChineseGuangdong MCC on GPRS packet corenetwork expansion

Nokia has announced the signing of aGPRS packet core network expansion contractwith Guangdong MCC Ltd., which will makeNokia the leading GPRS provider for thecompany. As per the terms of the contract, Nokiawill provide its intelligent GPRS packet core


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solution for the eighth GPRS expansion ofGuangdong MCC. The core solution consistsof SGSN, Nokia Flexi Intelligent Service Node,and Nokia Charging Gateway. The solution alsosupports the high-tech content chargingfunctionality and provides an easy migrationpath to Nokia Combi SGSN, as the 3G accesssupport capability can be obtained with simplememory and interface upgrades.

The multivendor, multitechnology NokiaNetAct network and service managementsystem, including Nokia NetAct Traffica, willsupport the network; Nokia will also providenetwork planning, implementation, andintegration services. The network will be servingmore than 11 million data subscribers in theEastern Guangdong province ranging fromShenzhen to include DongGuan and Huizhouby December 2006. Nokia and GuangdongProvincial Government signed a MoU in October2006 in Finland, which names Nokia as animportant player in the information industrydevelopment of Guangdong province.

ZTE’s new generation ‘green’ base stationsreduce power consumption

ZTE launched its ZXG10 8000 basestations family at ITU Telecom World 2006.ZTE’s “green” multi-carrier 8000 base stationsfamily integrates all the technical advantagesof third-generation base stations.

Because it adopts a multiple-densityfrequencies module, the power consumption islower and the dimension is smaller. An optimalbalance between capacity and coverage isachieved, supporting the smooth evolution to3G base stations and future networks.

“The key issue in today’s rapidlydeveloping market is that of proprietarysolutions,” said Mr. He Zhaogang, ZTE’s GSMproduct manager. “If any technology, product orsolution is to truly take off, it must integrate withlegacy systems and systems yet to come. Itgoes without saying that these solutions willincreasingly feed into the ‘green’ trend and aim

for a happy balance between capacity demandsand the environment, integrating with oneanother to ensure minimal product waste.”

The new base stations support allfrequencies of GSM — 850/900/1800/1900/EGSM — fully satisfying operator requirements,aided by a dynamic resources pool structurewhich enables fast construction and costsavings.

The adoption of Netspeed technology willlargely increase coverage and data qualities, aswell as increasing network construction speedand transmission abilities.

The ZTE ZXG10 8000 outdoor basestation family is suitable for harsh environmentswhere operators have difficulty providingequipment rooms.

The flexible networking modes helpoperators to build economic networks, and byusing ZTE base station products, operators willeasily achieve seamless coverage from citiesto suburbs, from towns to rural areas, and fromroads to grasslands.

ZTE also demonstrated solutions suchas its BSC-plus solution and its FMC solution,which directly increase network value and helpoperators achieve a competitive edge.

Beijing Mobile uses AsiaInfoAsiaInfo Holdings Inc., a provider of

telecom software solutions and IT securityproducts and services, announced that it hassigned a contract to develop Phase III of BeijingMobile’s Business Intelligence (BI) system. ThePhase III BI project will enhance Beijing Mobile’scompetitive capabilities by improving dataquality, broadening subject domain applicationsto enable Beijing Mobile to offer morepersonalized services.

“AsiaInfo’s leading business intelligencesystems help telecom operators analyze theiruser data and develop services tailored tocustomer needs,” said Steve Zhang, presidentand chief executive officer of AsiaInfo. “We havebeen investing in business intelligence R&D for


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several years now and our BI systems andservice guarantees are world class. Currentlyour BI systems support more than 150 millionusers and over 15 terabytes of data.”

Mr. Zhang also noted that AsiaInfo’s BIsystem has been successfully deployed for 13of China Mobile’s provincial subsidiaries.

As a leading telecom operator in China,Beijing Mobile’s business and user volume hasincreased significantly in recent years, and theoperator is expected to reach 14 million usersby the end of 2007.

