Fixed-line carriers eye NGN for growth
By Li Weitao (China Business Weekly)
Updated: 2004-04-27 10:35

With the roll-out of third-generation (3G) wireless services still up in the air, China's fixed-line carriers are setting their sights on the next-generation network (NGN) to maintain sustainable growth.

With NGN, operators can deliver innovative new broadband services such as voice over IP (Internet protocol), multimedia conferencing, unified messaging, enhanced Internet service, and integrated personal computer and phone applications.

The NGN and 3G mobile networks are expected to be the two largest money-spinners in the future for the telecommunications industry.

In the future, NGN will "seamlessly " integrate interoperable telecoms networks, computer networks and broadcasting networks and other network resources, industry professionals have said.

"I hope we will see the large-scale deployment of NGN in China in the second half of this year," said Chenhong Huang, director in charge of Nortel Networks' NGN business in China.

Chinese operators are already expressing interest in NGN.

China Netcom recently announced plans to build NGN infrastructure in Qingdao, Jinan and Taian, three major cities in East China's Shandong Province.

The smaller China Railcom is building -- using Nortel's equipment -- NGN in Chongqing Municipality. That is expected to be China's first commercial NGN.

Other operators are also conducting NGN trials.

Huang said several other NGN projects, which have not been announced, are being built in China.

"Sustainable development is now the top priority for all operators," he said.

Fixed-line carriers have, in past years, found they were disadvantaged when compared with cellular operators, as mobile phones replaced fixed-line phones.

Fixed-line carriers are anxiously waiting for their licences so they can roll out 3G wireless services to pick up some slack.

Most industry observers expect the Chinese Government will not award those licences until the first half of next year, at the earliest.

Huang, however, said fixed-line networks still have lots of advantages.

"Fixed-line networks will not die," he said.

"Fixed-line networks promise 'unlimited' broad bandwidth, and they can better ensure the QoS (quality of service)."

Low-cost IP phone and cellular services are significantly eating into China Telecom's revenues, said Wei Leping, chief engineer of the country's largest fixed-line carrier.

"Under such circumstances, there is a heightened need for China Telecom to find a strategic way to cut network costs, increase revenues and develop new services," he said.

"And the emergence of NGN has provided a very important opportunity to China Telecom."

NGN will be the major task during the strategic transformation of China's telecoms industry over the next 10-15 years, Wei said.

China Telecom has completed the technical trials of NGN, and has begun conducting service trials.

Wei expects China Telecom will soon begin commercial trials -- and commercial services.

For China Telecom, the build-out of a national NGN network will require tens of billions of US dollars in investment, Lei Zhengzhou, chief engineer of the China Academy of Telecommunications Research under the Ministry of Information Industry (MII), has told China Business Weekly.

The build-out of NGN networks will increase the chance of survival for operators in the increasingly competitive market, he said.

Globally, operators in Britain, Australia, Germany, Brazil and the United States have started offering NGN commercially.

Huang said Nortel's Succession solution has been used in more than 40 NGN networks in 26 countries.

Nortel has won more than US$2.3 billion worth of NGN contracts, he added.

Eyeing the huge potential of China's future NGN network, Nortel has significantly enhanced its research and development (R&D) expertise in the country, Huang said.

Nortel was the first foreign NGN equipment vendor licensed by the MII.

China's telecoms market is being transformed from a "technology-driven" to "market-driven" sector, and there is a marked increase in the awareness of operators to tap the market's potential, guide and meet users' demands and offer different services, Huang said.

The intensifying competition will accelerate the transformation, and speed up the large-scale deployment of NGN in the country, he added.