Fixed Line Broadband in China: Fixed Line Broadband in China for GIGA Technology Program
Tony Wang, Finpro Guangzhou, China
November 10, 2005
Table of Contents: Table of Contents 1. Introduction
2. Market Overview
2.1 Broadband Business Volume
2.2 Major Service Providers
2.3 Broadband Usage and Demographics
3. Technology
3.1 Delivery Technologies
3.2 DSL
3.3 Cable Modem
3.4 Satellite
3.5. Other Methods
4. Services
4.1 Main Technologies and Providers
4.2 Consumer Applications and Trends
4.3 Business Applications and Trends
5. Policymaking and the Role of the Public Sector
6. Public Sector R&D Activities
6.1 Research Activities
6.2 Organizations
7. Private Sector R&D Activities
7.1 Research Activities
7.2 Funding
8. Possibilities for Finnish Companies
9. Foreseeable Radical Changes
1. Introduction : 1. Introduction
Introduction: Introduction This report has been compiled for the GIGA program of TEKES, focusing on converging networks. The report provides information on the China fixed broadband market.
The report discusses the following issues:
Overview of the China fixed broadband Internet market
Competitive environment
Technology adoption and outlook
Available services
Government’s role in the development of fixed broadband
Public & Private sector R&D activities
Opportunities for Finnish companies 1. Introduction
Country information: Country information 1. Introduction Source: National Statistics Bureau 2004
Milestones of data communication development in China: Milestones of data communication development in China 1988 X.25 based CNPAC established National Computing and Networking Facility of China finished 1993 1995 1996 1998 2000 Cernet launched Chinanet and China public multimedia network launched by China Telecom IPv6 testing network 6bone China International Economy & Trade Net initiated 2003 China Next Generation Internet (CNGI) started Chinese Academic Netowrk established 1986 1988 National Public Economic Information Network launched 2001 China Highspeed Network (NSFCNET) launched Core network of CNGI (Cernet 2) launched Dec-04 Oct-05 China Telecom and Netcom started to build NGN test network 1. Introduction
2. Market Overview: 2. Market Overview 2.1 Broadband Business Volume 2.2 Major Access Service Providers 2.3 Broadband Usage and Demographics
China Communications Revenues: China Communications Revenues 2.1 Broadband Business Volume 2. Market Overview Source: Year Book of China Communications 2005
Total Internet Subscribers: Total Internet Subscribers 2.1 Broadband Business Volume 2. Market Overview Source: CNNIC Annual Survey 2005
Total PCs that connected to Internet: Total PCs that connected to Internet Source: CNNIC Annual Survey 2005 2.1 Broadband Business Volume 2. Market Overview
Comparison of GDP & Internet Penetration in Different Geographic Areas: Comparison of GDP & Internet Penetration in Different Geographic Areas 2.1 Broadband Business Volume 2. Market Overview Source: CNNIC Annual Survey 2005
Milestones of main broadband operators: Milestones of main broadband operators Mar-94 China Telecom separated from Bureau of Telecom China Unicom established Apr-94 98 Feb-99 Apr-99 Dec-00 Ministry of Information Industry established China Mobile, Satcom established China Netcom established China Railcom established Feb-02 10 provincial subs of China Telecom merged with China Netcom 2.2 Major Access Service Providers 2. Market Overview
Backbone Bandwidth of Commercial Internet Network connected to foreign Countries: Backbone Bandwidth of Commercial Internet Network connected to foreign Countries China Science & Technology Network (CSTNET): 5,275M
China Public Computer Network (CHINANET): 44,895M
China Education & Research Network (CERNET): 1,599M
China Unicom Network (Uninet): 3,450M
China Netcom: 26,111M
China International Trade Network (CIETNET): 2M
China Mobile Network (CMNET): 1,285M
China Great wall Network (CGWNET): Under construction
China Satellite Network (CSNET): under construction
Source: Year Book of China Communications 2005 2.2 Major Access Service Providers 2. Market Overview
Share of Internet Access Service Providers: Share of Internet Access Service Providers 2.2 Major Access Service Providers 2. Market Overview
Total IP addresses available in China: Total IP addresses available in China Total IP addresses:
Mainland China: 68.3 million
Taiwan: 15 million
Hong Kong: 6.12 million
Macao: 0.13 million 2.2 Major Access Service Providers 2. Market Overview
Revenue structure of three operators in 2004: Revenue structure of three operators in 2004 Source: Annual report 2004 of various companies Unit: Billion Euro 2.2 Major Access Service Providers 2. Market Overview
