“The Asia-Pacific region is poised to overtake Europe as the world’s largest [mobile] market during 2002, although mobile penetration is still below 10%,” ITU said in new report. It said effects of 2001 global economic slowdown were milder in that region and strong economic growth and greater consumer spending power contributed to positive growth in telecom services. Of 10 most profitable public telecom operators, 7 originate in Asia, and 2 of top 3 mobile economies worldwide (Taiwan and China and Hong Kong) are in that region, report said. It said mobile technologies contributed to raising total teledensity in many developing countries “that might otherwise have expected to remain locked into low levels of access.” Report said Asia-Pacific region, which has 160 million Internet users, accounts for 1/3 of total Internet users worldwide, more than any other region. Innovative schemes for community access, such as Indonesia’s warung internets (warnets), “have boosted Internet usage, as have prepaid cards and the boom in online gaming and e-government,” report said. Asia-Pacific also leads in broadband Internet with 5 Asian economies among top 12 worldwide in penetration, report said: “Capacity on Internet bandwidth has leapt eightfold over the last 2 years from 8 GBS at the end of 2001.” Report said Asia-Pacific region also distinguished itself in technology deployment and innovative and flexible nature of its policy models. It said in 2001 “the region emerged as the world’s largest telecommunication market,” and had added more than one new telephone user every second for last decade. S. Asia, currently least developed subregion with teledensity of 4 in 2001, “could provide the next great spurt of growth for the region as this is where the potential for ‘catch-up’ is greatest,” report said. It said Japan and S. Korea continued to be leaders in commercial deployment of 3G networks, but small countries such as Bhutan and Tonga also had “leapfrogged to leading edge technologies” such as wireless LAN and all-IP networks. Singapore, Hong Kong and China, report said, withdrew exclusivity of their operators’ licenses to introduce competition in international services, and Thailand and Vietnam found ways to introduce alternative suppliers and foreign investment into their markets. Author of report, Michael Minges, said Asia-Pacific region “continues to push the envelope of universal service. For those Asian countries that have crossed a threshold of 30 telephone subscribers per 100 inhabitants, the focus has shifted to providing service directly to the home and on keeping phone service affordable as cross-subsidies disappear.” Co-author Tim Kelly said: “The developing nations of Asia represent the real test of the potential of mobile communications to extend access to telecommunications services.” ITU’s Telecom Development Bureau Dir. Hamadoun Toure said: “The real reason for confidence [about Asia’s success] lies not so much in the numbers of telephone, mobile and Internet subscribers in the region, but rather the digital opportunities represented by the large numbers of those still waiting to be connected.”
Exports to China
China Unicom signed contracts with Nortel Networks and Guangdong Nortel Telecom Equipment, collectively estimated at $65 million for expansion of its CDMA and GSM networks. Under $25 million contract with Guangdong Nortel, China Unicom said it would expand its CDMA network capacity in Hunan Province using Nortel Networks Univity CDMA2000 1X equipment. Under contract, deployment will include Nortel Networks Univity radio, core switching and intelligent networking equipment “that will help position China Unicom to drive improved spectrum efficiency and reduced costs. Univity will also position China Unicom to migrate to all-IP packetized network,” China Unicom said. It also said it awarded $40 million contract to Nortel Networks for expansion of its GSM networks in 5 provinces. China Unicom said it expected those expansions, including GSM switching, radio base stations and transmission equipment, would increase its GSM network capacity by more than 1.25 million subscribers.
FCC International Bureau Chief Donald Abelson expressed concerns about Chinese govt.’s raising settlement rates for international calls. “This is just another vain attempt at stopping what will be inevitable -- that is, the cost of connectivity should go down,” Abelson said at news conference Fri. Noting progressive stance that China had taken in past on IP telephony, he said that was “exactly the kind of policy I thought that we were going to see from China going on in the future. This particular action… I am surprised by it.”
China Unicom said it would pay $580 million in cash to buy 9 provincial networks from their state-owned parent company increasing its CDMA user base to 21 million by end of next year. It said it also would assume $2.1 billion in debt. Company said total purchase price would represent multiple of 10.4 times 2002 forecast net profit of $55.6 million and 7.4 times 2003 forecast of $78.5 million. After completion of acquisition, Unicom New Century Telecom will become indirect subsidiary of China Unicom.
Global telcos revenue will grow by $300 billion over next 5 years, said new Pyramid Research report “Worldwide Telecoms Revenue Forecasts and Analysis: 2002-2007.” Report said global telecom industry would grow by compound annual rate of 6%, reaching $1.3 trillion revenue by 2007 from $1 trillion in 2002. “Emerging markets, particularly China, are driving the bulk of this growth,” said Global Product Mgr. Elizabeth Bramson-Boudreau, author of report. She said emerging markets were growing 3 times more quickly than developed markets, “which means vendors need to focus on countries such as China, India and Russia if they want to maintain a large share of the global equipment market.” Report said total number of connections would grow by 9% per year, led by mobile (11%) and broadband connections (25%), which would result in shrinking average revenue per subscription worldwide.