A sophisticated BI system that providesin-depth analysis of market and user data isintegral to servicing such a large user base. Priorto this agreement, AsiaInfo successfullyconstructed Phases I and II of Beijing Mobile’sBI system, establishing a unified data platformand nine major analytical functions.

Intelsat renews China Central Televisioncontract for global programming distribution

Intelsat announced that China CentralTelevision (CCTV), the national broadcaster ofthe People’s Republic of China, renewed amultiyear contract for the global distribution ofits programming.

CCTV is also utilizing Intelsat for itsinternational backhaul transmission of the AsianGames from Doha, Qatar, back to Beijing.

A long-standing customer since thelaunch of PAS-2 in 1994, CCTV became theworld’s first global Mandarin Chinese televisionservice when it expanded its servicesinternationally via the PAS-3 satellite in 1995.

Intelsat currently provides full-timeprogram distribution services for CCTV via itsPAS-1R Atlantic Ocean Region satellite, PAS-9Atlantic Ocean Region satellite, and PAS-10Indian Ocean Region satellite.

Intelsat also provides CCTV with capacityon its Galaxy 3C satellite for direct-to-home(DTH) services in the United States. Thisrenewal contract also expands CCTV’s C- andKu-band capacity agreement.

MERGERS AND ACQUISITIONS

Huawei accepts 3Com offer to purchaseHuawei’s entire stake in H3C

Huawei, a provider of next-generationtelecommunications network solutions foroperators around the world, announced that ithas accepted a bid offer from 3Com to purchaseHuawei’s entire stake in their joint venture,Huawei-3Com (“H3C”).

In accordance with H3C’s shareholders’agreement, the bid process was initiated by3Com on November 15, 2006, and a bid offerwas accepted by Huawei on November 28, 2006(Beijing time). H3C will become wholly ownedby 3Com after the completion of the transaction.

Mr. Guo Ping, senior vice president ofHuawei Technologies, said, “The divestment willfurther enable Huawei to focus its efforts on itscore business, strengthen our leadershipposition in the ALL IP-based FMC (Fixed andMobile Convergence) solutions market, andcreate long-term value and potential growth forour clients.

Over the past three years, 3Com andHuawei have contributed a great deal to thedevelopment of H3C. H3C has become one ofthe leading global suppliers of IP networkingproducts and solutions and we wish them everysuccess in the future.”

Huawei will continue to comply with itscommitments under the existing joint ventureagreements.

Hutchison courts suitorsHutchison Telecommunications

International Limited states that it has beenapproached by various potentially interestedparties regarding a possible sale of its equityinterests in Hutchison Essar Limited, thecompany’s mobile operations in India.

No agreement with respect to suchpossible sale has been entered into to date. Thecompany reiterates that there is no assurancethat a sale may result from these approaches.


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BUSINESS

Motorola Inc. to open another new researchcenter in China

Motorola Inc plans to open a researchcenter in China to target next-generationwireless technologies.

It would focus on important technologiesused in wireless broadband equipment and aidthe firm in developing worldwide standards.

The executive vice president of Motorola,Gregory Brown, said that Motorola is looking tostrengthen its alliance with Chinese parents, asChina is emerging to actively develop standardsin future mobile communications technologies.

The center will also improve Motorola’scooperation with local firms and universities.Motorola has 18 R&D centers in China, witharound 3,000 engineers, and is the biggest R&Dbase by a multinational firm in China.

Hong Kong’s telecoms regulator OFTAgrants EFTNS license to Tricom Asia

Hong Kong-based telecom regulatorOFTA has granted an External FixedTelecommunications Network Services(EFTNS) license to Tricom Asia, enabling it tooperate telecom services through VN-HK, its1,050km undersea fiber-optic network, whichlinks Hong Kong and Vietnam.

Since China Telecom won a license in2005, this is the lone EFTNS license in HongKong. Tricom Asia is planning to invest intelecom solutions in the emerging markets inAsia-Pacific. It had formed its Hong Kong-baseddivision in May 2003.

