BB Strategy, Technology DrivingForces -Development of

Broadband in China

Doc no:

telwg29/BB/06

Agenda item :BroadbandWorkshop

Submitted by:

China

Strategy, Technology Driving Forces -Development of Broadband in China

Contact: Dang MeimeiEmail: dangmeimei@mail.ritt.com.cn

APEC Telecommunications and Information Working Group29th Meeting | 21-26 March 2004 | Hong Kong, China

Please note:This document is not an official APEC document until approved by the Telecommunications and Information

Working Group. This version is a draft provided for discussion purposes only.

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Strategy, Technology Driving Forces -Strategy, Technology Driving Forces -Development of Broadband in ChinaDevelopment of Broadband in China

Dang Dang MeimeiMeimei Institute of Communication StandardsInstitute of Communication Standards

Research, CATR of MIIResearch, CATR of MII

March 23,2004March 23,2004

(At APEC TEL29 Broadband Workshop)

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Outline

! Universal access overview in China! Universal access objectives and approaches! Broadband access development! Strategy of Broadband! Summary

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! Definition：Anyone can use telephone servicein reasonable geographical regions.

! In developing countries, universal accesspolicies work to increase access totelecommunications services on a communityor village level.

! Universal access typically promote installationof public payphones or public call offices inrural villages.

Universal access

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Universal access status in China

! By the end of year 2000, the “telephone tovillages” percentage of the western 12provinces is only 57.55 percent.

! By the end of year 2002, there are nearly74,800 administrative villages which can’taccess telecommunication services, accountingfor 10.8% of the total administrative villages.

! Those unserved areas may locate far,or climateabominable, or low income.

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The objectives of universal servicein China! In China, the main objective

of universal access is“telephone to villages”.

! Short-term goal: at least 95percent of villages shouldbe provided with telephoneservices by the end of 2005.

Universal Service

UniversalAccess

Telephone to villages

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! Medium-term goal" Villages with definite number of residents,

schools, hospitals and other organizations will beconnected to the public telecom network by2010.

! Long-term goal" All organizations and families can be connected

to the public telecom network by 2020.

The objectives of universal servicein China

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Approaches to universal access! Universal access is undertaken by 6

backbone telecom operators in China.! The 31 provinces are assigned to 6

operators according to the income andrevenue of the operators. Each operatoris responsible for implementing the“telephone to villages” project in theappointed areas.

! In the long term, the Universal ServiceFund will be established.

25.63%25.63%25.63%25.63%

7.93%7.93%7.93%7.93%

56.18%56.18%56.18%56.18%

9.31%9.31%9.31%9.31%0.62%0.62%0.62%0.62%

0.33%0.33%0.33%0.33%

China TelecomChina TelecomChina TelecomChina Telecom

China NetcomChina NetcomChina NetcomChina Netcom

China MobileChina MobileChina MobileChina Mobile

China UnicomChina UnicomChina UnicomChina Unicom

China RailComChina RailComChina RailComChina RailCom

China SatcomChina SatcomChina SatcomChina Satcom

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Telecom development in China! New statistics in Jan. 2004

" Mobile service:! mobile subscribers reached to 276.8 million, with a increase of 8.1

million during the first month. The penetration rate is 20.9%." Fixed Line:

! fixed line telephone subscribers reached to 268.9 million, with aincrease of 5.63 million during the first month;

! Urban area: 145.7 million lines;! Rural area: 93.1 million lines.

" Broadband user: 11.8 million." Dial-in user: 55.38 million." Leased-line user: 59 thousand.

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Broadband access development

! ADSL" For incumbent operators, such as China Telecom

and China Netcom, they can fully use of theexisting telephone lines to develop ADSL.

" China is one of the most prosperous ADSLmarkets in the world.

" By the end of 2003, there are almost 11 millionADSL subscribers in China. The number isexpected to double by the end of 2004.

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! Leased line" Support voice, video and data service and provide

“total solution” to users." “80:20” law

! 80％ revenue comes from 20% VIP subscribers；! The competition in this market is very severe and has

great potential to develop in the coming next years.

" Operators provide ATM, FR, DDN, or SDH-based2Mb/s leased-line service to VIPs.

Broadband access development

1111

! LAN access" LAN access provide higher bit-rates and is more suitable

for high density residential areas." It provides 10Mb/s access for community resident and

connect to upper IP network via 10/100M or 155M POSinterface.

" For FTTx+LAN access, users share 10M bandwidth.Therefore, if the installation rate can exceed 30%, the costof each subscriber become lower. But the actual installationrate is no more than 10% in most areas.

Broadband access development

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! LAN access" For incumbent operators, they will still regard ADSL as the

first selection, FTTx + LAN is only an alternative way toprovide Internet access.

" For fixed service providers lacking of resources, theyacquire subscribers mainly through FTTx + LAN in thenewly built middle grade residential areas.

" Networks with FTTx + LAN expanded rapidly in the pasttwo years. To guarantee user’s service quality,MIIregulated FTTx +LAN service as one of the experimentalmanagement services. Experiments have been executedfrom 2001 to 2003.

Broadband access development

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! Fixed Wireless Access

" FWA is more attractive to CLECs that don’t ownwired pipe lines.

" With the advantage of fast deployment, easyinstallation,high scalability, FWA is competitivewith wired technologies.

" Service providers deploy FWA network targetingSME, SOHO users.

Broadband access development

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! FWA license" In 2001, MII started the program in five experimental cities

of Nanjing, Xiamen, Qingdao, Wuhan and Chongqing todistribute the rights to use 3.5GHz fixed wireless accesssystem through public bidding.

" It’s a try towards market economy and frequency resourceoptimum.

" Finally, backbone telecom operators and pure WISPssuccessfully bid the license in different cities.

" In 2002,MII selected another 32 cities to allow publicbidding for 3.5GHz frequency. Now, the third roundbidding is ongoing.

Broadband access development

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Feature of broadband development! Different access technologies are suitable for different types of

telecom operators and telecom networks. None of the accesstechnology is applicable to any cases.

! ADSL access is one of the most fast increased accesstechnology,while LAN access grew not too fast because of thelower installation rate.

! Leased line access mainly target enterprise users and keepincrease.

! Broadband wireless access increased because more license aregiven to operators.

! Service providers also deliver broadband services via PON,HFC, WLAN, etc.. But those networks are not widely deployed.

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Strategy of broadband development! Regulatory authorities pushes the opening of access

network market and the regulatory policies are inconformity with the actual conditions in China.

! In order to make the optimum use of the frequency,regulatory body has tried public bidding for fixedwireless.

! The operator can use different access technologies toprovide broadband access to users. Regulatory bodystrengthens the supervision of those broadbandtelecom operators to guarantee the service quality.

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Summary

! Universal access has been rolled out and isongoing in China to provide basiccommunications services for underserved &unserved areas.

! MII has created a market environment that willfacilitate competitions and development.

! Broadband technologies develop fast thanks tothe favorable policy environment.

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Thank you！