Fiber-optic network deployment in China leaps ahead

May 1st, 1996

Fiber-optic network deployment in China leaps ahead

BEN HARRISON

Long regarded as a huge communications marketplace, China is poised to expand its fiber-optic network deployment over the next five years. According to a recent study by Kessler Marketing Intelligence Corp., a Newport, RI-based fiber optics market research and consulting group, fiber-optic cable installations by China`s Ministry of Posts & Telecommunications (MPT) and other network operators are expected to surge at an average annual rate of 22%, from 1.3 million fiber-kilometers in 1995 to 3.5 million fiber-km in the year 2000 (see figure).

The study, "Fiber and Fiberoptic Cable Markets in China," (see "Steady Growth Seen for Fiber in China," page 10) reports that the MPT controls the national public telecommunications networks through its provincial and municipal affiliates. In the early 1990s, the MPT claimed it would build a nationwide fiber-optic backbone network within 10 years. It recently announced that as part of its Ninth Five-year National Plan Period (1996 to 2000), it will build another 23 systems with a total length of approximately 30,000 sheath-km. Most of the singlemode fiber-optic cable is expected to be installed in provincial trunks, urban feeder networks and rural networks. Coastal areas, better networked because of earlier economic reforms, are anticipated to deploy fiber-optic cables in business premises and residential areas.

Charles S. Xu, a KMI analyst and author of the study, remarks that China`s network authorities have stated that fiber-to-the-home may not be possible in the near-term. "Instead, they have proposed three other network architectures: fiber-to-the-area, fiber-to-the-building and fiber-to-the-curb," he says.

Xu sees China as a huge fiber optics market with great growth potential and notes that there is increasing demand for high-quality fiber-optic cables. "There is fierce competition from local manufacturers, joint ventures and foreign companies that sell fiber-optic cable in China," he adds.

ADC Telecommunications Inc. in Minneapolis, for example, is building a fiber optics communications network business in China. Last summer, the company reported that China`s Hunan Post & Telecommunications Administration agreed to purchase digital transmission systems valued at $14 million over two years.

Fiber footprint in China

Last March, the company inked a memorandum of understanding to further expand its fiber footprint in China. The agreement calls for cooperative work on an initiative to increase availability of voice, data and video services throughout China via ADC`s Homeworx hybrid fiber/coaxial-cable (HFC) network system.

Partners in this alliance include China United Telecommunications Corp. (China Unicom), the Ministry of Electronics Industry and China Communications System Corp. (Chinacom). Both China Unicom and Chinacom are licensed to provide telecommunications services in China, their goal being to install their own telecommunications system and compete with the MPT.

ADC plans to work with China Unicom and Chinacom to successfully accomplish the goals set forth in China`s five-year plan for deploying telecommunications services throughout the country. The multiphase agreement calls for laboratory and field trials, followed by deployment of the Homeworx system. Laboratory trials are expected to begin this spring, followed by a field trial this summer. Initial deployment of the Homeworx system is scheduled to begin in the second half of 1996, with large-scale deployment to follow.

Customers served include cable-TV operators, telephone operators, private network users and multinational service providers. Homeworx is a 750-megahert¥amplitude modulated video system that supports basic and premium programming services and universal video delivery, as well as delivery of advanced telephony and data services.

The agreement also stipulates that ADC manufacture its HFC telephony products in China. According to Frederick D. Lawrence, president of ADC`s Transmission Group, "HFC is a proven solution for cost-effective deployment of voice, data and video services, providing opportunities for competitive access by new entrants to the market."

He notes that this agreement reinforces ADC`s commitment to China, which began in 1994 with the establishment of the ADC-Shanghai joint venture and was further strengthened with the establishment of the ADC-Beijing representative office.

According to John Zhang, the company`s general manager of China operations, based in Shanghai, the outlook for ADC in China is bright. "The market potential is 75 to 100 million telephony lines in the new five-year plan," Zhang says. "China Unicom is planning 12 million new lines with at least one-half of them using HFC architecture." He expects ADC manufacturing to begin in China in 1997. q

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