Telecom sector rings in changesIf the number of times a CEO visits any

given market is an indication of its importance,then China must be very significant for Australiantelecom giant Telstra.

Since Sol Trujillo took over the helm ofTelstra in July 2005, he has visited China fourtimes, and his visits have paid off.

In August, Telstra acquired a 51 percentstake in Beijing-based real estate portalSoufun.com for US$254 million through itsdirectory and advertising subsidiary Sensis, thusentering the nation’s booming Internet market.

Industry sources said the firm is alsoconsidering establishing an alliance with ChinaTelecom, the nation’s largest fixed-line operator,which operates in much the same fields and hassimilar plans to boost its broadband, wireless,and Internet businesses.

Telstra’s ambition in both basic andvalue-added telecom services in China, asshown from its interest in China Telecom andSoufun, is a typical example of foreigncompanies’ interest in the world’s most populoustelecom market since the nation joined the WorldTrade Organization (WTO) five years ago.

“Joining forces with Chinese operatorsand bringing value is good, but one should nottake control,” said Igal Brightman, globalmanaging director of technology, media, andtelecommunications with the consulting giantDeloitte.

According to China’s commitment to theWTO, the maximum stake that foreign investorscan hold in telecom joint ventures has been liftedfrom 35 to 49 percent, while they are no longerrestricted to 17 large cities.

When China was negotiating its WTOentry, its telecom industry remained in itsinfancy; mobile phones were regarded as aluxury product by most people, and they neededto wait for almost one month to have a fixed-line phone installed.

As a result, with their financial andtechnological strength, foreign operatorsthought China’s WTO membership would givethem access to a hugely lucrative market.

Since China’s WTO accession inDecember 2001, Chinese operators have madedramatic progress and spent hundreds of billionsof dollars, partly prompted by the activities ofinternational equipment vendors such asEricsson and Motorola.


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China has therefore become a placewhere global telecom equipment vendors testtheir best products.

In addition, China’s fixed-line subscribersrose twofold to 370 million, and mobilesubscribers grew three times to 450 million.

Now, they have found out it is not wise tobuild their own networks, with equity investmentbecoming the dominant form of tapping thebenefits of the world’s largest market in termsof subscribers.

China Mobile, the world’s largest mobileoperator, teamed up with Vodafone; ChinaUnicom, a smaller competitor of China Mobile,formed a joint venture with SK Telecom fromSouth Korea; China Unicom, the second-largestfixed-line operator, brought Spanish counterpartTelefonica on board as its largest strategicinvestor.

The only firm left for foreign investmentamong the top four operators is China Telecom,which has many large international operatorspursuing it, such as Telstra, Japan’s NTT, andFrance Telecom.

“China is a very unique market: just likeits economy, no other country has gone fromhaving the most primitive communication toolsto the most advanced telecom system in theworld in such a short period of time,” saidCharles Yen, managing partner of Chinanorthern region with Deloitte.

Yi Mingyu, a senior analyst with CCIDConsulting Co. Ltd. under the Ministry ofInformation Industry, agreed with Yen and saidforeign investors and operators must have arealistic attitude when operating in the Chinesemarket. Brightman from Deloitte said that whenforeign investors come, they must find areaswhere they can add value, but Chineseoperators are now already very strong andtechnologically sophisticated, so theopportunities for foreign participants to have adominant say are minimal.

One area in which they can offer valueand attract Chinese counterparts is their

international expertise, as Chinese operatorsare trying to expand to overseas markets andincrease the share of value-added services forhigher profits.

That is why Vodafone, Telefonica, andSK Telecom have become strategic investors.Vodafone and Telefonica both have stronginternational businesses in Europe, Asia, andLatin America, while SK Telecom has richexperience in developing value-added services.

Brightman said new opportunities mayarise with technological breakthroughs such asthe third-generation (3G) mobile communicationsystem, which has a higher efficiency and afaster Internet connection speed.

