The Growth of Personal Clouds in China

In the Chinese IT industry, cloud storage seems to have taken center stage. Read more about their cloud market and the changes they face.

Despite the current economic and political challenges facing China, there is still some optimism in its IT sector. Over the last few years, cloud storage seems to have taken center stage in the Chinese IT industry. What started with pervasive and rapid internet growth has exploded as more people gain access to mobile devices. Personal cloud has sprung up to serve an insatiable need for sufficient storage and data sharing points for mobile users. Behind the boom lies a growing level of attention from both China and the international players.

The size of the cloud market

In 2014, the cloud computing products raised about $4 billion, contributing to approximately 5% of its IT industry, and hence lower than the global spending of about 11%. iiMedia Research group expected the number of active personal cloud users to hit 450 million, from 380 million in 2014. Based on CTA estimation, the Chinese spending on private cloud is expected to hit $2.57 billion in 2017 and enjoy a 30.7% growth in the next five years. While the rates manifest the public willingness to embrace the new storage platform, most popular platforms are yet to reach mainland China.

The key drivers of personal cloud market

While the topic seems to have missed the media headlines, it is driving force behind the Chinese dwindling economy and widening political issues. Private cloud users are keen on some features that come with the platform such as 10 TB storage capacity, fast sharing, high-security measures, and accessibility to all devices. Nonetheless, the service providers are keen to further innovations to win the ever-growing market.

The challenges

By the virtue of its size, every technology vendor hopes to grasp a share of the coveted market. They will have to deal with several hurdles if they are going to make significant progress in the market. For instance, they will have to deal with low internet speeds that stand at about 4MBS compared to the US average of about 11MBPS. In addition, a 14% access to fixed line broadband and 21% mobile broadband means the country is largely unexploited.

Unlike other international players, the Chinese personal cloud services allow users to share information raising concerns among the regulators. In a bid to clean the sector, the national authorities embarked on a drive to purge illegal content from the internet, which saw the exit of six primary services. The absence of a clear business model to drive the firms into prosperity stands the way between companies and profitability.

Whitepaper: China Telecom Americas’ Commitment to Carrier Partners Creates Opportunities for Global Expansion

As the North American subsidiary of the largest integrated communications service provider in China, China Telecom Americas is best able to help telecommunications service providers extend their reach and reinforce their brand with outstanding products that are backed by industry-leading SLAs. No carrier is investing in the infrastructure and services needed for the globalization of business like China Telecom. China Telecom Americas makes it easy for communication services providers to successfully expand to Asia in support of their clients’ operations and to reach the massive Chinese market.

Ready, Set, China! Millions of global companies have established operations in China, eager to take a slice of China’s growing pie. Many have come to learn that success doesn’t happen overnight in a country as complex as China; it’s a marathon that requires endurance and resourcefulness.

Telecommunications service providers see the potential of the world’s most populated nation, which has shown an appetite for networked and value added services. The massive global participation of multi-national companies in the Chinese economy continues to incent carriers from around the world to find innovative ways to serve their enterprise clients beyond their geographical scope and domain of expertise. China has become one of the world’s top destinations for enterprise expansion, yet the country is wrought with challenges to both enterprises and carriers. Diversity of the country, its location, heterogeneity across the expansive Chinese market and a plethora of regulations create an increasingly challenging business sphere.

China Telecom Americas’ research shows that enterprises doing business in China overwhelmingly consider reliable telecommunications services to be a priority. Carriers hoping to meet their clients’ needs in China must be prepared to deliver exceptional service. To avoid spending hundreds of millions of dollars building, deploying and managing the array of service options necessary to meet enterprise communication needs, carriers would be wise to partner with an incumbent when entering China.

China Telecom is China’s leading integrated communications services provider with majority market share for fixed-line services and the greatest global capacity to, within and from China. Recognized by industry analysts for its pioneering strategy of deploying CN2, the Next Generation Carrying Network built for business MPLS requirements, China Telecom continues to innovate and establish subsidiaries globally to provide better regional service and support. China Telecom Americas was established in 2002 to serve North and South America and currently counts some of the world’s largest companies and carriers among its valued customers.


“We are constantly adding capacity in and out of China because demand from our customers is growing. We were reselling another company’s services, and they were getting their capacity from China Telecom. Working directly with China Telecom Americas gives us circuits direct from China Telecom and puts margin on the bottom line.”

-Director of Commercial Carrier Management, US-based Global Communications Carrier


China Investment Remains Strong

Since the mid-1980s, China’s financial integration with the world economy has grown sharply. The country currently accounts for 40 percent of FDI to developing countries and is the largest recipient of FDI after the United States. China will also become one of the world’s biggest global investors by the end of this decade, with global offshore assets tripling from $6.4 trillion now to nearly $20 trillion by 2020. In an increasingly competitive world for FDI, the future for China remains bright. As more multinational companies realize the strategic importance of entering the Chinese market and establish operations in the country, they must connect people, applications and content as part of daily operations, and this is where China Telecom Americas serves as a bridge between nations.

