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News BriefingZTE, a leading global providero f t e l e c o m m u n i c a t i o n se q u i p m e n t a n d n e t worksolutions, showcased its latesttechnologies, services and solutions atthe 3GSM World Congress 2007, themobile industry’s premier event thattook place from February 12th to 15thin Barcelona, Spain.U n d e r t h e s l o g a n ‘ S t r o n g e rTogether’, ZTE displayed innovativemobile and wireless technologies andproducts such as WCDMA products,its UMTS series of base stations,WiMAX products, IMS equipment,and a full range of handsets.ZTE also delivered a speech at oneof the 3GSM World Congress 2007forums. Mr. Shen Donglin, deputygeneral manager of ZTE’s mobiledivision, speaked on ‘Next TechnologyEvolution’ on Tuesday, February 13th.Additionally, ZTE launched a newbase station and made a series of majorannouncements with leading telecomoperators during the 3GSM WorldCongress 2007.ZTE Showcasesat the 3GSM WorldCongress 2007Mr. Wen Ku (2nd R), DirectorGeneral of Department of Science& Technology, MII, and Cao Shumin(2nd L), Vice President of the ChinaAcademy of TelecommunicationResearch (CATR) at ZTE’s boothZTE TECHNOLOGIES1

ZTE to Develop Third GenerationMobiles for TelefonicaMovistar to launch new F230 phone this yearTelefonica Espana and ZTE,a leading global providero f t e l e c o m m u n i c a t i o n sequipment and network solutions,have reached an agreement to jointlymanufacture and distribute 3G mobiletelephones for the Spanish market. Thenew ZTE phones will be launched byMovistar during 2007 and will boastthe latest technology and features at ahighly competitive price.Telefonica and ZTE will form ajoint team to work on the developmentprojects and an independent teamwill be formed to develop ZTEproducts in Spain. The first productof the collaboration will be a 3Gphone, called the F230, developed forMovistar by ZTE.Zheng Qi, Director General of theSpanish office of ZTE in Madrid, said:“From a geographical and economicpoint of view, Spain is a key marketfor ZTE. Therefore, an agreement withthe leader in that market–Telefonica–is an ideal opportunity to showour technological expertise in thedevelopment of new 3G handsets.”He Shiyou (L), SVP of ZTE and GeneralManager of ZTE's Handset Division,and Luis Ezcurra, General Manager ofBusiness at Telefonica Moviles EspanaVodafone Signs HandsetProcurement Agreement withZTEVodafone Group and ZTECorporation announceda handset procurementa g r e e m e n t w h i c h w i l l s e e t h eChinese company produce a range ofVodafone-only branded, ultra-low costhandsets for sale across Vodafone’sMarkets.The handsets will only carry theVodafone name, adding to the rangeof devices which Vodafone offersbranded in this way for the consumermarket, and marks the continuationof Vodafone’s Original DesignManufacturers’ strategy, which isintended to bring to market highqualityand low-cost devices under theVodafone name.Vodafone anticipates offeringthe first Vodafone-branded, ZTEmanufacturedhandset, a 2G ultralowcost device, created particularlyfor sale in Emerging Markets, in thesecond quarter of 2007.ZTE High-end RoutersProduct EntersEuropean marketZT E C o r p o r a t i o n , t h ef a s t e s t g r o w i n g g l o b a ltelecommunications equipment andnetwork solutions provider, has beenawarded a contract to provide highendrouter and switching products toVestitel, a subsidiary of Bulgaria’slargest natural gas company Overgas,helping Vestitel to expand its tripleplaynetwork from the country’scapital city Sofia to four other majorcities, Varna, Bourgas, Rousse andVeliko Tarnovo.ZTE TECHNOLOGIES 3