China is expected to issue 3G licensesvery soon. What services operators bring toconsumers will be the key to their success inthis business. Areas like cost-efficiency andcontent on a 3G network may be something thatforeign operators and investors should use toattract Chinese operators and consumers.

Source: China Daily

TCL joins HomePlug Powerline Allianceboard of directors

Driving the worldwide acceptance ofhigh-speed networking over powerlines, theHomePlug Powerline Alliance announced thatTCL has joined the HomePlug Implementers’Forum board of directors. TCL is the world’slargest manufacturer of television sets and aglobal supplier of consumer electronicsproducts. With the addition of TCL, theHomePlug Powerline Alliance continues to alignthe world’s leading electronics manufacturersaround the global HomePlug family ofstandards. The HomePlug Powerline Alliancenow features the top three global televisionsuppliers — LG, Samsung, and TCL — on itsboard of directors.

Cisco places China betCisco announced that it has made a

strategic investment of US$50 million in China


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Communications Services Corporation Limited(CCS). Cisco is the largest foreign strategicinvestor in CCS.

CCS is the specializedtelecommunications support businesses arm ofa major telecommunications group in China.CCS has been reorganized and spun off to forma separate independent entity, with ChinaTelecom Group, China Mobile, and ChinaUnicom also as shareholders. CCS is nowpublicly traded on the main board of the HongKong Stock Exchange.

Under the terms of the agreement, Ciscoand CCS will jointly provide managedtelecommunications services, such as networkoperation and administration, to enterprisecustomers in China. Additionally, the twocompanies will provide customers with newnetwork solutions, including IP infrastructures,digital video, and 3G platforms and applications.

“We are pleased to be working with Ciscoto bring advanced telecommunications servicesto enterprise customers in China,” said Li Ping,chief executive officer of CCS. “This is anexciting time for CCS as we plan to capitalizeon the growing demand of high value-addedvoice and data supporting services across thecountry. We expect Cisco will play an importantrole in helping us realize our plan.”

“China is an extremely important marketfor Cisco, and in cooperation with CCS, weintend to help make China one of the mostconnected countries in the world,” said OwenChan, senior vice president of Cisco’s AsiaPacific business. “By working with CCS, wehope to help Chinese businesses adopt anddeploy new productivity-enhancingcommunications services.”

Global fixed-line operators share NGNconstruction experiences

The Network Evolution Summit, jointlysponsored by ZTE and China Telecom, was heldin Hong Kong’s Disneyland hotel, December 6,2006.

More than 300 senior executives andexperts from China Telecom and 70 other majortelecommunication operators from around theworld attended the event. The main topics ofthe summit were the role of NGN technology innetwork transformation, China Telecom’snetwork transformation opinion and experience,experiences of partnership between telecomsoperators and equipment providers, andoperation innovation and development in thetelecoms industry.

During the summit, China Telecom andZTE celebrated one year of stable operation ofthe China Telecom’s long-distance NGN project.Delegates from FT, TMI (Telecom MalaysiaInternational), and other top operators alsoshared their network construction andmaintenance experiences.

China Telecom is the one of the largestfixed-line network operators in the world and hasextensive operational experience in fixed-line,wireless PHS, and broadband data networks.Ms. Zhao Huiling, vice president of ChinaTelecom’s Beijing Research Institute, sharedChina Telecom’s views of, and strategy for,network transformation.

Ms. Zhao said that China Telecom’snetwork transformation is highlighted by itslaunch of the NGN-based long-distancebackbone project, which was awarded to ZTEas sole equipment supplier. The project wasstarted in May 2005 and now covers 31provinces and autonomous regions throughoutChina. It is, so far, the largest fixed NGN networkin the world in terms of number of nodes and its300 million subscribers. The launch of the NGNbackbone further improves China Telecom’squality of service in those provinces, securesrevenue from long-distance voice traffic, andprovides much more efficient, and more varied,services.

