ZTE announced at CommunicAsia this week that it has won a major Passive Optical Network (PON) equipment contract from China Telecom valued at over CNY 1 billion ($147 million). This is part of the fiber that
China’s Telecom said it would lay in its City Optical Network project. We suspect that this really is only a small part of the project, because even in China it wouldn’t be possible to wire up 70 cities for that amount of money, so expect China Telecom to share its favors across other suppliers and for ZTE to perhaps get even more contracts as this rolls out.
Under China Telecom’s plan, around 20 million lines of fiber optic based broadband will be deployed, to provide 12Mbps broadband access to more than 70% of rural areas and up to 100Mbps access speeds for major cities across the country. The contract for the PON equipment was tendered earlier this year and ZTE successfully won the bid.
Things are fairly simple in China aren’t they. In the US AT&T and Verizon told US regulators that they would not lay fiber until they were promised that rivals could not access the fiber and use it to create competitive local exchange carriers, a process that took nearly five years of deliberate neglect while the FCC held out against what was a form of blackmail. In the end the FCC partially caved in with the result that both companies committed $ billions to the laying of fiber and CLECs are dead.
The contract will mean that China Telecom has the capacity to totally rejuvenate its broadband connections, and in the process upgrade much of its infrastructure in readiness, if the authorities so decree, to roll out IPTV to much of China.
ZTE will provide its ZXA10 xPON passive access system to China Telecom aimed at triple-play service, providing multicast capabilities to supports VoIP, IPTV, and if necessary cable TV.
ZTE and China Telecom started their business relationship in PON in 2004 and ZTE’s xPON products already have 40% market share in China in that six years. ZTE also helped Shanghai Telecom to complete its own City Optical Network project recently.