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CCID Consulting: Influence of Telecom Restructuring in China's Telecom Market

Posted on: Wednesday, 4 June 2008, 09:00 CDT

BEIJING, June 4 /Xinhua-PRNewswire/ -- CCID Consulting, China's leading research, consulting and IT outsourcing service provider, and the first Chinese consulting firm listed in Hong Kong (Hong Kong Stock Exchange: HK08235), recently released its article on the influence of telecom restructuring in China's telecom market.

On May 24, 2008, a telecom-restructuring plan was decided, triggering a new round of discussions in a telecom industry that had been quiet for some time. In accordance with the restructuring plan, China Telecom would purchase the CDMA network (both assets and subscribers) of China Unicom; China Unicom would be merged with China Netcom; the fundamental telecom service of China Satcom would be merged into the business of China Telecom; and China Railcom would be merged into China Mobile. After the restructuring, three major operators, namely China Unicom, China Mobile and China Telecom, would come into being, and this will influence China's telecom market as follows:

1. A ''three-way struggle for hegemony" will be formed in the next 2-3 years

Before 3G license issuance, the restructuring of major operators to make them become full-service operators and establishing a relatively balanced market development system through regulating the market and new services is, as a whole, in favor of improving the overall competitive edge of China's telecom industry. According to CCID Consulting, in the next 2-3 years, telecom operators would pay attention to both PSTN and mobile services and the telecom operation market will achieve a relatively balanced state.

Presently, it is hard for PSTN network resources to make breakthroughs on incremental services without a full-service license. Through the telecom restructuring, China Telecom and China Netcom would be permitted to conduct a full range of services, thus PSTN operators could, with the same resources, compete with China Mobile in the incremental service market, which will radically change the current unbalanced telecom market structure. China Telecom, a PSTN operator, boasts two thirds of China's telecom subscribers, the biggest broadband subscriber group as well as mature group clients. Through the restructuring, China Telecom may increase its voice service market share through bind sales; meanwhile, it could also grasp decisive occasions to win industrial subscribers and group subscribers of data services. After integration, China Telecom would see a rising competitive edge through sustained internal reform, optimized restructuring, concentration of network resources and active service innovation.

China Mobile would enjoy advantageous mobile value-added services and data services by virtue of 3G licenses. But the 3G network will be developed in stages in a planned way and areas where 3G is unavailable would depend on 2G networks for system support, thus China Mobile absolute advantages in 2G subscriber quantity and network coverage would be quite competitive under the environment of a 2G - 3G coexistence. In addition, after China Railcom is merged into China Mobile, it is likely to become an individual PSTN Division of China Mobile and its broadband network resources may be used by China Mobile to develop broadband data services that enjoy great market potentials.

See the following figure for the forecasted market competition pattern: Figure 1: Forecast of competition pattern in China's telecom operation market http://www.ccidconsulting.com/upload/13205.jpg Source: CCID Consulting; May 2008

2. Telecom restructuring will bring huge market opportunities to communications equipment manufacturers

The formal release of 3G licenses will trigger a new round of growth for the communications equipment market, which will bring along huge market opportunities to communications equipment manufacturers and activate the 3G- equipment market in particular.

China's communications equipment market growth is driven by the fixed investment of telecom operators. Along with adjustments in domestic 2G communications networks, the amount of fixed investment in China's telecom industry somewhat dropped in 2004 and 2005, but it regained growth from 2006 driven by increased demand. In 2008, a new cycle of telecom investment will start and priorities would be given to 3G and relevant equipment, which brings along opportunities to manufacturers of mobile communications, data communications and optical communications equipment. After 3G licenses are issued formally, 3G mobile communications equipment will develop further. Data communications equipment will realize large-scale growth, followed by mobile communications equipment and optical communications equipment (refer to Figure 2 for the changes in market competition). However, technical requirements are being promoted along with a drop in telecom equipment pricing, and communications equipment manufacturers are set to face more challenges.

Figure 2: Competition forecast for China's communications equipment market http://www.ccidconsulting.com/upload/13206.jpg Source: CCID Consulting; May 2008

3. Telecom restructuring will accelerate the all-round upgrade of telecom operation support systems

After the telecom restructuring, major operators will shift their focus to operation after fundamental networks are built up, and sound operation and management capability becomes the foundation and precondition for realizing sustainable development. To answer to cut-throat competition in the age of full-service operation, traditional telecom operators should upgrade network management systems, resource allocation systems and IT support systems. Therefore, major operators have begun to shift their priority from network development to business operation and the management principles are being transformed from being product-centered to client-centered. Thus it is foreseeable that the development of OSS/BSS systems of the next generation would start along with this telecom restructuring.

In the 3G age, new requirements are presented to telecom operation support systems. For domestic operators, the 3G age presents higher requirements for the service support systems, such as the capability of integrated charging, differentiated pricing and differentiation of event contents and the capability of updating contents directory and rate scale in time. In addition, 3G networks support products with varied functions and rich contents, requiring operation support systems to practice effective management of 3G products, in particular data service products. In the second place, there is a huge group of 3G subscribers that requires the operators to support the whole service cycle, including product supply management, product design, product manufacturing, product sales, product use management and product substitution in order to locate user-required services quickly and accurately and render services to subscribers in time. Therefore, there is no time to delay the upgrading of telecom operation support systems along with the current restructuring.

About CCID Consulting

CCID Consulting Co., Ltd (hereinafter known as CCID Consulting), the first Chinese consulting firm listed in the Growth Enterprise Market of the Stock Exchange (GEM) of Hong Kong (stock code: HK08235), is directly affiliate to China Center for Information Industry Development (hereinafter known as CCID Group). Headquartered in Beijing, CCID Consulting has so far set up branch offices in Shanghai, Guangzhou, Shenzhen, Wuhan and Chengdu, with over 300 professional consultants after many years of development. The company's business scope has covered over 200 large and medium-sized cities in China.

Based on the major competitiveness of the powerful the industrial resources, information technology and data channels, CCID Consulting provides customers with public policy establishment, industry competitiveness upgrade, development strategy and planning, marketing strategy and research, HR management, IT programming and management. Her customers range from industrial users in electronics, telecommunications, energy, finance, automobile, to government departments at all levels and diversified industrial parks. CCID Consulting commits herself to become the No.1 advisor for enterprise management, the No.1 consultancy for government decision and the No.1 brand for informatization consulting.

For more information, please contact: Cynthia Liu Coordinating Manager CCID Consulting Co., Ltd. Tel: +86-10-8855-9080 Email: liuyan@ccidconsulting.com

CCID Consulting Co., Ltd.

CONTACT: Cynthia Liu, Coordinating Manager of CCID Consulting Co., Ltd.,+86-10-8855-9080, or liuyan@ccidconsulting.com

Web site: http://www.ccidconsulting.com/

Source: PRNewswire

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