Reviewing the latest approaches tonetwork transformation, Ms. Jane Chen, vicepresident of ZTE, analyzed current telecomsnetwork structures and future network


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development trends, and pointed out thatoperators should pay more attention to end-users’ multi-play service requirements.

As an example, she discussed ZTE’sF3G (Fast Triple Gain) solution, which isdesigned to address multi-play services. As anend-to-end networking solution, F3G fullyaddresses the requirements of serviceconstruction, deployment, and managementduring network transformation.

During the summit’s Q&A session,chaired by Mr. Wang Xuejun, vice president ofYankee Group Asia-Pacific, delegates fromoperators including FT, and TelkomSA Ltd.shared their opinions on how to construct ahighly efficient and profitable telecom network.

“This summit was jointly sponsored withChina Telecom to give us an opportunity to sharewith the world’s leading operators the lessonsthat have been learnt in developing the world’slargest NGN fixed line network,” said Jane Chen.“Our aim was to share the knowledge acquiredin this process and to give operators the chanceto share their experiences from other majormarkets, with the aim of enhancing globalknowledge of, and interest in, NGN networks.”

COMPANY NEWS

Huawei signs deal worth $38.4 million withGerman operator

China’s biggest telecom equipment-maker, Huawei Technologies, signed a deal withGerman operator Versatel Holding DeutschlandGmbH worth $38.4 million. According to theMemorandum of Understanding signed inBeijing, Huawei will build a fiber-opticcommunications network based on InternetProtocol (IP) for the third-biggest fixed-lineoperator in Germany. For the first time, Huaweiwill provide the technology for a completenetwork for a German operator. Versatel hasaround 700,000 subscribers, and its revenuesare likely to reach $883 million. Versatel CEOPeer Knauer stressed the need for a

dependable partner that would help the operatorface the challenging issues confronting theoperator.

Uganda to receive a grant of $120 millionfrom Huawei

Uganda will receive from China a grantof around $120 million for developing thenational information communication technology(ICT) backbone infrastructure. On ChinesePrime Minister Jiabao’s visit to Uganda, an e-Government project MoU (Memorandum ofUnderstanding) was signed with HuaweiTechnologies, the biggest telecom equipmentmanufacturer in China. State Minister for ICTMr. Allintuma Nsambu said that this grant wouldhelp in providing fast telecom services at lesscostly rates. The government intends to createa new ICT backbone to trigger new economicgrowth, improve trade, and offer bettercommunication choices to the Ugandans.Huawei will do the job of installing, supplying,and putting the technologies in place to set upan e-government system and extend thecommunications network.

Huawei picks XeleratedXelerated, a provider of network

processing, announced that its Xelerator X11network processor has been selected by HuaweiTechnologies for the next-generation packet-based multiservice products for metro networks.

“Huawei selected the Xelerated X11network processor (NPU) because theXelerated NPU is an integration of high-performance, programmability and low cost,best suited for packet-based multi-serviceproducts,” said Chen Junhua, president of thedata-communication product line, Huawei.

The X11 NPU will be deployed in thenext-generation packet-based product family tomeet the key requirements from multiple globaloperators. “We are very pleased to have beenchosen by Huawei on this vital, high-volumeplatform, and believe that our X11 NPU and


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future-generation products will provide Huaweiwith the flexibility to meet the changing demandsof operators around the world,” said BillFranciscovich, Xelerated’s VP of sales.

The X11’s unique, highly focused data-flow architecture provides guaranteed line-rateperformance with programmable featureflexibility to track changing standards and thedifferent requirements of multiple geographies.

UTStarcom sings deal with Maxim Telecomof Pakistan

Telecommunication equipmentmanufacturer UTStarcom Inc. has signed adistribution deal with Pakistan-based MaximTelecom. No financial details were provided bythe company. The deal will include offering thewhole range of UTStarcom’s handsets and alsoInternet protocol (IP)-based broadbandtechnology. The vice president of the Europe,Middle East, and Africa region at UTStarcom,Youssef Kassissia, said that since foreigninvestments in Pakistan account for 29 percentof all investments, this deal would help thecompany to enter an expanding market in thecountry.