Internet Growth – China’s people online: Internet Growth – China’s people online 2.3 Broadband Usage and Demographics 2. Market Overview Source: China Network Information Center
Social & Demographic Characteristics of Internet users: Social & Demographic Characteristics of Internet users Source: China Network Information Center Table 1: Internet users by places of access Table 2: Internet users by age Table 3: Internet users by degree of education 2.3 Broadband Usage and Demographics 2. Market Overview
Broadband Availability in Rural Areas: Broadband Availability in Rural Areas The broadband services are generally lacking in rural areas, largely due to the huge income gap between people living in the city and in the country side
In many rural areas, the basic fixed line telephone service is still not available
As commercial entities, the tele-operators are lacking the incentives to offer broadband services in rural area
It is now a issue that the Ministry of Information Industry and the National Development Committee are addressing 2.3 Broadband Usage and Demographics 2. Market Overview
3. Technology: 3. Technology 3.2 Future trends of delivery Technologies 3.1 Delivery Technologies
Slide21: 3.1 Delivery Technologies 3. Technology Source: China Network Information Center
Delivery Technologies that are currently in use: Delivery Technologies that are currently in use 3.1 Delivery Technologies 3. Technology
Evolution of Delivery technologies: Evolution of Delivery technologies LMCS Downward speed
10 Mbps
1 Mbps
100 kbps
10 kbps 10 kbps 100 kbps 1Mbps 10 Mbps 100 Mbps xDSL Cable
Modem VDSL Direct PC Upward speed
100Mbps Voice
Modem MMDS FTTC/
FTTH/PON 3G LMDS ETTH
Ethernet 3.5GHz WLAN OFDMA 3.2 Future Trends of Delivery Technologies 3. Technology
Upgrading options for existing customers : Upgrading options for existing customers Dial up users & current telephone users:
ADSL virtual dial up
LAN (depends on the availability)
Cable modem (only available in few areas of few cities)
FTTX
ADSL users
ADSL DDN
LAN
FTTX
LAN users:
More bandwidth could applied, depends on the availability of operators
FTTX 3.2 Future Trends of Delivery Technologies 3. Technology
Situation in remote locations : Situation in remote locations The following options have been explored by various tele-operators:
Satellite
Power cable
SCDMA (1900MHZ )
Wimax
GPRS
CDMA450Mhz
3.2 Future Trends of Delivery Technologies 3. Technology
4. Services: 4. Services 4.1 Main Technologies and Providers 4.2 Consumer Applications and Trends 4.3 Business Applications and Trends
Data rates and pricing principles China Telecom: Data rates and pricing principles China Telecom 4. Services 4.1 Main Technologies and Providers
Data rates and pricing principles China Netcom: Data rates and pricing principles China Netcom 4. Services 4.1 Main Technologies and Providers
Data rates and pricing principles China Unicom: Data rates and pricing principles China Unicom 4. Services 4.1 Main Technologies and Providers
Data rates and pricing principles China Railcom: Data rates and pricing principles China Railcom 4. Services 4.1 Main Technologies and Providers
Data rates and pricing principles Cernet: Data rates and pricing principles Cernet 4. Services 4.1 Main Technologies and Providers
Value chain of the Internet Services: Value chain of the Internet Services Users
(Broadband Subscribers) Tele-operator
(China Telecom
China Unicom
China Netcom) Service Provider
(Taobao Ebay Yahoo Sina Shanda QQ Alibaba) Contents Provider
(ActoZ Time Warner Disney Universal) Technology Vendor
(Asia Info)
Equipment Vendor
(ZTE Huawei UTStarcom
Lenovo Dell) 4.2 Consumer Applications and Trends 4. Services
Services and content available : Services and content available Source: CNNIC Annual Survey 2005 4.2 Consumer Applications and Trends 4. Services
The average amount that internet subscribers pay for the value added services: The average amount that internet subscribers pay for the value added services Table 4: monthly charge paid by subscribers 4. Services 4.1 Main Technologies and Providers Source: China Network Information Center
Typical broadband services: Typical broadband services Online game E-commerce Portal/Advertisement VoIP VOD Search 4.2 Consumer Applications and Trends 4. Services
Example - China Telecom: Example - China Telecom 4.2 Consumer Applications and Trends 4. Services
Example – China Netcom: Example – China Netcom 4.2 Consumer Applications and Trends 4. Services
Key Business Applications: Key Business Applications E-government
