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Report: Ethernet Exploding in China

Light Reading
News Analysis
Light Reading
11/22/2004

A survey of broadband services in China has revealed that Ethernet is already being widely deployed in telecom networks -- and that residential, rather than business, services are driving demand.

The survey, conducted by Heavy Reading, Light Reading’s paid research division, provides a detailed picture of what services are already being provided in more than 100 Chinese cities, by 10 major telecom operators and six cable TV operators.

The Heavy Reading report -- entitled “Ethernet Services in China” -- gives a profile of each operator, including a map showing its network footprint. It also includes a downloadable table identifying competing Ethernet service providers in each city.

“In the West, China is viewed mainly as a market with vast and untapped potential. That perception is clearly an oversimplification,” writes Graham Finnie, author of the report.

China has charged ahead with Ethernet service deployment this year and is now a world leader in terms of household connections, which doubled in the first half of 2004, to reach 30 million.

Much of this is based on bringing fiber to large apartment blocks, and distribution within the buildings using LAN technology. In the case of at least one operator, China Mobile Communications Corp., the customer connection is wireless LAN, stretching the definition of an Ethernet service somewhat.

“The emphasis on fiber-based access is not surprising," Finnie writes, "given that China's cities are dominated by large blocks of newer apartment buildings. Most Chinese cities also are well supplied with fiber in the core that can be extended out to these residential blocks.”

The Heavy Reading survey indicates a fair amount of competition among carriers, notably in southern China. As many as nine carriers operate in some provinces.

China Netcom Corp. Ltd. (NYSE: CN; Hong Kong: 0906) is the only one to concentrate largely on the north, having been created when incumbent monopoly China Telecommunications Corp. (NYSE: CHA) was split. The map below, taken from the report, shows its network reach.



The survey shows China Netcom has one of the most advanced Ethernet strategies, offering video on demand, gaming, and voice over IP to home users, along with private line and private LAN for enterprises.

As in the North American and European markets, enterprise services in China are increasingly being offered over Ethernet, but China Netcom is one of only three major carriers in the report to offer Ethernet private line and LAN services; the other two are China Telecom and Shanghai UnionNet Broadband Video. Operators are more likely to provide high-speed Internet access, which nine said they do, while five offer IP VPN services.

“Although Ethernet is often the base infrastructure for broadband services that are offered to both residential and business users, this does not necessarily translate into native Ethernet services for enterprise users yet,” writes Finnie.

The report also concludes that the expanding Chinese Ethernet market provides a real opportunity for Western vendors, with Cisco Systems Inc. (Nasdaq: CSCO) being cited most often as an equipment provider.

Heavy Reading's 23-page report, "Ethernet Services in China," costs $2,495. For more information, please click here.

— Nicole Willing, Reporter, Light Reading


Light Reading's Carrier-Class Ethernet in China roadshow will provide an invited audience of senior decision makers from service providers in China with a unique education in how to design and deploy profitable Ethernet services, employing original research written and presented by Heavy Reading analysts.

In Shanghai on Nov. 30 and Beijing on Dec. 2, those interested may register for it
here.

For information about another new Heavy Reading report, Carrier Ethernet Services: Who's Doing What, click here.

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rayrozelle
rayrozelle
12/5/2012 | 3:31:19 AM
re: Report: Ethernet Exploding in China
I hope you're not seeking a technical explanation.

NA is lagging in telecomm for the same reasons that people buy SUV's in an era of high energy costs, that Americans are overweight in spite of all the information available on proper nutrition, that the military is spending hundreds of billions for weapons where there is no enemy that competes on that level, that people use Microsoft Windows when on a technical and reliability basis, it is virtually disfunctional, that there is no viable public transportation system in most cities, that even though you pay a unionized autoworker or steelworker 25 dollars an hour for a job that requires no advanced education or training, they still strike, and that people can be more concerned about what time Desperate Housewives is on than how much homework their children do. Need I say more?

Which of the Seven Deadly Sins is it?

Ethernet and FibreOptic are icredible technologies, yet 20 years on, we are still waiting.
telecom_guru
telecom_guru
12/5/2012 | 1:03:13 AM
re: Report: Ethernet Exploding in China
can anyone explain why Ethernet has taken off everywhee except NA? Do the Americans know something that the rest of the world has not figured out yet?
keelhaul42
keelhaul42
12/5/2012 | 1:03:12 AM
re: Report: Ethernet Exploding in China
can anyone explain why Ethernet has taken off everywhee except NA? Do the Americans know something that the rest of the world has not figured out yet?
>>>>>>>>>>>>>>>>
Four letters: RBOC
We in the US have built an enormous legacy network. The "last mile" is particularly vexing. The companies operating that portion of the network don't want to just throw it away and also don't want to spend the billions necessary to setup something new.
Add to that the "we are a regulated monopoly" mindset. (Or, the alias "one" on a BSD distribution: "One Bell system. Doesn't care, doesn't have to.")

In fairness, SBC and Verizon have recently announced some FTTH programs. We'll see what happens; talk is cheap.

-kh
issey
issey
12/5/2012 | 12:57:52 AM
re: Report: Ethernet Exploding in China
Or rather.. is the USA held back and not enlightened like the rest of the world inclduign even China ??
rjs
rjs
12/5/2012 | 12:57:42 AM
re: Report: Ethernet Exploding in China
The last mile providers (RBOCs) are used to
metering the bandwidth. They are, or rather would prefer to stay, in a "linear" pricing mindset where they charge for the bandwidth in multiples of 64 Kb/s. Their expectations are to
charge 10x the price of 10Mb ethernet for the 100Mb fast-ethernet and 100x for 1GbE. They don't believe in economies of scale applying to bandwidth.

It has taken more than 10 years for them to realize that the access model is going towards the flat rate
metering of access. They have fought it tooth and nail all through, first with local calls then long-distance and now with the ISP access. They have lost the battle on all those fronts despite their monopoly power. Imagine if the electronics industry had that mindset ... we would still be using 286 instead of the Pentiums and working with 4M RAM instead of 4 G RAM. Fortunately, the electronics industry did not have the monopoly protection that the telecom industry has had and and they had to adapt to the newer market pricing forces or perish.

The only reason that the RBOCs are deploying FTTx
now is because they know if they don't their goose is cooked. They are already losing triple play to the cable MSOs and in just a couple of years the revenue base from voice which is the base of their power will be reduced by more than half.
They did all they could by using their market (read Monopolistic) powers, political powers and legal avenues to slow this in the last decade or two. Now they are taking the only possible action left to survive, and that is learn to compete. This not out of altruism but rather out of necessity. I wish them well in the new era if they plan to compete fair and square.

Amazingly, competition is a good thing, not only for capitalism but also for mankind!!

-rjs
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