National economies that were once slightly entangled are now permanently intertwined. China is the United States’ largest trading partner, accounting for more than 15% of US trade, according to US Census Data, and will account for thirty percent of the world’s growth through to 2017, based on global forecasts from the International Monetary Fund. Trade between China and Latin America has also grown significantly. According to the Chinese Ministry of Commerce, bilateral trade between China and Latin America expanded from $200 million annually in 1975 to $70.2 billion per year in 2006. By 2013, that figure had risen to $289 billion.

China’s Telecommunications Landscape is Vast and Growing

With a population of 1.38 billion and a land mass slightly larger than the United States, China owns the worlds largest fixed-line and mobile networks in terms of both network capacity and number of subscribers. By 2020, China’s telecom market will be four times larger than the US market . In terms of Internet users, China has surpassed the United States at over 700 million users and also holds the greatest number of mobile phone subscribers worldwide. Its consumers, households and business have caused a boom in e-commerce, with shopping, texting and gaming rapidly growing. This large-scale adoption of communications technology and services has allowed China’s telecom service industry to grow. According to a KPMG report, China is targeting 1.2 billion 3G/4G mobile users (85 percent penetration) by 2020, up from 325 million in June 2013.

Implications for Carriers

The massive telecommunications market presents significant opportunities for carriers and value added service providers, even if they lack infrastructure in China. In order to succeed, they must select an alliance partner that demonstrates a willingness and ability to invest billions of dollars in infrastructure and support services required to keep up with the explosive demand for telecommunications services resulting from unprecedented economic growth. MNCs want to streamline the number of vendors that they use for their global communications requirements. They typically want to acquire telecommunications services through vendors with whom they have existing relationships. Even if carriers’ clients have not already inquired about communications services in support of operations in China, carriers should ready themselves to serve clients’ business in China.

For carriers whose clients have already led them into China, it’s a perfect time to evaluate alternatives that provide the best mix of service coverage options, support, SLAs and overall value. In most cases, carriers are serving existing clients who are expanding into China, so a relationship of trust between them is already established. If the services provided in China do not meet customers’ expectations, the entire business relationship could be at stake. Thus, carriers need to make sure that they choose a partner with the strength and resources to support the quality of their own brand.

China Telecom Americas Fosters Successful Relationships with Carriers

If anyone knows what carriers need to successfully serve demanding enterprise customers in China, it’s China Telecom. China Telecom Americas, China Telecom’s subsidiary serving carriers and enterprise customers in North and South America, combines the experience of a world-class carrier, the expertise and strength of its parent, and a North American team to locally support its relationships with carriers and service providers doing business in Asia.

Delivering data communications solutions to clients in China can be challenging on many levels including:

  • Overcoming a lack of knowledge about doing business in China’s expansive market;
  • Finding a local partner that can reach into all of China;
  • Choosing between the multitude of networking options;
  • Dealing with language and time differences and;
  • Writing contracts with terms that are acceptable to the carrier.

China Telecom Americas is a strong, reliable choice for telecommunications service providers seeking a world-class partner in Asia in order to support their brand and their clients’ requirements. China Telecom Americas offers the strongest SLAs for network performance of any carrier serving China and the program management team has delivered industry leading on-time installations 99% of the time. China Telecom Americas works on behalf of carriers and customers for network planning, implementation and operational support in the Americas, China and the rest of China Telecom’s global network coverage area. The company is Cisco certified and has close synergies with technology providers like Citrix, Juniper Networks and Equinix.

The company provides a range of enterprise services along with a set of carrier-specific offerings including China Transit Services (Figure 2), Internet Peering, Network Ethernet Leasing Service, Wholesale IPLC, Wholesale MPLS, Wholesale Voice and Managed Services in the company’s Internet Data Centers (IDCs). These services help carriers extend offerings under their own brand while leveraging the multi-billion dollar investment that China Telecom has made in global capacity and services.

Most important to carriers and value added service providers is China Telecom Americas’ ability to locally support their global objectives. Telecommunications service providers interviewed reported the following benefits received from China Telecom Americas:

  • End-to-End Service Management – “We did not need to know what was happening behind the scenes to provision the circuits that were ordered for our customer or to deal with service issues when they arose. We just worked with the China Telecom Americas support team and they turned around and worked with the people in China in all hours of the night. They were like our advocate.”
  • English Language Support – “When we have issues, we don’t have a language barrier standing in the way of resolution.”
  • Local Presence – “My China Telecom Americas rep comes to the office to sit down and talk about what we need.”
  • US-Based Contracts – “For us, writing contracts in the US is a lot easier than writing them under Chinese regulations and being able to pay in US dollars is key.”
  • Better Margins – “Since we can now buy the circuits we need directly from China Telecom Americas, we can cut out the middleman and put money on the bottom line.”
  • Best Service Level Agreements – “China Telecom Americas offered us out-of-the-box service level agreements that far exceeded what any other carrier could guarantee.”