VPN
Emergency Services
Intelligent Transportation Services (ITS)
Online/remote education
Online banking
Business to Business Sales
4. Services 4.3 Business Applications & Trends
Mass market demand on services: Mass market demand on services Convergence of IP network, PSTN network and cable TV network - Triple play
VPN on IP network
Digital home
Industrial vertical applications
Government
Logistic
Transportation
E-commerce
Video streaming application in various sectors
Online education
Online video conference
Online medical services
Online brokerage (realties etc.)
Podcast, videocast 4. Services 4.3 Business Applications & Trends
5. Policymaking and the role of the Public Sector: 5. Policymaking and the role of the Public Sector
Policy making and public sector`s role: Policy making and public sector`s role Chinese government is playing a leader’s role in the broadband network development as it realized that “Science & Technology is the first productivity” and “Informationization of the whole society is the only way to narrow the gap between China and the developed countries”
The government is mainly achieving its target by:
Drafting and issuing standards
Providing guidelines for public and private sectors on R&D directions
Provide funding for the basic and application R&D programs
Coordinating the R&D activities among public and private sector organizations
Several projects were initiated by the government to stimulate the development of Informationization of the country
Government has put huge investment through several funding schemes to support the universities, research institutes and business organizations to develop backbone network and applications in both public and different industrial verticals. 5. Policy Making and the role of the Public Sector
Government Goals: Government Goals To Transform China from a Big telecom country to a Strong telecom country
To Stimulate the R&D of in-house developed technologies
To utilize the latest IT and Internet technologies to upgrade traditional industries, as well as the efficiency of the government
To promote exports of high value added goods and build up the competitive advantage of the country based on technology, rather than low cost of labor
To narrow the digital gap between coastal area and inner land, between urban and rural residents
To improve the education level by utilizing the network and IT technologies 5. Policy Making and the role of the Public Sector
Government’s policy on Broadband: Government’s policy on Broadband China is left behind North America and EU countries in developing the first generation of Internet, even when it already catch up in equipment supply and manufacturing, the core technologies are still owned by foreign vendors
Lack of IP addresses is a key problem for further development and application of Internet
Therefore, the key policy is to develop next generation Internet (CNGI) based on IPv6 technology with in-house developed IPRs, which are critical to homeland security and sustainable development of the whole industry
5. Policy Making and the role of the Public Sector
China Next Generation Internet - CNGI: China Next Generation Internet - CNGI The aim of CNGI is to:
To build up information infrastructure for creative capability
To provide environment for basic R&D and testing activities
To grasp the core and application technology of the next generation of Internet
To further promote the commercialization
CNGI was launched by
National Development and Reform Committee
Ministry of Science and Technology
China Academy of Science
China Academy of Engineering
Ministry of Information Technology
National Natural Science Foundation
5. Policy Making and the role of the Public Sector
China Next Generation Internet - CNGI: China Next Generation Internet - CNGI Composition of CNGI:
Demo network construction
Backbone network
Municipal network
Access network
Research & development and commercialization
Application testing
Main builder of CNGI:
China Education and Research Network (CERNET)
China Telecom, Netcom, Unicom, Mobile and Railcom
Mile Stone and Achievements:
December 2003 – CNGI Started
December 2004 – CERNET 2 launched
December 2004 – Main Tele-operators started to build testing network
5. Policy Making and the role of the Public Sector
Network structure of CNGI: Network structure of CNGI 5. Policy Making and the role of the Public Sector
Regulatory Issues: Regulatory Issues Basic Telecommunication services (Voice call, internet access)
Shanghai, Beijing and Guangzhou are now opened
Foreign companies are only allowed to have less than 25% shares of the company providing basic services
