Rooted in China: Stepping Forward to World-Class Excellence

An interview with Zeng Xuezhong, Senior Vice President of ZTE Corporation

P&T/EXPO COMM CHINA 2010, to be held in Beijing this October, will be the most influential ICT event this year. The theme of the EXPO is tri-network convergence, and topics such as TD/LTE/4G evolution, green telecom, and Internet of Things will be discussed. In the lead up to the event, journalist Zhao Lili interviewed Zeng Xuezhong, Senior Vice President of ZTE Corporation, to find out how ZTE is working with Chinese operators to develop a new industrial chain in a new industrial environment.

Journalist: 2009 saw the birth of 3G in China, and the country’s three major operators have been involved in 3G network deployment and operation ever since. What role has ZTE played in China’s 3G deployment? And how will ZTE establish strategic partnerships with these operators to develop their networks to LTE?

Zeng: In 2009, China’s Ministry of Industry and Information Technology issued 3G licenses to China Mobile (TD-SCDMA), China Unicom (WCDMA), and China Telecom (CDMA). This marked the formal entry of China into the 3G era, and for the first time, placed Chinese telecom vendors on an even footing with foreign competitors. ZTE is not only a key participant in China’s 3G network construction, but also an advocate for 3G industry development and technological innovation.

According to a report released by iSuppli in January 2010, ZTE holds the largest share in China’s 3G market. In the TD-SCDMA sector, ZTE has been a strategic partner of China Mobile throughout its TD network construction—from the phase one and two network trials in 2007 and 2008 to the large-scale phase three commercialization in 2009. ZTE has played a key role in China Mobile’s technical innovation, industrialization, network deployment, and service delivery.

ZTE has also become the industry leader in CDMA, holding the largest market share in China since 2007.  Close cooperation was established with China Telecom after it was awarded a CDMA license, and ZTE infrastructure equipment has now been deployed in 27 provinces throughout the country. ZTE helped China Telecom build approximately 60% of its local CDMA networks at the prefecture level, and undertook most of its 3G network planning, construction, and maintenance. 

ZTE has also been a key supplier to China Unicom since the company started WCDMA network deployment in 2009. ZTE’s market share increased during phase two, phase three, and phase four of China Unicom’s WCDMA project. The largest share was clinched in phase four of the project, which covered 20 provinces and 108 cities. Leveraging its implementation efficiency and service capability, ZTE became the leader in fast project completion. Moreover, network tests were passed with excellent results. All this demonstrates ZTE’s comprehensive strength in the WCDMA field.

Operators worldwide are closely monitoring the evolution of 3G to LTE, and some are even initiating the process. ZTE is devoted to LTE research and development, and is continually increasing its strategic funding in both FDD and TDD. We have applied for more than 1,700 LTE patents, and own basic patents of the LTE standard. With a quality product portfolio and a growth strategy that is prudent and sustainable, ZTE is ranked among the Top 3 players in terms of LTE strength by research firm Garnet.

ZTE offers sophisticated services for TD-SCDMA, CDMA2000, and WCDMA, working with operators to develop the whole industrial chain. We are highly recognized by operators for our innovation mechanism, long-term strategies, and enhanced brand image. Chinese telecom vendors are certainly capable of competing with global telecom giants. The 3G era is a turning point for China’s telecom industry and is of far-reaching significance.

J: The theme of P&T/EXPO COMM CHINA 2010 is tri-network convergence, and the Chinese government has put in place support policies to speed up this process. What changes will happen in China’s telecom industry, and what challenges and opportunities will this present to equipment vendors?

Zeng: In January 2010, the State Council passed a general proposal for speeding up the convergence of telecommunications, broadcast TV, and Internet networks. This proposal will alter the whole industry, not only driving the growth of telecommunications, broadcast TV, and Internet businesses in China, but also presenting opportunities and challenges to all parties in the industrial chain.

Tri-network convergence will change the competition pattern of China’s telecommunications industry.  For equipment vendors, it will lead to increasing demands for equipment because of network construction and upgrade requirements. More importantly, as telecom operators transform into service providers, equipment vendors will also transform from simple equipment suppliers to end-to-end full-service solution providers. The group of three major operators in China will expand to include CATV operators. These new operators will have diversified business models and will challenge traditional operators with their control over TV content and broadcasting rights. Both telecom and CATV operators will have to innovate and explore new areas of business to gain a competitive advantage, and this will create new market and cooperative opportunities. Demand for triple play services will grow, and emerging multimedia services such as position shift TV (PSTV), interactive TV, high definition video, mobile monitoring, and mobile TV, will be widely sought after. Moreover, with the current bandwidth restrictions for broadband services, telecom operators will be compelled to increase network access bandwidth and to widely deploy FTTH networks. Likewise, because cable networks are incapable of bidirectional transmission, CATV operators will be compelled to restructure their networks as digital two-way systems.