    “One of our largest clients came to us with the need to network 11 facilities in China together and provide a fast, reliable and secure connection back to the US for access to the financial and ERP systems located in Chicago. They have more than 800 people relying on this circuit and the operation would go down if the circuit fails. China Telecom Americas helped us plan the solution, made sure provisioning went smoothly and did everything we needed to support the client.”

-Director of Network Solution, US-based Business Communications Services Provider


China Telecom’s Strength and Stability Rewards Carriers

Extending services into a new geographic region presents risks to any carrier. Management can mitigate risk by selecting to do business with a strong, forward-looking global leader that is dedicated to its clients and carrier partners.

China Telecom has earned a reputation for service and management excellence that carriers can leverage to better serve its increasingly global client base. The company was once again named one of the 2007 “World’s Most Admired Companies” by FORTUNE Magazine and in 2008, Euromoney named China Telecom “Asia’s Best Managed Fixed Telecom Company.”

The company is shaping and facilitating the steady economic growth being experienced in the region. Its more than 670,000 employees share the commitment to place “Customer First. Service Foremost.” China Telecom has the largest IP network and fixed-line subscriber base in Asia and has the most capacity to and from China. The company has established bi-lateral direct circuits with 70 telecom carriers in 40 countries and regions and the list is growing.

China Telecom invests billions of dollars to develop the best-supported products and services for global business, including CN2 (Figure 3) and its cable network, such as the Transpacific Express (TPE) Cable (Figure 4). TPE is a cable that offers unprecedented capacity and performance with its own backhaul infrastructure in China and the United States. It has landing points in Shanghai and Qingdao China, Keoje, Korea, Tanshui, Taiwan and Nedonna Beach, US with full connectivity capability to all cities in China, all China Telecom Hong Kong and US PoPs and all of China’s neighboring countries. It connects directly to other cable systems including APCN2, SMW-3, FEA and EAC.

The FASTER cable system, a 9,000-km submarine cable system linking Japan and the West Coast of the U.S., is China Telecom’s most recent subsea cable investment and the first trans-Pacific subsea cable designed to deliver 60 Terabits per second (Tbps) of bandwidth.  With its state-of-the-art design, FASTER provides continuous connectivity and high capacity for cloud, video streaming, analytics, and the Internet of Things. It can support the expected four-fold increase in broadband traffic demand between Asia and North America, enhancing China Telecom’s infrastructure to support customers’ data traffic.

Building the Brand, Expanding the Reach

MNCs will continue to participate in the growing Chinese economy for many years to come, spawning further expansion of the country’s communication services sector. In support of clients’ requirements, carriers and telecommunications value added service providers worldwide must develop their short and long-term strategies for Asia expansion. In order to sustain their brand and revenue streams, they are advised to establish a relationship with an integrated communication services provider that has deep knowledge and extensive services throughout Asia.

As the North American subsidiary of the largest integrated communications service provider in China, China Telecom Americas is committed to helping carriers and service providers extend their reach and reinforce their brand with their customers by providing outstanding products that are backed by industry-leading SLAs. Investing heavily in the infrastructure and services needed for globalization, China Telecom Americas is making it easier for communication services providers to expand to Asia in support of their clients’ operations by the day.

About China Telecom Americas

China Telecom Americas, a wholly-owned US-based subsidiary of China Telecom Corp. Ltd. (NYSE: CHA), is an international telecom provider for Data, IP and Voice Wholesale services to multinational companies, organizations and international carriers requiring China domestic services and International access to China & Asia Pacific. With headquarters in Herndon, Virginia, and offices in Chicago, Houston, Los Angeles, New York, San Jose, Dallas and Toronto, Canada, China Telecom Americas continues to expand its reach, including Latin America. China Telecom Americas provides a locally based, one-stop-shop, turn-key solution for everything from China domestic and international data circuits to IDC services, network management, equipment management, system integration and more.

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Case Study: Sterigenics MPLS Network Solution in China

Sterigenics needed a reliable network solution for their China offices to run their ERP system. The network proved to be very reliable and performance superior to the previous infrastructure.

  • Challenge: Sterigenics needed a reliable network solution for their China offices to run their ERP system.
  • Solution: China Telecom Americas proposed a CN2 MPLS VPN solution with Managed routers.
  • Key Benefits: The CN2 MPLS VPN solution with Managed routers came with SLA covering the congested Trans-Pacific portion between the United States and China. After a quick an efficient installation the network supporting two sites in Shanghai and one in the US has proved to be very reliable and performance superior to the previous infrastructure.

Sterigenics International, Inc Headquartered in the Chicago suburb of Oak Brook, IL, Sterigenics International, Inc., is a leading global provider of contract sterilization solutions and radiation processing services. With 38 facilities across North America, Europe and Asia, Sterigenics is the only company in the world to offer technology in all leading sterilization modalities. As a result of this broad-based network, customers around the world receive the convenience of cutting-edge technology and expert technical support close to their production and distribution facilities.