Value added services (Internet contents and applications)
Opened nation wide
Foreign companies are allowed to hold up to 50%
Convergence of cable TV and IP network
Cable TV operators are now allowed to offer Internet access in the cities where they operate, but not nation wide
One IPTV license has been issued to Shanghai Media Group, a local cable TV network operator in Shanghai
Convergence of wireless and wire line communication
Currently mobile and fixed line operators are now allowed to tap each others market segment
Wimax is now under testing by both operators, will later on be a trigger point
VOIP
Still regulated, only six tele-operators are allowed to offer the services
More licenses will be issued later on after the testing of tele-operators
5. Policy Making and the role of the Public Sector
6. Public Sector R&D activities: 6. Public Sector R&D activities 6.1 Funding Scheme 6.2 Research Activities 6.3 Organizations
Subsidies and government funding scheme: Subsidies and government funding scheme National Basic Research program of China (973 plan)
National High-tech Research & Development Program of China (863 plan)
China Torch program
IT funds of MII
National Natural Science Foundation
Various funds set up by provincial & municipal governments 6.1 Funding scheme 6. Public Sector R&D Activities
Investment from Information Science division of National Natural Science Foundation (NNSF): Investment from Information Science division of National Natural Science Foundation (NNSF) Note: *small-fund exploratory projects. Average funding intensity does not include such projects. 6.1 Funding Scheme 6. Public Sector R&D Activities
Government sponsored programs in 973 plan: Government sponsored programs in 973 plan Research on Future Internet Architecture
Basic Research on Photonic Integrated Circuit for High Speed, High Capacity Information Network
Research on Theory and Methodology of Agent-based Middleware on Internet Platform
Research on the organization and key technologies of the Storage System on the next generation Internet
Fundamental Theory, Algorithms of Virtual Reality and Its Implementation
Basic Research on Integrated Optoelectronic Devices and Microstructure Optical Fibers with Structure and Technology Innovations for Future Advanced Optical Communications
Digital Contents Understanding 6.2 Research activities 6. Public Sector R&D Activities
Government sponsored program in 863 plan: Government sponsored program in 863 plan The technology standardization of IP evaluation and design
Auto Switch Optical Network and its application
3Tnet research, construction and test operation in Shanghai
3Tnet Technology and scalable testing
3Tnet expand to 80*40 DWDM switching system
3Tnet Network TV operating platform
Network TV access system and engineering of terminal
Information security on value added service platform
Research on standards of beyond broadband
MSR city-domain network
Integrated Testing & Developing platform for NGN 6.2 Research activities 6. Public Sector R&D Activities
Government sponsored program in China Torch program: Government sponsored program in China Torch program Web based interactive multi media communication platform
MSwitch IP based switching system
Intelligent Ethernet switching system
6.2 Research activities 6. Public Sector R&D Activities
Government sponsored program – IT fund of MII: Government sponsored program – IT fund of MII Commercialization of IPv6 based network equipment (high-end router)
Auto Switch Optical Network (ASON) products
Commercialization of optical network components
NGN core services platform
IPv6 gateway equipment
New city domain optical network equipment
IP based VPN
6.2 Research activities 6. Public Sector R&D Activities
Selected Organizations: Selected Organizations Ministry of Information Industry
www.mii.gov.cn
Telecommunication Technology Committee of MII
China Academy of Telecommunication Research of MII
www.cttl.com.cn
China Internet Association
www.cnnic.org.cn
Beijing University of Post & Telecommunication
www.bupt.edu.cn
China education Science & Technology Network
www.edu.cn 6.3 Organizations 6. Public Sector R&D Activities
7. Private Sector R&D Activities: 7. Private Sector R&D Activities 7.1 Research Activities 7.2 Funding
Huawei technologies: Huawei technologies Company brief
A private company established in 1988 in Shenzhen
One of the leading telecom & network equipment vendor in the world
Products cover PSTN, 3G, broadband Router and switches
Business covers 90 countries, 22 operators worldwide of the top 50s.