Changes brought about by tri-network convergence will present opportunities and challenges for equipment vendors, but the opportunities are greater than the challenges. The entire industrial chain will be reshuffled. Infrastructure equipment vendors, service equipment vendors, OSS providers, high-end integrated terminal suppliers, and content and service providers will become the market’s focus of attention. With the most complete range of infrastructure, service, OSS, and terminal equipment, ZTE has much experience in integrated broadcasting and control platforms, interactive and converged services, transmission, IP, fixed-line networks, and service software. Drawing on the advantages of our products and end-to-end network solutions, ZTE will continue to be a key player in tri-network convergence, and will further improve its ability to rapidly respond to operator needs.

J: Green technology, carbon reduction, and energy conservation are of paramount importance in today’s telecommunications industry. What requirements are implied by these issues and how will equipment vendors and operators adapt to such requirements? Specifically, what is ZTE doing to minimize negative environmental impact?

Zeng: Green products, carbon reduction, and energy conservation are now integrally linked to the sustainable development of telecom enterprises, and represent a revolution in values, concepts, production modes, and lifestyles. In a recent government work report, Premier Wen Jiabao stated that the global financial crisis was giving rise to a technological and industrial revolution, and that great efforts should be made in developing emerging strategic industries including new energies, new materials, information networks, and high-end manufacturing. The ICT industry is vitally important in promoting a low-carbon economy.

Telecom vendors and operators must play an active role in a new low-carbon economy, and are obliged to promote healthier, more sustainable telecom models. To create green, innovative networks, and to drive sustainable development across the industry, ZTE has incorporated energy conservation and environmental protection into its technological innovation, product R&D, and manufacturing.

We have been active in drafting international standards, and have established a complete green operation and evaluation system incorporating product research, implementation, supervision, and management. Environmental protection is at the forefront of our product design, testing, and manufacturing, and this helps reduce TCO while improving profitability. Green packing, transportation, installation, and operation and maintenance are implemented as part of our logistics and project delivery. Moreover, we provide unified all-IP platforms, IMS core networks, IP service engines, multi-mode BSCs, and renewable energy sources for network evolution and convergence. Power consumption of base stations can be reduced by 30% or more over a 24 hour period, which translates into savings of up to 6,300kWh per site each year. Reducing power consumption of base stations implies limiting the use of auxiliary devices associated with power supply, cooling, and maintenance. When combined with new energy resources such as solar or wind, power savings of around 50% are achievable. These efforts are examples of how ZTE is developing green, low-carbon, and energy-saving products.

J: Driven by new service demands, new business models and new technologies such as Cloud Computing, Internet of Things, and mobile Internet have emerged and are being enthusiastically promoted within the industry. How will vendors and operators change their supply and demand relationships to cope with new forms of competition?

Zeng: The emergence of Cloud Computing, Internet of Things, and mobile Internet has driven operator demands for new products, industrial convergence, and business innovation.

Increasingly, equipment vendors are being asked to not only provide upgrade solutions for products and platforms, but also to develop new products. They must meet network requirements in a new industrial environment.

Today, the telecom industry is converging with IT, entertainment, Internet, and even traditional logistics,  and this trend inevitably presents challenges and opportunities to all parties in the industrial chain.  Traditional telecom enterprises, however, may have little knowledge of other fields. Providing operators with new products and technologies is not the only role played by telecom vendors; they must also work with operators to explore future technological trends, network development, and business models. As well as helping operators increase efficiency and profitability, vendors will become long-term strategic partners in the joint exploration of new market opportunities.

With the widespread deployment of 3G networks throughout China, operators have transformed into full-service providers. 3G service operation has become a primary focus, and mobile Internet strategies have been put forth. Since the first half of 2009, ZTE has been helping China Telecom build its software stores and this year won a project to build China Unicom’s software store. ZTE is working hard to enhance its service innovation, and is partnering with operators to offer high quality feature-rich 3G services.

J: Finally, what are the future plans of ZTE in China?

Zeng: China is a very important market for ZTE. In the coming years, we intend to continue helping domestic operators explore opportunities and to maintain our own high speed growth. Drawing on our strength in integrated solutions, quality project delivery, and technological innovation, we will cooperate with our partners to satisfy requirements for mobile broadband, to thoroughly enhance service quality, and to contribute to the country’s industrialization and information building.

On the whole, ZTE will enhance its ability to deliver integrated solutions and resources, and will seek to improve its competitive strategies, product planning and deployment, and market behaviors to provide operators with a full range of products and services. Although rooted in China, ZTE is stepping forward to world-class excellence by further improving operational efficiency and developing its global strategy.