Sterigenics attracts clients which span multiple sectors and markets, including firms within the medical device, pharmaceutical, and food safety industries. Sterigenics anticipated a major growth in network traffic in their expanding Shanghai activities. The IT Department needed to have a reliable network solution for the China facilities to access their global ERP system. The initial IP circuit was adequate for light usage, but due to the congestion on the public Internet, it was difficult to get the performance they needed from their IP SEC VPN tunnel between Shanghai and the United States. From Shanghai to North America to the heart of the European Union, Sterigenics International is expanding—building new facilities and enlarging existing ones, to bring the latest in technology and increased speed-to-market to medical device manufactures worldwide.

Working Together
China Telecom Americas and Sterigenics began to work together around the same time that Sterigenics was beginning construction on their second facility in Shanghai. At that point, higher bandwidth network solutions were required to support their newly-implemented global enterprise resource planning (ERP) platform. The Chicago Office of China Telecom Americas reached out to Sterigenics, the concerns were discussed and a plan of action was developed. Mike Smith, Vice President of IT at Sterigenics, explains: “After describing our application environment and networking requirements, the China Telecom Americas sales team and engineers presented a couple of options, from which we selected the one that would best work for us both functionally and within our budget. China Telecom Americas also understood that we did not have staff on the ground in China, so we required a solution that they could install, monitor, and support.” At the beginning, the service was a 2M IP Access line, which kept costs low for Sterigenics. This level of service was maintained for nearly two years. However, due increased congestion, the IT department at Sterigenics came to realize that MPLS was a better solution for them so China Telecom Americas migrated the Sterigenics network to MPLS.

Solutions that Worked
China Telecom Americas proposed a CN2 MPLS VPN solution with managed routers. This service came with an SLA covering the congested trans-pacific portion between China and the United States. After a quick and efficient installation the network supporting two sites in Shanghai and one in the US (Downers Grove IL) has proven to be very reliable and performance superior to the previous infrastructure. In addition China Telecom configured and installed the routers in Shanghai and is managing these routers proactively through their NetCare service giving Stergienics IT staff the flexibility to focus on other strategic areas in their business while China Telecom does the proactive monitoring. In addition to the MPLS solution, CTA also proposed and provided a backup private line between the two locations in Shanghai so in the event one of the locations fails, the network will automatically reroute to the other location via the private line. This addresses the business continuity for the Shanghai locations and mitigates the risk for any operational and production issues.

In The End
An MPLS solution was selected to connect Sterigenics’ two operating facilities in China; a separate leased line between the sites provides essential backup. Through China Telecom’s services, local customers can now access Sterigenics’ global ERP environment and also utilize an automated data collection bar coding system.

China Telecom’s round-the-clock support and monitoring meant Sterigenics could launch its global ERP environment in China without having to invest in on-site IT resources or a 24-hour operational support staff. Since implementation, China Telecom Americas has been able to continue customizing its service to accommodate Sterigenics’ international growth strategy. Sterigenics credits China Telecom Americas with playing a key role in helping them pave their way to success in China. With the continued assistance of China Telecom Americas, Sterigenics is currently exploring the possibility of expanding to other parts of the Asia-Pacific region, where China Telecom has additional resources to deliver and extend the CN2 MPLS VPN network.

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White Paper: How China Telecom’s Transformation Enables Growth

China Telecom’s multi-pronged transformation strategy is changing the company into an integrated information services company at the forefront of technology and service innovation. The transformation strategy benefits shareholders and China Telecom’s many types of clients, including households, small and medium enterprises, multinational companies and global carriers.

The Future Is Now

Predictions that leading economists and technologists once made about China are now being validated. Each prediction is like a brush stroke that helps paint a vibrant image of this flourishing nation, helping to strengthen the global economy and transform the lives of its 1.38 billion people. The experts said:

  • China would become among the fastest growing economies. Indeed, Indeed, real GDP growth averaged 9 percent since 1998 and China has become the world’s second largest economy. In the first quarter of 2016, China’s economy grew at an annual rate of 6.9 percent, down slightly from the end of 2015 but still very much in line with the official target.
  • China’s entrance into the World Trade Organization (WTO) would re-shape the constitution of its GDP. China’s economy has swung from agricultural based to manufacturing based, and the services sector has become increasingly important as a driver of the economy. It accounted for 48.2 percent of China’s economic output in 2014.
  • Increased income levels among the population would create demand for products and services that global companies would enter China in order to meet. Much publicity covered multinational companies (MNCs) that entered China at the turn of the century to test the market, but now MNCs are executing market penetration strategies on a large scale.
  • China would surpass even the United States in Internet usage. The country has over 700 million Internet users, double the population of the U.S.

Indeed, the China that had been envisioned is upon us. The future is now.