Main R&D areas
Nine R&D centers in North American, European, India and China
Base station architecture and system design, RF core arithmetic – Stockholm, SW
ASIC technology and CDMA arithmetic – Dallas, US
IP switch technology and platform – Bangalore, India
RF technology – Moscow, Russia
Core network of NGN, 3G – China
Involvement in national standards
NGN framework architectural
IP switch equipment technical requirements
Media gateway control protocol
IP-VPN framework
IP broadcasting protocol standards
7. Private Sector R&D Activities 7.1. Research Activities
Tsinghua Bitway: Tsinghua Bitway Company brief
The company was established in 2000, based on Tsinghua University, one of the leading technology university in China
Its core business is network equipment research, production and sales
Main R&D areas
NGN core routers and access network equipments
IPv6 & IPv4 interconnection system
NGN security equipments
IP-switch between wireless network and wire network based on IPv6 architecture
Involvement in national standards
NGN framework architectural
IP switch equipment technical requirements
Media gateway control protocol
IP-VPN framework 7. Private Sector R&D Activities 7.1. Research Activities
ZTE Technologies: ZTE Technologies Company brief
The company was established in 1985. It is now the largest telecommunication equipment vendor in China with annual sales revenue of Euro 3.4 billion in 2004
The company was listed in both Shenzhen Stock Exchange and Hong Kong Stock Exchange
Its products portfolio includes NGN, 3G, Optical network, wireless access and mobile terminals
Its products have been deployed in more than 60 countries worldwide
14 R&D centers in China, North America and Sweden
Main R&D areas
Soft-switch
Core routers for NGN
OADM
Involvement in national standards
Soft-switch based application server equipments requirements
Media server technology requirements
SDH multi-business transmission platform testing
SDH network protection testing
7. Private Sector R&D Activities 7.1. Research Activities
Datang Telecom: Datang Telecom Company brief
The company was established in 1998 and listed in Shanghai Stock Exchange
It is owned by National Telecom Research Institute
Its business area covers 3G (TD-SCDMA), Switching, access, optical communication, software and IC design
Main R&D areas
VoIP based on NGN
Virtual operator systems
Security system on IP network
Broadband access
Open Service Platform based on IP switch 7. Private Sector R&D Activities 7.1. Research Activities
Fiberhome Technologies: Fiberhome Technologies Company brief
The company was established in 1999 and listed in Shanghai Stock Exchange
Its business area covers solutions of access level to core level of communication network and optical communication
It is one of the main optical fiber network equipment supplier for all the main tele-operators
Main R&D areas
FTTH
Optical components
ASON
IP switch based on NGN
32*10Gb/s DWDM
ATM-PON full services access network system
Involvement in national standards
IP switch access standards
Integrated access network standards
FTTH network standards
7. Private Sector R&D Activities 7.1. Research Activities
BII Group: BII Group Company brief
The company was established in 1999
It was originally Beijing Internet Institute set up by R&D center of State Council and a group of scientists.