R&D CloseupBeijing R&D Center Sharpens theCompetitive Edge of ZTEIn 1998, ZTE opened the BeijingR&D center in Beijing, China’scapital city, cultural, political, andeconomic center, as part of its drive toincrease optical R&D. The researchareas of the center now includeDWDM, CWDM, and ROADM aswell as data communications.As people demand a broad varietyof services, greater emphasis is puton large capacity and long distancetransmission. The establishment ofthe Beijing R&D center facilitated thecompany’s expansion into the arenaof high-capacity transport networkin late 1990s, greatly enhancing thecompetitiveness of ZTE’s opticalproducts. After almost ten years ofdevelopment, this center has becomea mainstay of innovation in opticaltransport for ZTE.The center broadened its R&Dscope when a data communicationsR&D base was set up in August 2006.It’s been expanded further when thecompany centralized its operatingbranches in Beijing on a single siteat the beginning of this year. Hence,the center is expected to play a biggerrole in the company’s development:attracting more talents and increasingthe company’s overall strength beforethe 3G license is issued and before theBeijing 2008 Olympic Games is held.At present, nearly 300 engineers areengaged in research and developmentof optical transport, among whom, 70percent holds a master degree. Withwell-defined product developmenttechnology roadmap and objectives,the center has built a cohesive fightingforce with the employee commitmentand satisfaction maintaining at a highlevel. It is through their dedicatedeffort that the center have madeimprovements in R&D processnormalization, talents cultivation, R&Defficiency, logistics operation, productplanning, standardization activities,p a t e n t s p o o l i n g , a n d p l a t f o r mdevelopment. The center passed theTL9000 certification initially and itsDWDM First Year Return Rate (YRR)reached the lowest level in the industry.A good startOne year after the center was setup, ZTE and Beijing University ofPosts and Telecommunications (BUPT)4 ZTE TECHNOLOGIES

jointly undertook the OADM subjectof National 863 Programme in China.In 2001, the OADM equipment ofthis project passed the appraisal byan expert team. ZTE sustained itsmomentum of success with a seriesof breakthroughs both in the Chineseand international markets including thewest ring project of China Mobile.As ZTE had accumulated a certainamount of experience in ultra longhaulprojects, it was appointed as editorto draft recommendation on Ramanamplifier technology in 2003, whichwas approved in 2005. In September2005, ZTE was asked by ITU to draftthe standard on adaptive dispersioncompensators.A s Z T E i s p a r t i c i p a t i n g i ninternational standardization activitiesand pushing to set the standards, it isalso vigorously implementing patentsstrategy. It has acquired more than 100patents in the optical communicationf i e l d , a m o n g t h e m , t h e c l o c kmanagement and protection techniqueswon China Excellent Patent Awards.ZTE has been active in research anddevelopment on standards and patentsrelating to optical communications. Take2006 as an example, ZTE registered 108Chinese patents, and 11 internationalpatents, and made a total of 23contributions to ITU.As a result of its strong R&Dability, ZTE’s DWDM system hasrealized a leap-forward development,with a capacity of reaching 1.6Tb/s,fully satisfying the requirement ofnext generation services. With theadoption of multiple industry-leadingtechnologies such as Raman amplifiers,enhanced FEC, dynamic powerequalization, and distributed dispersionmanagement, it can implement superlong-haul non-REG transmissiondistance of more than 5000km overG.652 and G.655 optical fibers.R&D bears fruitsWith cutting-edge technologies,ZTE has succeeded in carving a nichefor itself in the optical networkingproduct space. Today, ZTE’s WDMproducts are widely used in trunk linenetworks and local area networks ofChina’s major operators while enteringcountries in Southeast Asia, SouthAsia, the Pacific region, WesternEurope, Eastern Europe, SouthAmerica and North Africa. ZTE hashad the highest average sales growthrate of all the mainstream opticaltransport equipment providers from2003 to 2005 according to globaltelecoms analyst organization, OVUM-RHK.Indeed, ZTE has made a greatheadway with its WDM solutions sinceits triumph in 2002 (China Mobile’swest ring project). In India, ZTE wasselected to build Phase I of the BSNLnational backbone network and wasauthorized to carry out the Phase IIcapacity expansion project. This is thefirst national-level backbone networkinstalled by ZTE outside of China,covering two thirds of India. In China,ZTE was chosen by late 2005 to carryout the expansion phase of ChinaMobile’s west ring project, whichboasts the most nodes and the longesttransmission distance.In 2006, ZTE has been riding a newwave of optical growth. In the first halfof 2006, ZTE’s share of the ChineseWDM market was first and its shareof the international LH DWDM wasthird. Meanwhile, ZTE has made solidprogress in one of its most importantmarket, Europe. It signed with GTSCentral Europe in early 2006 fordeployment of an ultra long-haulDWDM backbone transmission networkspanning Eastern and Western Europe.ZTE offers a comprehensive rangeof optical products for all kindsof networks, meeting customers’demand at all levels. For the metronetwork, ZTE offers the WDM metroequipment that has special designsfor metropolitan networks such asmulti-service OTU and T-MUX aswell as a most complete protectionswitching structure in the industry.The ROADM-based DWDM systemis used in metro core, meeting thesituation when traffic continues togrow. ROADM offers advantagesover the conventional OADM suchas flexibility for bandwidth growth. Itfeatures add-drop capability of 40 and80 wavelength, and “pay as you grow”scalability. ZTE’s compact and highperformance metro CWDM system, onthe other hand, is used in metro accessnetworks.Innovation is key to ZTE’s businesssuccess. R&D has always been thecornerstone of the company’s strategy.The Beijing R&D center as thebackbone of ZTE’s optical transportdevelopment will keep innovating witha market-oriented approach, and makeinnovation propel the development ofZTE.ZTE TECHNOLOGIES 75