In bid to cap licensing fees for 3G, NTT DoCoMo, Ericsson, Nokia and Siemens signed agreement for licensing arrangements on patents for Wideband CDMA. Companies said that under pact essential patents for W-CDMA would be licensed at rates “proportional to the number of essential patents owned by each company.” Point is to set benchmark for all W-CDMA patent holders “to achieve fair and reasonable royalty rates,” companies said. They collectively own majority of intellectual property rights related to W-CDMA wireless standard. “This arrangement would enable the cumulative royalty rate for W-CDMA to be at a modest single digit level,” companies said. Based on recent developments in China, cumulative royalty rate appears to remain even under earlier targeted cumulative level of 5% of price tag of product in royalties to holders of patents, Nokia Exec. Vp Yrj Neuvo said. “With this initiative we believe the cumulative royalty will be even lower for W-CDMA than GSM, which has enjoyed unrivaled success compared to any other standard,” said Torbjorn Nilsson, Ericsson senior vp-mktg. & strategic business development.
George Ditomassi promoted to pres.-CEO, Summit America TV (formerly Shop At Home)… George Lee advanced to chmn.- CEO, China Xin Network Media, replacing Jean-Francois Amyot, resigned.
International cellular subscriber base will grow 13.6% per year to 2 billion in 2006 from 1.1 billion in 2002, new report from research firm Forward Concepts projected. Because of steep competition between carriers and “aggressive” price plans, network capacity is expected to grow even faster at estimated 35% compound rate, report said. It attributed faster rate to increasing air time and greater bandwidth use by wireless subscribers. International capital investment in base station and mobile switching system equipment is projected to grow at compound rate of 8.3% to $68.6 billion in 2006 from $49.5 billion this year, firm said. Greatest potential for wireless Internet deployment lies in countries such as Japan and China that have less widespread wireline Internet penetration than countries such as U.S., it said.
China Telecom (USA) will become first Chinese telecom company to establish operations in U.S., with opening of its D.C.-area hq Nov. 4, it said Fri. “China continues to be a leading investment destination for American companies. They need a telecom partner who has the local experience and know- how to get things done,” said China Telecom Vp Chang Xiaobing. He said China Telecom added 20 million new residential and business lines to its voice network last year, which he said was equivalent of adding all phone lines in Cal. in one year. China Telecom (USA) Pres. Zhang Weihua said China Telecom USA’s major focus was to create “seamless communications links” between U.S. hq and Chinese subsidiaries. China Telecom (USA) will have points of presence in L.A., San Francisco, N.Y. and D.C., work in same time zones as its U.S. customers and have simplified and more-flexible billing system allowing customers to pay their bills both in U.S. and China. China Telecom said it had its own submarine cable circuit connecting U.S. and China and its transport backbone in U.S. Company is expected to complete its initial public offering on N.Y. Stock Exchange “in the near future.”
Corning will permanently close its fiber manufacturing facilities in Noble Park, Victoria and Australia, mothball its optical fiber manufacturing facility in Concord, N.C., and transfer certain capabilities to its Wilmington, N.C., facility, company said Wed. It also said it was considering closing its fiber plant in Germany. Closures were proposed to be completed by early 2003, Corning said. However, it said, Concord facility could be returned to productive capacity within 6-9 months of decision to reopen. Corning said those and other restructuring actions would result in reduction of 2,200 employees and pretax restructuring charges of $550-$560 million. Company said it expected to realize annualized saving of $165 million from latest round of restructuring and cost reduction programs, in addition to $265 million in annual cost saving from restructuring actions in 2nd and 3rd quarters. “The challenge confronting the telecommunications industry is the most serious we have faced,” Corning Vice Chmn.-CFO James Flaws said: “Telecom carriers continue to indicate that they will further reduce investments in 2003… We are taking decisive actions to re- size our businesses to reflect today’s economic realities.” Corning said its net loss in 3rd quarter was $133 million, improvement on $220 million year earlier. It said sales in 3rd quarter fell 45% to $837 million. Excluding financing activities and related investments, Corning used $110 million in cash and short-term investments in 3rd quarter, including $77 million in restructuring payments and net $24 million related to purchase of Lucent’s fiber and cable assets in China. “The sequential sales decline was primarily driven by continued lower demand across all the telecommunications businesses,” Corning said. It said volume in fiber and cable business declined 10% and fiber prices 10-15%. It said it expected 4th-quarter sales of $775-$825 million and net loss of 8-12 cents per share, excluding restructuring and impairment charges. It said decline in 4th-quarter sales compared with 3rd quarter was due primarily to continued volume and price declines in fiber and cable businesses. Company said it expected volume to drop 10-15% and rate of price decline to be slightly less than in 3rd quarter.