Huawei named supplier of WDM opticalmetropolitan network for Telecom Italia

Huawei Technologies Co., Ltd.(“Huawei”), a provider of next-generationtelecommunications network solutions foroperators around the world, announced that ithas been selected by Telecom Italia to carry outWavelength Division Multiplexing (WDM)technology projects. The first Chinesetelecommunication equipment supplier selectedfor Italian telecom programs, Huawei wasawarded the contract to supply optical transporttechnology after the company underwentTelecom Italia’s stringent evaluation process.

In addition to Telecom Italia, Huawei’sother successful partnerships with Europeanmainstream operators include British Telecom,where Huawei is a preferred vendor in the

transport and MSAN domain for the 21CNprogram; and a CWDM/DWDM project for Dutchoperator KPN, in which Huawei is the exclusivevendor..

“We are excited to be part of TelecomItalia’s rollout plan for WDM optical metropolitannetworks,” said Mr. Qiao Xiaoping, managingdirector of Huawei Italy. “Although Huawei andTelecom Italia are working together in the opticaltransport domain for the first time, Huawei’sleading technology in optical network, richexperience in commercial development ofequipment and rapid response will allow us toprovide high-value, customer-focusedsolutions.”

Huawei’s Metro WDM products provideabundant interfaces, which can support servicesaccess and aggregation with multiple datatransfer rates and different protocols. The uniqueGE ADM technology guarantees the flexiblegrooming of GE service on a WDM network, andsaves wavelength and fiber resources. Basedon the company’s leading-edge technologiesand experience in commercial application ofproducts worldwide, the Huawei Metro WDMsolution has become a popular choice forconstructing an efficient transport network forIP DSLAM, IPTV, and GE VPN, which is widelydeployed in over 10 countries and regions.

Huawei releases the industry-first FMC IMSSolution: IMS 3.0

Huawei Technologies Co. Ltd.announced the commercial introduction of itsIP Multimedia Subsystem (IMS) 3.0 solution thatprovides an open architecture for thedevelopment of multimedia services.

Facing the challenges of intensecompetition and limited innovation of newservices, Huawei IMS 3.0 is a solution that manycarriers are looking for. Huawei IMS 3.0 solutionis the first commercial fixed-mobile convergence(FMC) solution in the industry that complies withboth 3GPP (3rd Generation Partnership Project)and TISPAN (Telecoms & Internet converged


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Services & Protocols for Advanced Networks),and provides an open architecture over whichservice providers, platform providers, andterminal providers can work together tointroduce diversified multimedia services.

With the solution, carriers can create asubscriber-focused architecture based on FMCand CT-IT convergence, which opens upnetwork and service capabilities and promotesa healthy environment for IMS applications.

Based on a common hardware andsoftware platform, Huawei’s IMS solution canhelp simplify the network deployment processand decrease capital expenditures (CapEx) andoperating expenditures (OpEx) for carriers.Huawei and its partners have released scalecommercial use of services, such as voice callcontinuity (VCC), IP Centrex, and BlendedServices.

These services can help carriersaccelerate their steps from the existing networkto an FMC network smoothly, protectingcustomers’ investment efficiently.

The VCC service, in particular, takes thelead in realizing bidirectional senselesshandover. The guarantee of quality of service(QoS) and unified session control and userdatabase will bring to subscribers a high-qualityexperience that is different from traditionalInternet service.

“With the deployment of the IMS 3.0solution, we believe that this open, convergedAll-IP architecture will become a platform forinnovations, through which carriers, consumersand our partners in services, platform andterminal domains will benefit,” said Mr. Ding Yun,president of Huawei core network.

“Carriers will easily be able to consolidateresources, information and customerrequirements, and at the same time continue torelease cutting-edge services.”

Huawei has been promoting the IMSindustry chain, together with over 100 industry-leading partners in service, platform, access,and terminal domains. In December 2004,

Huawei established joint labs with a number ofpartners, providing an environment forinteroperability tests and service experience anddelivering competitive solutions for carriers.