Leading EdgeAir Interface Evolution ofCDMA2000Zhu Xiaoguang, Yu Yuanfang, Xin Yu, Zhao XiaowuTh e T h i r d G e n e r a t i o nPartnership Project 2 (3GPP2)standards organization isdeveloping the next generation ofCDMA2000 wireless communications.CDMA2000 has a long-term evolutionpath which offers significant benefitssuch as enhanced technologicalperformance, low-cost delivery andshort time-to-market. The CDMA2000evolution includes air interfaceevolution and core network evolution.Fig.1 demonstrates the evolution pathof the CDMA2000 air interface.Fig. 1 CDMA2000 roadmapEach step in the evolution ofCDMA2000 capitalizes on theinherent advantages of CDMAwhile introducing new technologies,including Orthogonal FrequencyDivision Multiplexing (OFDM)or OFDM Access, multiple-inputmultiple-output (MIMO), and spacedivision multiple access (SDMA), tooffer high network capacity, high datarates, and low latencies, minimizingthe operational cost.EV-DO Rev. BThe EV-DO Rev. B or multi-carrierEV-DO standard is the “CDMA2000High Rate Packet Data Air InterfaceSpecification” published in May 2006by 3GPP2. Rev. B provides higherpeak data rates and improved supportfor delay-sensitive applications. Fig. 2is a basic comparison among differentEV-DO technologies.Numerous techniques are used toenhance the performance of EV-DORev. B. These include:● Channel aggregation that allowsoperators to combine 1.25MHzchannels, the current 1x channelwidth in agglomerations of up 15or 20MHz total which would allow73.5Mbps downlinks● Multi-carrier EV-DO which supportsthe symmetric and asymmetricforward and reverse link carriers● Multi-carrier terminals supportingRev. A devices and operation onnon-contiguous carriers● Improved HARQ and multi-userdiversity in the frequency domainto achieve higher spectral efficiencyfor the forward link● Support flexible duplexer spacing,which enables hybrid frequencydeployment scenarios6 ZTE TECHNOLOGIES

