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July 3, 2009
In yet another sign that China could be a major market for GPON system vendors in the coming years, Ericsson AB (Nasdaq: ERIC) today announced it has landed fiber-to-the-home equipment contracts with the country's three big operators, China Mobile Communications Corp. , China Telecom Corp. Ltd. (NYSE: CHA), and China Unicom Ltd. (NYSE: CHU).
While there is no indication from the vendor or carriers about the size of the deployments, it's clear Ericsson's GPON technology is being given a chance to prove its worth in the field, as it's set to be used for high-speed Internet access and, potentially, high-definition IPTV services, in nine provinces -- Anhui, Guangdong, Hebei, Heilongjiang, Hubei, Liaoning, Shandong, Shanghai, and Sichuan.
Because of customer confidentiality agreements, all Ericsson said it could add to its press release was that some of the deployments are for commercial service rollout and some are trials.
The news follows the recent announcement from Alcatel-Lucent (NYSE: ALU) that China Telecom is trialing its GPON gear in five markets. In addition, Broadcom Corp. (Nasdaq: BRCM) announced in June that it is introducing a new family of GPON access device chips for the Chinese market that will be used in customer premises gateways. (See China Telecom Uses AlcaLu's GPON and Broadcom Adds China GPON.)
But it's not all about GPON in China's broadband market: EPON is still being rolled out, and DSL deployments will continue to expand. (See World's Largest EPON Tender?)
According to a new Pyramid Research report, "Communications Markets in China," the number of active DSL lines in China will grow from 67 million at the end of 2008 to more than 126 million by the end of 2014.
The report's author, Daniel Yu, though, notes that the Chinese government is pushing for greater fiber access penetration, and that, from a low current base, the number of FTTH subscribers (irrespective of the underlying technology) will exceed 50 million by the end of 2014.
Ericsson's GPON challenge
For Ericsson, news of some success, however limited, will be a boost for the GPON business line that has been built around the early 2007 acquisition of Entrisphere. (See Ericsson Buys Entrisphere and GPON Gets a 10G Look.)
At the time Ericsson had hoped the purchase would give it a healthy foot in the door at AT&T Inc. (NYSE: T). That, though, hasn't quite worked out according to plan. (See Is AlcaLu's FiOS Share Slipping?)
Instead, the vendor has had to be content with a number of small engagements in markets such as Armenia, India, and Nigeria. (See Ericsson Wins GPON Deal, Ericsson Does FTTH in India, and Ericsson Wins GPON, IPTV Deal.)
But there's another opportunity in Asia/Pacific that might give the Entrisphere team another boost. Vendor selections are expected to be announced shortly for Singapore's sizeable national high-speed broadband network, and Ericsson's BLM 1500 GPON gear was on display at the recent CommunicAsia event as part of a typical central office deployment for the fiber-access-based project.
While that doesn't mean Ericsson is guaranteed a healthy slice of the action -- the plan is to hook up every home and business on the island state with a 100-Mbit/s connection -- it puts the vendor in pole position to bag a purchase order, alongside the other vendor that had its fiber access gear on display in the mock-up central office cabinet, Huawei Technologies Co. Ltd. (See Singapore Makes FTTH Strides .)
— Ray Le Maistre, International News Editor, Light Reading
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