Mike McHugh, vice president andgeneral manager, BEA WebLogicCommunications Platform, BEA Systems Inc.,said, “Both BEA and Huawei bring their uniquestrengths to this relationship. Recently, wecompleted IMS and SIP AS interoperabilitytesting that demonstrated Huawei IMS and BEAWebLogic SIP Server compliance with openstandards. BEA has been integrated into theHuawei IMS eco-system and together they canprovide an innovative service developmentenvironment for third-party development.

This is designed to present our mutualcustomers with a great opportunity to leverageIMS technology and rapidly design, develop anddeploy revenue-generating customer services.These services can then become part of areusable palette that helps further speed upservice design and delivery.”

“We have successfully assisted largeService Providers around the world in deployingenhanced VoIP services for both business andconsumer offerings and we bring this experienceto our partnership,” said Marco Limena,president and CEO of Sylantro Systems Corp.“I am convinced that combining Sylantro’sfeature server with Huawei’s core network andintegration expertise is a winning combinationfor both flexibility and time-to-market.”

Huawei has always been working onmigration to an all-IP network. In 2003, Huaweireleased V3 for its softswitch in Geneva, ignitingthe core network’s migration toward an all-IPnetwork.

Over the past three years, Huawei hasdeployed over 800 softswitch-based networks,helping over 100 carriers with their all-IP goals.The release of IMS 3.0 solution is a giant leapin the FMC evolution, strengthening Huawei’sposition as an industry leader in the IP corenetwork domain.


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ZTE debuts the world’s first F3G multimediasolution

ZTE Corporation, a global provider oftelecommunications equipment and networksolutions, has launched the world’s first F3G(Fast Triple Gain) multimedia network solution,which was previewed during the recent “NetworkEvolution Summit 2006” jointly hosted by ZTEand China telecom.

The ZTE F3G solution is an end-to-endconverged 3G network construction solution.Instead of the current industry approach ofsimple, stacked voice, data, and video (triple-play) networks, F3G converges IPTV, fixed-line,and mobile telecoms services onto a singleservice platform, decreasing operators’operation costs and providing one platform forthe provision of both current and futureinnovative services. The ZTE F3G solution wasdeveloped based on ZTE’s development ofChina Telecom’s intelligent fixed-line NGNnetwork over the last 12 months and ZTE’sextensive R&D programs focused on next-generation telecoms systems. “Multiple-Playand convergence are the major current trendsof the telecommunications industry,” said ZTE’svice president, Ms. Chen Jie. “End user demandfor Multi-Play services will become more andmore important to telecom operators. ZTE’sproven NGN based F3G solution will meet thisfast growing requirement and speed up returnsfor operators, customers and vendors.”

As the largest NGN manufacturer inChina, ZTE’s has successfully constructedmany backbone networks, including the DC1Project for China Telecom, a 9 million-port NGNmigration for Shanghai Telecom — the largestlocal NGN network in China — and a 6.6 million-port NGN migration for Guangdong Telecom,the second-largest local NGN in China.

ClearTalk selects ZTE USA’s 3G digitalwireless solution

ZTE USA Inc., a subsidiary of ZTECorporation, announced that ClearTalk

Wireless, a provider of cost-efficient personalcommunications services in five states withinthe United States, has selected ZTE’s All-IPCDMA2000 platform to deliver high-speed, high-quality third-generation (3G) wireless voice,data, and multimedia services to subscribers inselect markets.

“Subscribers today are demandingbetter, faster and cheaper advanced wirelessservices and a 3G foundation is essential formeeting the demands of our customers andcontinuing to attract new ones,” said GlennIshihara, president of ClearTalk.

“After an extensive evaluation process,we found that ZTE’s solutions were the bestavailable for our current needs.

They represent superior technology anda comfortable price point.

