WCA March 2009

On 18 th December, Unicom said it would take over Netcom’s fixed-line and broadband Internet business across 21 provinces in the south. In addition to its own local access telephone business in Tianjin, Unicom will also acquire Netcom’s backbone transmission assets in northern China and a 100% equity interest in Unicom Xingye, CITC, and New Guoxin. These moves are expected to boost the number of Unicom fixed-line and broadband subscribers from 130 million to over 140 million. Damage to three major undersea ✆ ✆ cables seriously affected more than half of Internet and phone service across Europe, the Middle East, and Asia on 19 th December, with India (82% disruption), Qatar (73%), and the United Arab Emirates (68%) the worst affected, according to France Télécom . The French operator also said that Saudi Arabia, Jordan, and Egypt suffered disruption to about 50% of their service. Initial notice of the breakdown, on the France Télécom website, placed the locus of the cuts “in the Mediterranean between Sicily and Tunisia, on sections linking Sicily to Egypt,” but said the cause was unclear. Resumption of full service was not expected before the New Year. As reported by Dylan Bowman of arabianbusiness.com (20 th December), the newswire AFP quoted France Télécom as saying the cuts were less likely to be due to sabotage than to an encounter with trawlers’ nets. The cables – two of which seemed to have been severed, one partially cut – are jointly owned by several dozen countries. One cable is 25,000 miles long and links 33 countries; another, 12,000 miles long, serves 14 states. Experts from France Télécom Marine arrived at the site of the damage aboard a cable ship and began repairs on 21 st December, said a company spokesman. The breakdown was the first such major incident since January 2008, when five cables in the Middle East and Europe were cut, causing severe Internet disruption across the Middle East and Asia.

Even as some major Western telecom equipment manufacturers prepare for a reduction in carrier spending and falling sales this year, there are indications that their Chinese rivals Huawei Technologies Co Ltd and ZTE Corp believe themselves to be on course for higher revenues. As reported in Light Reading, Alcatel-Lucent expects the fixed and mobile infrastructure sector, including associated services, to shrink in value by between 8% and 12% during the year, while Nokia Siemens sees the market shrinking by 5% or more. In contrast, a bullish Huawei expects to hit its 2008 target of $23 billion in contract sales, in which a purchase is not recorded until a fixed number of payments have been made by the buyer. In 2007, Huawei reported contract sales of $16 billion but audited revenues of only $12.56 billion. Even so, the results made the Shenzhen-based company the number 5 telecom equipment vendor in the world. (“Huawei, ZTE Predict 2009 Growth,” 19 th December). If Huawei manages to reprise the revenues-to-contract sales ratio it achieved in 2007 international news editor of Light Reading, Ray Le Maistre, projects 2008 revenues of more than $17 billion. For 2009, Huawei looks for “steady growth from both the fixed and mobile field, especially with the development in the mobile broadband space,” a market in which Huawei is regarded as strong competition to the large European vendors. For its part, China’s largest listed telecom equipment provider ZTE, also based in Shenzhen, exudes a similar confidence. Light Reading observed that, while this “fierce Huawei rival” had not yet issued an official 2009 financial outlook, company representatives talked of sales growth in 2009. “Like Huawei,” Mr Le Maistre wrote, “ZTE is well positioned, as a local supplier, to continue to win new deals from China’s carriers for the building and expansion of networks. [It] is also active in India.” Of course, projections butter no parsnips but, like Huawei, ZTE has been busy building business in emerging markets in Asia/Pacific, Africa, and Latin America, and is keen to win deals in North America. To that end, in mid-December it announced a contract for CDMA infrastructure and handsets from US-based mobile startup Smart PCS, which serves the southern states of Georgia and Tennessee. And, Mr Le Maistre noted, ZTE is also “making noises” about next-generation fibre access technology developments. Chinese equipment makers see a sunnier 2009 than their counterparts in the West

Elsewhere in telecom . . .

3G in 2009 alone, with long-awaited licences to be awarded early in the year. Reuters noted that Beijing is developing its own TD-SCDMA 3G standard to promote domestic industries and technology “and to avoid the hefty royalties demanded by foreign companies that own the rights to the technologies” that are in common use worldwide: WCDMA and CDMA 2000. Licences for the new technology, which enables faster data downloads, were expected to go to China Mobile, China Telecom, and China Unicom. In other news of China Unicom, to ✆ ✆ expand its presence in southern China the mobile operator has announced plans to acquire the fixed-line business of its parent China Netcom for $940 million.

The high morale of Huawei and ✆ ✆ ZTE owes much to the Chinese government, which has said that telecom operators in China will spend about $41 billion on next-generation (3G) mobile net- works over the next two years. In addition, as reported from Beijing by Reuters correspondent Kirby Chien, China will support the development of core microchips, terminals, and testing equipment to expand network coverage. The information was attributed to Minister of Industry and Information Technology Li Yizhong. (“China Says $41 Billion to Be Spent on 3G,” 19 th December)

Mr Li had already said that at least $29.2 billion would be spent on

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Wire & Cable ASIA – March/April 2009