RANKey featuresKey servicesDataRateEV-DOAll-IP, high FL dataratesBest effortdownstream services(Internet access,MoD, VoD, BCMCS)EV-DO Rev. AImproved QoS, high RLdata ratesLow latencycommunication services(Video telephony, VoIP,EBCMCS)EV-DO Rev. BMultiple carriers,higher performanceper carrierBroadbandapplicationsFL 2.4Mbps 3.1Mbps 73.5MbpsRL 153kbps 1.8Mbps 27MbpsFig. 2 A basic comparison among the evolutionary steps of the EV-DO standard● Improving terminal battery lifewith discontinuous transmissionand reception in talk time and quickpaging channel in the standby time.Rev. B is a very competitive andcost-effective wireless broadbandsolution in the near and middlefuture. The cost of upgrading to Rev.B is low as EV-DO Rev. B can reuseEV-DO Rev. A network, minimizinghardware investments. The existingRev. A base station channel cardscan be easily upgraded to Rev. B.Compared with the Rev. A protocolstructure, there are no more changesin Rev. B except adding the multicarrierprotocol to the Connection,MAC layer and physical layers. AsRev. B is backward compatible withRev. A devices and applications,operators can roll out Rev. B asneeded in selected areas.EV-DO Rev. C3GPP2 brought forth LooselyBackwards Compatible (LBC) andStrictly Backwards Compatible (SBC)options for Rev. C. In the SBC mode,the legacy units are required to besupported on the SBC carrier; in theLBC mode, the legacy units don’t needto be supported on the LBC carrier.The LBC scheme was supported byalmost all the companies while thosewho opted for SBC are just but a few.The LBC mode uses the FDD mode orthe TDD mode. The LBC TDD hasn’tbeen discussed in detail yet.A LBC framework proposal forFDD was accepted by the TSG-Cmeeting in July 2006. It is based on aproposal submitted by Huawei, KDDI,LG Electronics, Lucent, Motorola,Nortel, Qualcomm, RITT, Samsung,China Unicom and ZTE. The finalversion of LBC FDD was scheduled tobe published by June 2007.The framework requires the systemto operate in the full and half duplexFDD mode, supporting scaleablebandwidth. The system is designed tobe capable of delivering robust mobilebroadband access to users and canimprove the spectral efficiency andlatency with advanced modulation,link adaptation and multi-antennatransmission techniques. Featuresnecessary for mobile operation such asfast handoff, fast power control, intersectorinterference management areintegrated into the design.T h e r e t r a n s m i s s i o n l a t e n c yin the framework is quite small,approximately 7ms on the forward linkand reverse link. The peak rate is over260Mbps in a 20MHz forward link,and 70Mbps in a 20MHz reverse link.The system in the proposal usesOrthogonal Frequency DivisionMultiple Access (OFDMA) on theforward link and supports antennatechniques like MIMO and SDMA.The reverse link is quasi-orthogonal,i.e. it employs orthogonal transmissionbased on OFDMA, together with nonorthogonalmultiplexing with layeredsuperposed OFDMA (LS-OFDMA).The reverse link also includes optionalCDMA transmission for low-rate traffic.I n t e r f e r e n c e m a n a g e m e n t i sobtained through fractional frequencyreuse (FFR), improving coverageand edge user performance. TheFFR is now under study. Optimizedthroughput/fairness tradeoff is achievedthrough distributed power controlbased on other cell interference.With the belief that the technologyevolution promises product enhancementsand better customer services, ZTEwill continue to closely monitorthe evolution of the CDMA2000technology and actively participate inthe development of it.ZTE TECHNOLOGIES57

Tech FeaturesThe Evolutionary Path ofFixed NetworksMu AnrongFrom the 19th century to thebeginning of the 20th century,the global public switchedtelephone network (PSTN) subscribershave experienced a high speed growthand the fixed voice service is themain contributor to carriers’ revenue.But in recent years, the worldwidePSTN telephone networks have finallyreached a plateau.Data from Gartner (see Fig. 1)indicates that the number of theglobal PSTN subscribers will reachits peak in 2007 at about 1.3 billion,and then register a negative growth.On the other hand, Voice over InternetProtocol (VoIP) service, also knownas IP telephony is moving intomainstream. The consumer VoIPmarket will increase at a compoundgrowth rate of 55 percent while thebusiness VoIP will record phenomenalcompound growth rate of 72 percent.VoIP picks up fast in Europe and NorthAmerica. Broadband Internet accessalso maintains its growth momentum.As growth in broadband access internetand VoIP revenues remain robust, thevoice service is projected to accountfor 48 percent of operator’s fixedservices revenue by 2009, as comparedwith 65 percent in 2003.New modes of competition, crosselasticeffects from mobile and VoIPservices are gradually eroding thePSTN business. Circuit-switchedtechnology is being replaced by morecost-effective packet-based wirelessand Internet technologies, leadingto a lower profit margin of voiceservice and a continuous decrease ofaverage revenue per user (ARPU). The8ZTE TECHNOLOGIES