Yet countries blessed with history that is as long and rich as China’s understand that further prosperity and progress require smart planning and investment. Nations never stop evolving. As the largest fixed-line operator in China, China Telecom offered a strong foundation upon which the country could build over the past few decades. With wise management and its own set of predictions for the future, China Telecom set out in 2004 on a path of transformation in order to better serve its customers, the global market and its shareholders.

Relationship Between Telecommunications Growth and Economic Change

World Bank studies have shown that there is a positive correlation between economic development and telecommunications density and available services, and some studies even claim that a causal relationship exists in both directions. Telecommunications growth has also been linked to other stimulants like increased education, improved access to information, development of research centers and other positive changes on an economy and a culture.

The telecommunications sector in China has been one of the fastest growing sectors in China. The country’s 371 million phone subscribers account for one fifth of the world and its 131 million Internet users make up one tenth of the world’s users. In 2014 alone, telecom services spending in China amounted to $182.9 billion USD.

China Telecom’s Transformation Strategy Delivers Diverse, Branded Communications Solutions to Global Clients

China Telecom is the major supplier of integrated communications services in China, managing more than 220K wire lines and offering data, voice, Internet and converged services throughout the country. In a study of Chinese consumers conducted by Nielson Media Research and reported that China Telecom was highlighted as one of only 17 “Platinum Trusted Brands” due to its outstanding performance in the survey. A company with China Telecom’s size and success might have rested on its laurels, but China Telecom has not. Leveraging its strong foundation, the company announced a bold transformation strategy in 2004, with the goal of putting the company in a position to diversify its operation, support the growth of the Chinese economy and in turn, the world economy, and continue to strengthen its brand.

Chairman and CEO of China Telecom Wang Xiaochu explained that the company is using the transformation as a platform to encourage the growth of both revenue and the customer base and to win the race to occupy the top position of future information services. Expansion of broadband services, convergence of voice, data and video and a move from product management to brand management all characterize the transformation. He explained that the transformation strategy has brought about three important changes.

First, China Telecom is optimizing its revenue structure, whereby voice revenues are a diminishing percentage of overall revenues. Revenue from non-voice services such as broadband access, fixed network value-added services, integrated information services and systems integration and management has been growing steadily.

Second, the company is introducing new bundled and branded offerings to combat price erosion and make them more “sticky” to customers. Branded offerings like Best Tone (an integrated information inquiry service for phone users), BizNavigator (an integrated application suite that meets the needs of enterprise clients) and One Home (an integrated voice, data, TV offering through the home box) address the needs of three target groups; personal, enterprise and household. Fixed-line based voice search services, MPLS/ VPNs and IT solutions to support mission critical applications have all been launched and are enjoying promising adoption. The company is also offering “seed services” such as IPTV.

Third, China Telecom continues to strengthen its ability to grow with precision management that focuses on delivering value to shareholders and outstanding products and services to its clients. China Telecom’s management had the foresight to understand the importance of serving MNCs. While the company continues to invest in infrastructure, branding and customer service systems in China, it is at the forefront of expansion to serve MNCs. The company was the first among its peers to open operations in North America, and now has offices in Hong Kong, London and Brazil, with company-owned information technology services termed “Information Silk Road” that offer seamless services between the Americas, China, Asia and Europe.

Transformation in Action

China Telecom’s transformation is manifested in the lives and livelihoods of individuals, households, Small-to-Medium-Size Enterprises (SMEs) and MNCs doing business in China. Let’s take a closer look at three strategies that epitomize China Telecom’s transformation in action and indeed, have placed the future in our hands: BizNavigator, CN2 and China Telecom’s global expansion to serve MNCs locally.

BizNavigator

Biz Navigator was conceived as a way to provide IT support to local offices of MNCs and to enhance the competitiveness of SMEs, whose importance to the changing economy was recognized. Since its launch, it has been adopted by well over 500,000 SMEs.

China Telecom’s BizNavigator has proven valuable to SMEs and global MNCs with offices in China. BizNavigator exemplifies China Telecom’s mission to become an integrated information service provider, integrating communications services with application support services. BizNavigator provides industrial IT applications support for processes like sales, logistics management, supply and demand management, travel services, tax and other financial reporting. It allows clients to manage domain names, provides corporate e-mail, enables website creation and maintenance, provides virus protection, helps manage customer contacts, provides a data-rich office automation platform and more. All these are provided on a base of communications services ranging from broadband access to interactive teleconferencing and support services like equipment procurement and maintenance and LAN deployment.

As an example, BizNavigator was deployed in support of Guangzhou’s “Bridge for Business and Trade” service, which is a portal to connect suppliers with buyers. After just one month, there were over 22K daily hits on the site, and messages among the members increased at a rate of 2K per day. BizNavigator is delivering the future of integrated information services to China’s businesses and provides an excellent example of China Telecom’s Transformation Strategy in action.