We are confident that the All-IPCDMA2000 platform will empower us tosignificantly improve the customer experienceand further grow our business.

The fact that ZTE also has a handsetdivision was very important to us, as we plan tojointly develop applications that are deliveredover both the client (handsets) and server(network).

ZTE has shown a unique willingness towork closely with us in this regard.”

In addition to supporting CDMA2000-based services, ZTE’s All-IP CDMA 2000platform will provide ClearTalk with a smoothmigration path towards offering EV-DO Rev.

A-based services, which provide fasterdata transmission speeds and a better qualityof service (QoS).

3G refers to an advanced set of wirelessapplications beyond voice, such as multimedia,data, video, and Internet applications.CDMA2000 is the industry’s dominant 3Gstandard.

The EV-DO Rev. A standard, the nextgeneration of CDMA2000 technology, promisesto deliver even more advanced multimediaapplications at a faster speed while allowing for


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enhanced network capacity. In today’scompetitive market, the ability to extend 3Gservices to subscribers enables carriers todifferentiate their services and generate a higherARPU (average revenue per user).

In order to do so, carriers must putnetwork equipment into place that will enablethem to extend and support 3G services onCDMA 2000, with EV-DO.

“At ZTE, we are committed to creatingtechnology innovation that will position ourcustomers to capitalize on current and futuremarket demands,” said Jack Yang, executivevice president of sales and marketing, ZTE USAInc.

“In the US, CDMA2000 with EV-DO Rev.A is quickly becoming the most advancedwireless standard for delivering advancedservices that open up new revenue doors forcarriers.

Our All-IP CDMA2000 platform givescarriers in the U.S. and all over the world thefoundation for delivering high speed, superiorquality services that attract new subscribers andkeep existing ones.”

With the new ZTE platform, ClearTalk’ssubscribers will experience improved voice andcall quality and longer battery life for phones.

Subscribers will also have access toadvanced camera, text and multimediamessaging, ringtone, gaming, and high-speedwireless Internet applications.

ZTE’s All-IP CDMA2000 platform powershigh-speed 3G broadband wireless servicesincluding data, voice, and multimediaapplications, while also offering a migration pathto EV-DO Rev.A-based services.

ZTE CDMA products have beensuccessfully deployed in more than 60 countrieswith over 100 operators, delivering a globalcapacity of 50 million lines for commercial use.

ZTE has built over 50 CDMA2000 1xEV-DO systems for commercial or trial use in morethan 40 countries worldwide

MARKET INTELLIGENCE

China’s IP PBX market likely to reach $479million in 2010

According to a report from research firmIn-Stat, the IP PBX market in China is goingthrough a good phase and is expected toincrease from $164.1 million in 2006 to $479.5million in 2010. In-Stat analyst Kevin Li said thatnew solutions are being developed thatadequately address the customers’ concernabout security and reliability of carrying voiceon an open data network. Traditional PBXrevenue would reduce 31.8 percent in ChinaCAGR through 2010.

Chinese market to increaseThe mobile video market in China will

take off in 2008, driven by interest in the BeijingOlympics. A new study from ABI Researchforecasts total mobile video users at more than32 million in 2008; about 27 percent of theseconsumers will use broadcasting technology,and 73 percent will use unicast streamingtechnology, while a number of viewers are likelyto use both. In 2006, SARFT, the Chinese StateAdministration of Radio, Film, and Television,announced two handset-related standards. DABis likely to be the first phase of mobile multimediabroadcasting standards development in China.DAB paves the way for upgrading to China’sproposed mobile multimedia broadcastingstandard, T-DMB, a terrestrial implementationof SK Telecom’s mobile video format.

Because both standards are voluntary,there are questions surrounding their effect inthe market. “It is likely that local media groupsand TV stations will deploy DAB initially, andimplement T-DMB at a later date,” said ABIresearch director Jake Saunders.

“The Chinese government will givepreference to a standard that will be used in the2008 Olympics, and DAB has been listed as oneof the broadcast services that will be availableat the Beijing Games.”

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