Fig. 1 Worldwide fixed network size datafixed operators’ revenues are slidingobviously in recent years. We, hereat ZTE, believe that the traditionalPSTN network is not as competitiveas the mobile and VoIP networks are,and this can be attributed to the closedarchitecture of PSTN that is incapableof creating diversified services forusers.Migrating towards NGNHave fixed networks already reachedceiling performance? What’s the futuredevelopment of fixed networks? Fixednetwork operators are looking totransformations.According to the need hierarchytheory of Maslow, the human beingwill move to high level needs after thelower level needs are met. That’s thesame in the communications industry.Voice communications is a basicservice that has already got highstandards and operators need to offerservices beyond basic voice (e.g.data, broadband multimedia services)when the world economy is growingfast. In other words, we not onlyneed the communications technology(CT) to suit our basic communicationneeds, but also information andcommunication technologies (ICT)that prompt changes in our lifestyles.As next generation networks(NGNs) technologies are maturing,n e w t e c h n o l o g i e s s u c h a s I PMultimedia Subsystem (IMS), andFixed Mobile Convergence (FMC)emerge one after another, newopportunities are created for newservices offering and operators areimpelled to accelerate the pace oftransformation.What is the direction of fixednetwork transformation? Experienceshows that this transformationwill require operators to redefinethemselves as something greater thanmerely basic voice service providers tomore of integrated information servicesproviders. This involves transformationin marketing strategy, operationalmode, organization structure, andnetwork architecture.T h e n e t w o r k a r c h i t e c t u r etransformation requires a fundamentalchange in the way PSTN services areprovided. As we know, although thePSTN technologies are very mature,the PSTN network has poor serviceprovision capability as it is a closednetwork. Since it is difficult to provideattractive and value-added services,operators should establish an opennetwork architecture to facilitatedeployment of new services.NGN is the development trend offixed networks which allow operatorsto create an architecture based on CT-IT convergence. Softswitch is thebest solution for the optimization andreconstruction of the PSTN networkat present. NGN introducing theSoftswitch technology has emerged atthe forefront of the telecoms industryand is proven mature by a host ofsuccessful deployments. It has thefollowing advantages in its technology:● Open and hierarchical architectureNGN is divided into multiple layersZTE TECHNOLOGIES 9

Tech Featureswith standard-based protocols andinterfaces between them.● Strong networking and accesscapabilityNGN support multiple accesstechnologies tailored to differentapplication environments such asFTTC, FTTZ, FTTB, FTTH, FTTO,DSL, hybrid fiber coaxial (HFC),CDMA WLL, and wireless.● Flexible creation of services andimproved time-to-marketNGN provides a fully open serviceplatform architecture which allowsInternet service providers (ISPs), evencustomers themselves to develop newservices.● Operation Expenditure (OPEX)r e d u c t i o n w i t h c e n t r a l i z e dmanagementmigration strategy.the access layer, Multi-Service AccessPSTN has an evolutionary path as Network (MSAN) and Multi-Serviceillustrated in Fig. 2. Of course, some Access Gateway (MSAG) are favoredoperators can utilize IMS architectures solutions as they can provide variousto optimize their networks if the PSTN narrowband and broadband services.reconstruction pressure is not intense. It’s worth noting that Stage 2 is notFig. 2 General evolution path for fixed networksEvolutionary phases of fixednetworksI n t h e s e c o n d h a l f o f 2 0 0 5 ,migration from PSTN to NGN hasentered a substantive stage. Manymainstream operators especiallythose in China, Russia, India, Brazil,Malaysia, Pakistan are embarkingon NGN migration projects. Thesemovements to NGN are motivatedby the need to support end users’demands, to exploit the synergies thatnew technologies bring as well as theneed to replace the legacy obsoletenetwork. Regardless of their differentmotivations, operators all emphasizeon the open architecture, flexiblecreation of new services, all kindsof broadband access networks, andabundant bandwidth, and Softswitchis the first step in their PSTN networkStage 1: Construct an IP Backbonenetwork based on Softswitch networktechnology. Fixed operator willimplement an open NGN architectureto take advantage of the new marketdemands, optimizing the legacynetwork while replacing obsoletePSTN equipment. NGN can accessmultiple types of services includingthe traditional voice service. TheSoftswitch network will coexist andinterwork with the PSTN network atthis stage.S t a g e 2 : F i x e d n e t w o r kintellectualization stage. Introducingthe Smart HLR (SHLR), operatorscan bring next generation value-addedservices to legacy users. To meet therequirements of emerging broadbandmultimedia services, intelligentterminal devices will be employed. Atan essential step for those operatorswhose networks have a small capacityand a simple structure. For them, thenetwork-wide intellectualization canbe implemented in Stage 1.Stage 3: Evolution from Softswitchto IMS. As IMS technology isgradually getting mature and usersincreasingly demand multimediaservices, it’s inevitable that Softswitchwill be substituted by IMS. Basedon a layered architecture, IMSand Softswitch in fact have a lotin common. Both have the samefunctional model, and the same SIParchitecture–both support intelligentdevices and allow operators todeliver multimedia services. The IMSarchitecture was initially proposedfor use in mobile networks by 3GPP,and now being adapted for use in10ZTE TECHNOLOGIES