The Business Internet Comes to Life

With the staggering demand for Internet services coming from within China and outside from MNCs expanding into the region, China Telecom’s leadership made a bold move to build an entirely new global Next Generation Network (NGN). The network was dubbed China Telecom Next Generation Carrying Network, or CN2, and it began rolling out in 2005. CN2 provides the global coverage, network technology infrastructure and management capabilities required for MNCs to successfully leverage China in their growth strategy. It’s an advanced communication and information network for the future.

Telecom Magazine reported that CN2 makes China Telecom one of the most proactive NGN carriers in the world. CN2 is an IPv6-capable backbone network leveraging new softswitches and protocols like DiffServ and MPLS, which boost performance. Five classes of service and QoS help CN2 guarantee reliability and performance of mission-critical and high-priority applications. Its MPLS-optimized architecture also enables Frame Relay and ATM traffic to be transported over a Layer 2 VPN, which promotes network efficiency and scalability. CN2 provides a highly-advanced network on which to deliver high value services using technology that will transition well into the future, allowing the company and its subsidiaries and partners to provide cost effective new offerings.

Expanding Around the World

Businesses today are networked for success. For many companies entering or expanding into China, the business plan depends on the availability of reliable communication services throughout the region. Without them, critical success factors cannot be met. China Telecom established subsidiaries like China Telecom Americas, China Telecom Europe and China Telecom Hong Kong to help assure that MNCs’ global operations thrive.

China Telecom and its subsidiaries consistently deliver uncomplicated solutions to complex problems – problems that stem from rapid expansion in China, the need to distribute content to tens of millions of people or to synchronize mission-critical applications on multiple continents. China Telecom’s clients depend on the company to enable their growth – and China Telecom – along with its local subsidiaries in Asia, the Americas and Europe – deliver.

China Telecom’s Transformation Strategy leverages the company’s expansive assets including:

  • International bi-lateral connectivity to 100+ countries
  • Broadband access to 300 cities in all 31 provinces
  • Trans-Pacific cables systems, including China-U.S., Japan-U.S., SEA-ME-WE3 in APCN2, SMW3, Flag, TAE and more.
  • CHINANET (China’s largest Internet network) and CN2, the business class IPv6-capable backbone Internet network
  • Over 670,000 employees worldwide who embrace the corporate philosophy “Customer First. Service Foremost.”

Conclusion

As predicted, China is a major driver in the world economy, and its continued effects are expected to be positive. Wise and experienced executives at China Telecom announced a multi-pronged transformation strategy that is changing the company into an integrated information services company at the height of communications services. The Transformation Strategy benefits shareholders and China Telecom’s many types of clients, including households, SMEs and MNCs and global carriers.

The Transformation Strategy today leverages the company’s massive, existing assets, and introduces new products like BizNavigator and CN2 and support services that enable positive change in people’s lives. Transformation enables the rapid growth strategies that MNCs are now executing in the region. No other telecommunications carrier offers the seamless network coverage, services and capacity connecting Europe, North America and Asia that China Telecom does. China Telecom’s network reach and performance help connect people and content and cost-effectively support mission-critical applications around the globe. China’s future is beautifully painted on the canvas for the world to see and China Telecom’s Transformation Strategy makes the colors bright.

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White Paper: Access China with Next Generation Networks

China Telecom is one of only a handful of elite carriers that has built entirely new IP networks in order to satisfy the complexities of globally distributed, Internet-based, mission-critical applications. China Telecom’s next generation network initiative, China Telecom Next Generation Carrying Network, or CN2, began its acclaimed commercial roll-out in mid-2005. Corporate entities, public sector organizations, carriers and managed service providers now have access to a broad range of highly reliable, high performance network services through the region’s best-connected and entrenched information provider – China Telecom.

Partnering for Success
Penetration of Internet subscribers, like the distribution of China’s nearly four million websites, is concentrated in more developed regions of China. It parallels the investments that have been made in all sorts of infrastructure such as the thousands of industrial parks that have been created to nurture upstart Chinese business, attract multi-nationals doing business in the region and retain them. What many foreign companies have discovered over the years is that in order to have long-term success in China, finding a strong local partner is crucial. China Telecom Americas and its parent company, China Telecom, helps multi-national companies and carriers develop and execute their market penetration strategies in China.

The Century’s Greatest Innovation

It has been suggested by some pundits that the Internet is the greatest innovation of the last 100 years, having shaped the global political landscape, fundamentally shifted the way economies develop and changed how people live, work, learn and play. The world is getting comfortable in a digital skin. Most of us would agree that the Internet has had a profound effect on our lives. According to Nielsen’s 2010 Global Online Survey, 40 percent of online consumers in Asia Pacific claim that the Internet has helped them make big decisions. Today global ecommerce is booming, e-mail and instant messaging communications have become ubiquitous and vital industries such as financial services rely on the Internet for mission-critical applications.

