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Communications & Networks

  Medium Term Optical Communications Prospects Bright In China
September 18, 2008

China's optical communications market growth has been trending somewhat with that of the worldwide market. Driven by China's FTTH, service demand, governmental policy support and technical progress, CCID Consulting projects growth will be stable at 18.5%, with revenues exceeding 24 billion Yuan.

CCID expects that, in 2H 2008, optical network deployment to slow as telecom operator spending growth will decrease. Moreover, the Beijing 2008 Olympics spurred on advanced network build-out in 1H, so there will be a post-Olympics adjustment in 2H. At the same time, China's natural disasters in 1H will require repair and rebuild of damaged communications infrastructure, such as copper and fiber cabling.

In the longer term, China's telecom restructuring will be providing full services offerings to its Chinese subscribers, which in turn will drive large scale network upgrades. That's good news for optical communications vendors, and they will need to understand China's telecom operators' challenges of offering new, comprehensive, and quality services. Solutions that protect telecom operators' existing networking investment while providing an evolutionary path to the optical network will be important.

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Source: CCID Consulting, July 2008

1H 2008 REVIEW

China's optical communication market, especially with FTTH, has experienced rapid growth in 1H 2008.

Larger transmission capacities of 40G and beyond.

Telecom operators will need to support more bandwidth due to China's rapid growth of broadband. Mainstream 10G transmission rates can no longer satisfy demand. 1H 2008, Nortel released its 40G products in China, and it also offered upgrade paths that helped protect existing communications investments. With the upcoming 3G licenses issuance as a result of the telecom restructuring, more opportunities (and competition) for high capacity equipment will present itself.

Transmission trending towards all-optical.

Cost is the core issue in China's optical network construction. OTN (optical transport network) technology offers cost-effective transmission services that can support broadband and IPTV. To meet mobile base station and dedicated-line packet bearer requirements, MSTP (multi-service transport platform) technology will further evolve into packet transport network (PTN) technology. Telecom operators will benefit from this top-down, evolution strategy that protects existing investments while transitioning to cost-effective optical solutions. OTN+PTN will be the development trend.

Green, energy efficient solutions is the new opportunity, and requirement.

China continues to face challenges in its ever-increasing demand for energy. “Green IT” has been the focus of China's optical communication market, especially in FTTH. Fiercely competitive and low-profit optical fiber and cable markets are facing the new green opportunity, and only optical fiber vendors that have the green technologies have the competitive edge. In 1H 2008, Corning released its new fiber products with energy conservation features. Combined with Corning's advanced integrated cabling system, these new products show promise in China's markets.

For more information

Please contact us for these and other China-related data, information and products.

Unless otherwise specified, all information provided is sourced from CCID Consulting.


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