Its business focus on R&D and commercialization of IPv6 network technology
It is one of the main builder and system vendor of IPv6 testing network
Main R&D areas
NGN general services platform
Network monitoring system
IPv4/IPv6 integrated video terminal
IPv6 network TV
Intelligent control system based on IPv6
Involvement in national standards
IPv6 ready
IPv6 testing standards
IPv6 certification standards 7. Private Sector R&D Activities 7.1. Research Activities
UT Starcom: UT Starcom Company brief
A global telecom system vendor established in 1995 by two Chinese overseas students in Silicon Valley. The company was listed in NASDAQ
Its business area covers wireless access (PAS), Broadband access, and terminal manufacturing
It is now serving more than 300 tele-operators in more than 300 countries and regions. In 2004, its sales revenue reached Euro 2.5 billion
More than 10 R&D centers in North American, China, India and Korea
Main R&D areas
IP switches
IP DSLAM
GEPON
Net ring optical fiber network
IPTV solutions
NGN network terminals
7. Private Sector R&D Activities 7.1. Research Activities
Slide64: 7. Private Sector R&D Activities 7.2 Funding Source: Year Book of China Communications 2005
Slide65: 7. Private Sector R&D Activities 7.2 Funding Source: Year Book of China Communications 2005
Slide66: 7. Private Sector R&D Activities 7.2 Funding Source: Year Book of China Communications 2005
8. Possibilities for Finnish Companies: 8. Possibilities for Finnish Companies
Opportunities for Finnish companies: Opportunities for Finnish companies The domestic market used to be dominated by foreign technologies until recent years when domestic firms growing up with in-house R&D capabilities
On the component side, especially the chips design and development are still lacking behind
Government continue to finance heavily on in-house development of technologies and standards as it sees the telecommunication network is vital to homeland security and social economical development
It is better for Finnish companies to tap into the market in R&D and standard drafting phase, in order to show commitment to the market and gain a foothold
Technology and equipment are free to enter the market, all the other services should team up with local firms 8. Possibilities for Finnish Companies
Opportunities for Finnish companies: Opportunities for Finnish companies IPv6
Access network systems
Switching between IPv4 and IPv6
Applications based on IPv6
IP based VPN
IP switch for telecommunication system
Integrated switching system of PSTN, broadband, wireless network (3G)
IPTV and video streaming
Convergence of networks
Enterprise solutions
Billing and network monitoring for NGN
VOIP solutions 8. Possibilities for Finnish Companies
9. Foreseeable Radical Changes: 9. Foreseeable Radical Changes
Foreseeable Radical Change: Foreseeable Radical Change Further split/merge of tele-operators
All the wireline and wireless line operators are chasing hardly the 3G license as they all see bright future of mobile communication, however, to whom it will issue is still a wide guess. The initial split of operators was aiming at create competition, but the current rumors are that these six operators will be merged into three or four with each one get a 3G license. Once the wireline operator granted a mobile license, it may need to relocate resources rather dramatically.
Open up of basic telecommunication sector to foreign investors
As China entering to WTO, the basic telecommunication services, e.t access services and voice services will eventually open to foreign companies step by step. Once more foreign operators penetrating the market, they may bring new business model and technologies and change the competition landscape rather dramatically. 9. Foreseeable Radical Changes
Foreseeable Radical Change: Foreseeable Radical Change Progress of IPv6 testing network of the main tele-operators
As the successful launch of Cernet 2, the first national NGN network, more operators are following. Once the test going through smoothly, it is likely that the whole network will be upgraded to IPv6 based NGN, which will stimulate the innovative services and applications
Adoption of Wimax
The attitude of Chinese government used to be against Wimax as none of the domestic companies are having the core technology. However, things seem changing as one of the officer from MII stated recently that China is going to deploy Wimax in 2007
Convergence of Cable and Telecommunication Operators
As IP network is now ready to transmit videos thanks to the expanding bandwidth, the boundary of cable TV and telecommunication services are blurred. China has issued one IPTV license for testing purpose, it is believed that more will be issued later on.
On the contrary, the digital TV service that initiated by cable TV operators seems developing very slow partly because of sources of HD programs. By the time, IPTV may go beyond digital TV 9. Foreseeable Radical Changes