There’s a common global theme. Driven by consumer and business demand, Europe and Asia are now becoming Internet transit centers, a role that had once been dominated by North America. Data published by China Internet Network Information Center (CINIC) in August 2016 show that Internet adoption and use in China remains strong. The number of Internet users grew by 6.1% in 2015 and currently accounts for over 50 percent of China’s population (CINIC). Consider all of this testament to China’s potential: the country has 721 million Internet subscribers, more than double the population of the United States, and the number of mobile Internet users has reached at least 630 million.

So What’s Wrong with the Internet?
If so many people are using the Internet with positive results, what could be wrong? The Internet on which we depend today is wrought with weaknesses stemming from the fact that it was originally developed as a means for research universities to share information among their computers. As it evolved to be used by consumers, government, businesses, educators and researchers, it remained fundamentally a one-size-fits-all infrastructure.

The Internet’s founders could not have foreseen the level of dependency the global business community now has on the Internet as the foundation for the Information Technology (IT) stack, becoming the network of choice for all kinds of applications and communication methods – from voice to video. Who could have anticipated the many changes to the business environment that now affect all areas of IT, especially the network? Today’s IT executives must now make network architecture and operations decisions in consideration of these trends, which make up the new IT paradigm:

  • Globalization. Whether the company’s increasingly global view is driven by a global client base and/or global sourcing of services or materials, IT – from the network layer up to the business application layer – is supplying the enabling infrastructure to sustain the expansion.
  • A growing reliance on distributed, composite applications. The nature of distributed, composite applications is that resources are spread out among many physical and logical locations and they are comprised of IT assets that were not originally built and rolled out together. These applications are ever changing and leverage both old and new technologies. They are dependent upon underlying network performance to keep application resources on-line, performing at required service levels and synchronized worldwide.
  • A move from batch to real-time transaction processing. Industries like manufacturing, financial services and even retail that used to wait 24 hours to analyze the day’s operations data or complete clients’ transactions are now processing transactions in real time and expect to view performance data in real time through their Business Activity Monitoring (BAM) applications and Executive Dashboards. Real-time transaction processing smoothes network loads, yet also means that unless the network supports classes of service, mission critical financial trading transactions or important updates to the ERP system may experience performance bottlenecks due to a burst of e-mail traffic. Customer Service Level Agreements (SLAs) and IT’s operations performance targets are now higher than ever, and rely on real-time transactions, which in turn require network reliability, accessibility and performance.
  • Intense competition and consolidation in many vital industries. There is extreme pressure in nearly every industry to reduce the cost of operations. Information technology, from the business layer down to the network layer, has delivered cost savings by rolling out systems and processes that automate and control business operations. As new network protocols and services are commercialized by industry-leading communications companies, the cost of IT operations has been further reduced and the new IT paradigm has been enabled.
  • Government regulations. Although many regulations are process-oriented, others dictate stringent IT performance, new reporting capabilities and auditable levels of security in the IT infrastructure.
  • Greater availability and acceptability of digital content and web applications. Integrated Software Vendors (ISVs) and content owners have made billions of dollars of investments in web-enabling applications and creating digital content. The growth of digital content market is spurred by the commercialization of services that enable it to be consumed in a variety of ways; through a television, computer or mobile device. The convergence between mobile and fixed line services; between voice, data and video; and between devices all requires supporting network infrastructure to meet rising consumer demands.

Most consumers and business users of Internet services are incognizant of the new paradigm, but IT executives and network communications providers certainly are. The fact is that the Internet we use today (the majority of it running IPv4 technology) has had millions of patches applied to it in order to help it address this new IT paradigm. And in spite of its shortcomings, the Internet continues to be a strategic part of our lives and the global economy.

China Telecom’s CN2: The Business Class Internet
While many global users may be satisfied with the current Internet, some IT executives, industry analysts and innovators like publicly-traded China Telecom Corporation (NYSE: CHA) have seen both cause for concern and untapped opportunity. China Telecom has the majority market share of Internet users in China and 53% of the country’s Internet backbone. The company controls 70% of China’s local access and has led the country’s telecommunications evolution with service offerings like China VNet (Internet portal) and ChinaNet (IP and broadband network) and was the first Chinese carrier to establish a US operation to serve global clients, China Telecom Americas.

Forward-thinking and resourceful, China Telecom evaluated a constellation of emerging technologies, market conditions and trends and concluded that ChinaNet would meet much of the market’s needs for a long time, yet the company understood that there would remain an underserved market segment. The growing importance of IT to global competitiveness, the increasing dependence on networked applications, the booming economy and the influx of Multi-National Corporations (MNCs) investing in China would require an entirely new global Next Generation Network to meet both the staggering volume of demand for Internet services and the new IT paradigm – one that rests on the power of global, distributed, real-time and regulated networked operations. China Telecom laid plans for China Telecom Next Generation Carrying Network, or “CN2.” CN2 provides the global coverage, network technology infrastructure and management capabilities required for MNCs to successfully leverage China in their growth strategy. It’s an advanced communication and information network for the future.

Technology for the Next Generation
NOCs in Shanghai and Beijing equipped with service-aware management tools provide automated provisioning, proactive problem identification and resolution, network and application performance management, service level management and real-time reporting.

