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China Daily Website

Telecom companies go more global

Updated: 2012-07-16 09:55
By He Wei in New Jersey ( China Daily)

AT&T Corp, the United States' largest telecom carrier by subscriber, is eyeing more business opportunities in China as multinational corporations enter the country's inland areas and Chinese firms increase their overseas presence.

The company is set to expand its existing IP-VPN service in China to allow broader national reach, enhanced performance and reduced total cost of ownership for its customers, said Greg Brutus, head of communications of AT&T Asia-Pacific.

Although China's telecom industry is closely held by three domestic operators, AT&T was the first and still the only foreign company to form a telecommunications services joint venture in China. Through the subsidiary, it handles businesses with corporate customers.

"We definitely see this trend that many foreign companies are penetrating deeply in China, where costs are lower. Therefore they need high-quality connectivity that is much faster, more streamlined and cost-effective," Brutus told China Daily.

AT&T first gained a foothold on the mainland in 1999 when it signed a joint venture agreement with China Telecom Corp Ltd and Shanghai Information Investment Inc to establish the first Sino-foreign telecom joint venture in China, Shanghai Symphony Telecommunication Co.

Last year, it renewed a strategic framework agreement to expand the existing relationship in order to deliver advanced global solutions to AT&T's more than 400 clients on the mainland.

Under the agreement, the two companies are working to expand AT&T's existing IP-VPN service in China as international companies continue to expand their business in China.

In reciprocity, China Telecom gets to access MPLS-based IP networks in the United States and other regions such as Latin America to provide the same world-class global experiences for Chinese multinationals as they go abroad.

Its key homegrown customers include China Ocean Shipping (Group) Co, Air China Ltd and China UnionPay, all of which have clear and inherent desires to grow outside China, Brutus said.

As the idea of "mobility" prevails, the mushrooming of smart devices also poses a pressing task for telecom operators, eroding profits as data traffic soars buoyed by exploding bandwidth.

According to Rajeev Singh-Molares, executive vice-president of communications equipment maker Alcatel-Lucent, operators will need to add a lot more capacity in the core network to carry the traffic. This translates into a huge amount of investment.

In the case of AT&T, mobile data traffic on its network grew more than 20,000 percent, more than doubling in 2011 alone, according to its annual report.

As business customers' needs gradually focus on mobile broadband connectivity, AT&T is tapping into value-added services to create new business models, reinvent operations and improve productivity.

For instance, the company has deployed an expanded suite of advanced services such as tele-presence, cloud-based services, network integration services and enterprise mobility solutions.

For example, AT&T can create a cloud solution for companies that are facing the challenge of supporting multiple external websites by giving them the flexibility to dial capacity up or down without investing significant capital.

The company also launched an Application Programming Interface platform targeted at helping developers run their mobile apps more efficiently and leverage AT&T's network.

According to Sanjay Macwan, AT&T's chief technology officer, when developers start writing applications, the classes and objects they will need to interface with AT&T services are already written and accessible.

There are certainly business dimensions under such projects. AT&T charges $99 this year for app developers to make use of its network. The fees are expected to rise later.

Another endeavor is the so-called "Fast Pitch". It works like speed dating for entrepreneurs who want to collaborate with AT&T. In 2011 alone, AT&T met more than 500 small companies to quickly determine whether they would collaborate on getting their products and services to customers.

The likes of such initiatives are driving positive trends in the wireline business category, where revenues from the firm's top-end business solutions advanced 18.4 percent in 2011, Macwan said.

Domestic operators are taking similar moves to ride the boom of data traffic. China Mobile Communications Corp, the country's top carrier, has been aggressively promoting its data business in the past year.

According to the 2011 financial statement, data services represented an increase of 15.4 percent compared with a year ago and the revenue derived from the segment as a percentage of operating revenue also increased, to 26.4 percent.

The group aims to turn Shanghai into a smart city that is composed of four pillars: network deployment, application development, cloud computing and information security, said Mao Weiliang, deputy general manager of the data service department of its subsidiary Shanghai Mobile.

To boost its innovation in business applications, Mao said the Shanghai company has so far set up more than 40,000 WLAN access points in the densely populated city hubs. The number is expected to triple in two years.