Marbridge Daily

<- April 17, 2012 ->

China Telecom, Foreign Operators Discuss Co-op Opportunities

Marbridge Consulting, 4/17/12

At Capacity China 2012, a conference for the wholesale telecommunications industry, in Beijing today, China Telecom (NYSE: CHA; 0728.HK) and foreign telecom operators and equipment vendors discussed opportunities for cooperation on international cable connections, cloud data centers, and other areas.

Regarding international cable connections, China Telecom revealed that it relies more heavily on terrestrial than submarine cables, explaining that submarine cables usually go through earthquake areas and are more heavily regulated by local governments, while terrestrial cables are more secure and less regulated. Accordingly, China Telecom typically uses terrestrial cables as its main form of connection, and submarine cables as backup. A representative from a major Chinese telecom equipment vendor said that currently about 70% of China Telecom's international traffic goes through terrestrial cables, while just 30% travels via submarine cables.

Regarding its criteria for selecting from which overseas operators to purchase additional international bandwidth, China Telecom said it depends mainly on bandwidth price, network security and service quality.

China Telecom also expressed concerns over upgrading from 40G to 100G WDM transmission technology, since few vendors can guarantee a smooth upgrade.

Overseas telecom operators expressed concern for China's strict control over internet content and the latency caused by routing traffic through multiple gateways (a crucial issue for the banking and finance industry), but felt China's commitment to accelerate Internet infrastructure development - including FTTx, data centers, cloud computing, and other areas - over its current Five-Year Plan period (2011-2015) was a very positive direction. Some overseas operators also indicated that China's plans for a full IP migration, massive demand for video content, and efforts to move towards three-network convergence could yield a variety of fruitful cooperation opportunities.

Foreign operators' attending the conference advised that key steps toward ensuring smooth development of their operations in China included: establishing local offices in China; employing local staff with local language skills and working closely with local operators at all levels (not just national level, bur more with city-level branches) and providing regionalized services.

At the conference, China Telecom announced that its international transmission bandwidth has reached 1,940G. China Telecom has direct connections with 11 countries and regions including Russia, Mongolia, Kazakhstan, Kyrgyzstan, Tajikistan, India, Myanmar, Laos, Vietnam, Macau and Hong Kong. China Telecom also has over 40 international submarine cables connecting to more than 72 countries and regions worldwide.

At present, China Telecom has over 300 core nodes and a 4,000G broadband backbone network connecting all major cities in mainland China, as well as 30 overseas PoPs.

By April 2011, China Telecom's ChinaNet network hosted over 2.3 mln websites and managed 64.7% of all Chinese internet domain names. China Telecom's CN2 network, in which it has invested heavily in recent years, now has more than 300 node cities worldwide.

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