CN2 moves China Telecom from a traditional network carrier to a comprehensive integrated information service provider and reinforces its position as an ally to multinational businesses doing business throughout Asia.

A multi-billion dollar investment, CN2 was built from the ground up. It is an IPv6-capable backbone network leveraging new softswitches (the control layer) and protocols like DiffServ and MPLS, which boosts performance of its bearer layer. With five classes of service and QoS, CN2 guarantees reliability and performance of mission-critical and high-priority applications. The MPLS-optimized architecture also enables Frame Relay and ATM traffic to be transported over a Layer 2 VPN, ensuring support for both legacy traffic and new IP services over a single IP/MPLS network. This promotes network efficiency and scalability in order to satisfy the growing demand for IP services.

CN2 enables China Telecom and its subsidiaries to continue to support its legacy services while moving forward with cost effective new offering such as:

  • high-performing global VPNs such as IP/VPNs or Ethernet VPN;
  • converged services offering communications from anywhere to any device (combined voice, data and video services);
  • high-quality IP voice;
  • video streaming and other advanced broadband applications;
  • 3G mobile applications.

Pervasive Network Coverage
After nearly three years of tests and trials, the network began its commercial roll-out in mid-2005, beginning in China with core nodes in seven cities, aggregate nodes in 22 cities, edge nodes in 165 cities with direct coverage to 194 cities with the ability to extend further through ChinaNet. CN2’s Global Points of Presence (POPs) are located in New York, Los Angeles, San Jose, Washington DC, Frankfurt, Hong Kong, Beijing, Shanghai, Guangzhou, Singapore, London, Seoul and Tokyo. Connecting to ChinaNet’s over 35 million registered customers, CN2 reaches more subscribers in Asia than any other network, and provides direct connections to all major global ISPs for direct traffic routing. As an ultra long-haul Dense Wavelength Division Multiplexing (DWDM) network, CN2 provides better transit and minimizes signal delays.

Smart Operations Support System
Many global carriers struggle with the fact that their Network Operations Centers (NOCs) were built before the entire IT paradigm shifted – before real-time, distributed, mission-critical applications were running over the Internet and certainly before classes of service needed to be managed like applications. How can a company offer industry leading Service Level Agreements for multiple services without the tools to assure that they can be met?

China Telecom’s network investment has been matched by an equally powerful Operations Support Systems (OSS) infrastructure called China Telecom Global Support Center. NOCs in Shanghai and Beijing equipped with service-aware management tools provide automated provisioning, proactive problem identification and resolution, network and application performance management, service level management and real-time reporting. These OSS tools provide China Telecom’s global clients and carrier partners visibility into CN2’s performance. When distributed, composite applications experience performance problems, quickly identifying and isolating the root cause of the problem to the network, ERP system, middleware, database, J2EE application or even the mainframe becomes essential. CN2’s management tools empower Operations Support experts to rapidly rule out whether or not the problem is caused by the network.

CN2’s Benefits to Clients and Affiliates
While leveraging the assets that already exist on ChinaNet, CN2 offers a business class alternative that enables applications and communication services in Asia and beyond to perform at unprecedented levels. CN2 takes into account:

  • The need for immense scalability (of users, network capacity, thousands of interconnections, domains and IP addresses, etc.);
  • The need for application specific SLAs;
  • The growing global dependence on Internet based distributed, composite, mission critical applications;
  • Security as required by government regulations and today’s security best practices;
  • Support for alternate devices and converged media such as voice, data and video;
  • The need to find and fix performance bottlenecks quickly.

Corporate and Public Sector Organizations
Corporations and Public Sector Organizations will realize many benefits from CN2, including:

  • Improved performance of all networked applications;
  • Broader range of services available;
  • Greater flexibility in service choices;
  • Cost effectiveness – more services available through one investment;
  • Ability to store information centrally on the network, which means that they can obtain it from many points, rather than have to transfer data among devices;
  • Reliable management capabilities.

Communications Providers and Managed Services Providers
Communication and Managed Service Providers which have had a long history of collaboration with China Telecom are offered the following with CN2:

  • Best of breed services to offer to their clients either under the China Telecom brand or privately labeled;
  • Ability to generate new revenue streams from innovative, customizable service offerings;
  • Opportunity for easier and cheaper entry into the Asian market by working with China Telecom and its subsidiaries;
  • Availability of carrier-class multi-service IP networks and service driven switching;
  • Superior customer support by leveraging CT’s investment in OSS, making service fulfillment and service support available in real-time.

Summary
China Telecom’s CN2 initiative set out to leapfrog current technology and Internet service offerings in order to enable the growth of the Chinese economy and to remain the Internet service provider of choice serving China and the rest of the world. CN2 is not merely an enhancement or network upgrade. It represents a network and corporate transformation and one that will benefit the region, MNCs and carriers doing business in China for years to come.

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