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China NGN Market Development 2005
Analysys International, July 2005, Pages: 76
The research shows that the global NGN construction has reached a new climax since 2004. Following the construction of NGN by the new emerging operators in the early stage, the major operators all around the world have formulated the NGN construction plans one after another. Operators are willing to reestablish infrastructure networks through NGN, aiming at largely reducing the operation costs in the long term. Though they do not know what the killer application of NGN is, all the multinational operators have realized this is not an important issue at present. What is important is to firstly build a killer application platform with completely open business development interface such as the business platforms of NGN. And only by this can they guarantee the vantage position in the future telecommunication operation competition.
The NGN equipment providers represented by Huawei and ZTE have dominated China's domestic market. ZTE opened the first experimental network for commercial use in China in 2001, while Huawei's NGN market share has been No. 1. In the equipments performance test organized by the major operators, the domestic manufacturers are by no means inferior to the foreign manufacturers in the functional performance. This indicates that the domestically produced NGN products have become mature and have been capable of competing with the multinational providers in the global market.
Based on the accurate understanding of the global NGN market and technologies, this report provides references in technological developments, business marketing, operation models and users' increasing demand for NGN. Help the telecommunication operators and equipments providers to obtain NGN market opportunities, and promote NGN industry's sustainable development.
Findings
The NGN business development throughout the world has shown the step-by-step mode, and all the domestic operators have adopted similar stable business development models.
British Telecom, Sprint, Korea Telecom, Japan NTT and China Taiwan Chunghwa Telecom have all adopted the model of transferring from long-distance network to LAN for the development of NGN. Thus the former businesses can be continued and the QoS of current businesses won't get worse.
The prior application market of NGN business will be video business; it has huge development potential in corporate user market.
The corporate users have strong demand for the NGN-based video businesses, and at the same time, they greatly hope the operators to optimize the business flow, loose the terminal restrictions, and avoid the condition of buying one terminal when each new business emerges.
In the early development stage, the NGN video business might possibly face the problem of mutual communication, which is very similar to the early SMS market stage.
The video business communication between the corporate users of China Telecom and Netcom Group, which dominate the Chinese market, need to strictly control the data loss rate, data delay and other key indexes. Otherwise they cannot provide satisfactory services for their users. China Satcom, China Railcom and other operator competitors also must pay great attention to this issue. This issue needs the forceful intervention of the administrative organs, who should urge the operators to provide solutions.
- The NGN's VAS greatly attracts the corporate users.
The NGN's VAS considerably attracts the corporate users. Mobile operators should consider cooperating with SPs, holding the promising industrial SPs' market shares, and providing more segments and industrialized VAS for the corporate users.
- NGN's target users have some features that are easily identified.
These enterprises frequently need inside-mainland long-distance calls and international long-distance calls service. They have applied the dedicated data circuit or VPN business, and have the history and experiences of using videoconferences. Many of them use the new telecom fixed network business.
- NGN video business has great application value for the individual users.
In regard to corporate users' demands for the video business, individual users also have great demands for NGN video business, especially colleges, universities, hospitals, schools and other industrial users.
- At present, NGN is not greatly recognized in corporate user market of corporate users.
As NGN is still in the preliminary stage of development, it hasn't been greatly recognized by the corporate users.
Suggestions
Suggestions for operators
For incumbent fixed network operators
- NGN's application priorities: first, long-distance backbone network; second local GMSC; last replacing local PSTN. The NGN business in the core cities should be developed first.
- NGN's business promotional priorities: provide the NGN video business and value-added business, For the VoIP business, it's necessary to comprehensively balance and decide whether to promote in a large scale. The NGN value-added business needs to be implemented by cooperating with the industrial SPs.
- The NGN's business implementation: Identify the characteristics of NGN target users through investigations and researches; guarantee the NGN terminal's user friendliness; comprehensively optimize the business application, implementation and failure response and so on; provide simple payment mode; and provide free trial and equipment rental services.
Suggestions for fixed network challenger operators
- Expand the NGN's free trial region and improve corporate users' level of recognition.
- Emphatically promote the video business to corporate users, through which revenues may rapidly improve. Utilizing the NGN fixed telephone business to replace the PSTN business currently used by the corporate users after the video business become more popular.
- Strengthen the cooperation with the SPs and provide segmented VAS for the corporate users.
Suggestions for mobile operators
- Closely follow NGN development, and evaluate new NGN business influence to mobile communication business.
- China Unicom can make development tests regarding the NGN video business by relying on the current users of dedicated data circuit.
- It's necessary for China Unicom to strengthen the communication in mutual connection and communication with the governmental administrative departments, and urge the major operators to provide comprehensive mutual services.
- Cultivate and develop SPs with industrial characteristics among the current SPs of mobile valued-added business. Consider the stock share distribution for the SPs with excellent development prospect. Obtain the control right over SPs, and then win an advantageous position in the competition with current operators.
- It's necessary for the operators to cooperate with the mobile data business developers, and develop mobile VAS bonded with NGN service.
- It's necessary for the operators to carry out terminal mass purchase regarding the target market, and lower the threshold for users.
- It's necessary for the operators to design the service packages and expenses to attract the users in accordance with different NGN features and aiming at the markets segments.
Suggestions for SPs
- Identify the characteristics of target corporate users according to operator demands and operator research, and carry out the corresponding information collection and database construction.
- Cooperate with the operators to conduct corresponding content testing, and progress according to user feedback
- Cooperate with many operators and lower business operation risks.
- Cooperate with terminal equipment manufacturers, bind the service provided by SPs at the terminal and expand the service coverage.
Suggestions for terminal manufacturers
- Guarantee the terminals' user friendliness, and lower the business threshold for users.
- Actively cooperate with the operators to develop business tests, and provide appropriate terminal products through target user visits.
Attempt to reduce the costs for NGN user side products to adapt to the tendency of IAD application.
Research Methodology
We arrived at corresponding conclusions mainly through analyzing primary and secondary market information.
The primary information mainly comes from sampling the major manufactures or agents of channels and end users.
- In-depth Interviews with major manufacturers
- In-depth interviews with major agents of channels, distributors and retailers
- Sampling of end users
The secondary information is mainly public information that comes from the following sources:
- Information in the industry's public domains.
- Opinions vended by senior industry experts
- Data and information provided by relevant government departments
- Related economic data
- Annual and quarterly reports of enterprises
- Interviews with product users
- Financial analysis and reports by financial analysts
- Information from the Internet
Due to the fact that we depend on the information obtained through interviews with manufacturers and or channels to reach its conclusion on market scale, the data provided by manufacturers on the types of products they offer, their operating revenues and marketing activities shall have a considerable impact on the final analysis of the reports.
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