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AlcaLu Lands GPON, 3G Deals in China

Alcatel-Lucent (NYSE: ALU) made further headway in the Chinese market today with the announcement of two deals with China's largest carrier China Mobile Ltd. (NYSE: CHL): one for GPON gear for the operator's fixed broadband rollout, and one for TD-SCDMA (3G) infrastructure. (See China Mobile Uses AlcaLu GPON.)

Although the size and value of these contracts has not been disclosed, each is part of a trend that is significant in the Chinese market -- namely, the growing pace of GPON deployments, and the fall from grace of Datang Mobile Communications Equipment Co. Ltd. radio access network (RAN) gear.

The GPON contract covers 10 cities in Guangdong and Anhui provinces, where the carrier will deploy AlcaLu's 7342 Intelligent Services Access Manager Fiber-to-the-User (ISAM FTTU) platform to roll out FTTH services. (See China Mobile Uses AlcaLu GPON.)

AlcaLu claims it's the sole supplier in these cities, but other vendors will supply fiber access equipment in the same provinces, an AlcaLu spokesman confirms.

Ericsson AB (Nasdaq: ERIC) could be one of those other vendors, as Guangdong and Anhui were amongst the nine provinces named by the Swedish vendor when it announced GPON deployment contracts with all three of China's operators. However, Ericsson was unable to confirm which provinces were being covered for which operators. (See Ericsson Scores GPON Wins in China.)

AlcaLu is also working on GPON with China Telecom Corp. Ltd. (NYSE: CHA), the country's largest broadband provider. The vendor's spokesman says there are further "GPON opportunities" in China. (See China Telecom Uses AlcaLu's GPON.)

Momentum behind GPON is growing fast in China, and sources close to the developments point to statements by Wei Leping, CTO of China Telecom, at last month's Optinet event, in which he suggested that traction for GPON will increase and the technology will lead the market in terms of deployment against EPON in two years.

China Mobile is rolling out FTTH as it seeks to make more of an impact on the Chinese broadband market that is growing rapidly but dominated by China Telecom and China Unicom Ltd. (NYSE: CHU).

Pyramid Research predicts that FTTx's share of the total access market will rise from 1 percent in 2009 to 13 percent in 2014. (See China Set for DSL, FTTH Boom.)

TD-SCDMA RAN turnaround
As part of the TD-SCDMA deal, China Mobile will deploy AlcaLu infrastructure in 11 of the 31 provinces China Mobile will reach in the third phase of its 3G TD-SCDMA rollout.

Phase Three targets China's provinces, and follows Phase Two's focus on the country's major cities.

AlcaLu's TD-SCDMA solution is being deployed under the umbrella of its partnership with Datang, but, significantly, the spokesman confirms that the RAN equipment will be made by Alcatel-Lucent Shanghai Bell.

This is another blow for Datang's RAN operation, which was used by the vendor alliance for Phase Two deployments. It also gives more credence to suggestions that China Mobile is abandoning Datang's RAN solution, as it is not upgradeable to TD-LTE. (See China Mobile Swaps Out Datang 3G Kit.)

The AlcaLu spokesman declined to comment on this matter specifically, but confirms that, "Alcatel-Lucent is actively engaged in the evolution to TD-LTE and has achieved substantial progress. We are confident in our ability to support China Mobile as it migrates its network to the next generation technology," he says.

AlcaLu could not release financial details of the contract, but the spokesman confirms that it falls under the $1 billion framework deal signed with China Mobile earlier this month. (See AlcaLu's $1.7B China Boost.)

All 11 provinces are new territories for AlcaLu, and the contract includes both core and applications platforms, as well as RAN infrastructure, the spokesman confirms.

AlcaLu is still not commanding the same size deals as its Chinese vendor rivals, however, as Huawei Technologies Co. Ltd. and ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763) will still gain the lion's share of the third phase contracts, according to the results of the tender published by China Mobile. (See ZTE Tops 3G Tender.)

China Mobile is approaching 1 million subscribers on its 3G TD-SCDMA network, which is conveniently called G3. At the end of June it had 959,000 live users, according to the company's figures, up from 746,000 in May. Pyramid Research predicts strong growth for TD-SCDMA, with subscriber additions to China Mobile's home-grown 3G technology causing a decline in GSM subscriptions from 2012 onward.

— Catherine Haslam, Asia Editor, Light Reading

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