fixed access networks by TISPAN andITU-T standard bodies.At present, IMS is not matureenough to be able to address theproblems that may arise in PSTNE m u l a t i o n S u b s y s t e m ( P E S ) .Moreover, there is no example of IMSbasedPES application in real world.So, in the recent two years, Softswitchwill still be the major element in thetransformation of PSTN.However, operators and vendorsin anticipation of IMS are workingdiligently to outline evolutionstrategies from Softswitch to IMS. Theuniversally approved evolution path isshown in Fig. 3.Stage 3 probably takes two to threeyears. Commercial deployment hasa long way to go before a full set ofstandards and a viable business modelare developed. Therefore, Softswitchis an impassable stage. Incumbentoperators are advised to start theirtransformation with the Softswitchapproach.Stage 4: FMC. Fixed and Mobileconvergence (FMC) is the ultimategoal of fixed network development.While GSM/CDMA networks areevolving towards mobile NGN,also known as mobile Softswitcharchitectures (R4 in 3GPP and LMSDin 3GPP2), PSTN networks are movingto the fixed network Softswitch, orfixed NGN, paving the way for FMC.In fact, FMC will take place at eachlayer of the network. For instance, atthe service layer, the unified servicedelivery platform enables simultaneousdelivery of services over fixed andmobile networks. At the access layer,◆ Softswitch (SS) can be upgraded to provide functions of the following networkelements based on the different networking situations: Call Session ControlFunction (CSCF), Media Gateway Control Function (MGCF), Access GatewayControl Function (AGCF), PSTN Emulation and Simulation Subsystem (PES/PSS).◆ Upgrade SHLR to provide the IMS HSS function, and upgrade SS or introduceIMS subsystem for multimedia service provision.◆ Upgrade SS to provide the MGCF function for full interoperability between IMSand the existing networks, upgrade SS to provide AGCF function or introduce theIMS element AGCF for PES service support, cut over part of NGN subscribersto IMS. At the beginning of IMS construction, it is recommended to deliver thenarrowband voice service through Softswitch.Fig. 3 Smooth evolution to IMSintegrated gateways support wirelesswirelineconvergence. At the core functions in each link in the new industryhuge potentials and display greatlayer, IMS provides unified control for value chain created by broadbandboth fixed and mobile networks. multimedia services. As the globalFixed network now has a slow economy is fastly growing, there is nodevelopment pace as if it entered limits to people’s demand for multimedia“the hibernation state”. However, services, content-based services andfixed operators are accelerating the bandwidth, spurring developmenttransformation process and developing of new technologies and innovativetowards multi-dimensional operations. services, which in turn stimulate userThey are expanding their voice and data demands. We have full confidence thatservice offering with the addition of the “Springtime” for fixed network willmultimedia services. They will unleash come soon.ZTE TECHNOLOGIES11

Tech FeaturesZTE NG DSLAM: A New GenerationBroadband Access PlatformYan Chengming,Chen HaoThe general consensus amongtelecom operators is thattransformation is a must anda strategy. Operators are beginning toimplement transformation, changingtheir roles from a traditional basicn e t work o p e r a t o r t o a m o d e r ncomprehensive information serviceprovider. Service is critical to networktransformation as there is a growingdemand for rich services. By migratingto a service-oriented network,operators hope to increase their overalloperational effectiveness. Basedon advanced network technology,the network transformation is torevamp the network from a traditionalmulti-layer network with mutuallyseparated layers to a customercentric,convergent, and reliable nextgeneration network that can alsoenable more manageable services.12ZTE TECHNOLOGIES

There is an accelerating developmentof the broadband network infrastructureand an increasing number of broadbandusers. According to industry analystf i r m G a r t n e r D a t a q u e s t , D S Lsubscribers worldwide had reached 183million by late June 2006, increasingby 44 million over late 2005.As broadband is an irresistibledevelopment trend, it is necessaryto develop principles to guide thedesigning and planning of the nextgeneration broadband access network.These principles are:● Integrating with the next generationnetwork, fulfilling its requirementsat the service layer, control layer,and bearer layer● Developing a full service accessplatform to meet high-bandwidthconsumption requirements ofadvanced applications● Adopting a flat architecture whichoffers wide area broadband access● Enhancing its management andcontrol capabilities: Providing endto-endQoS and enough securityto VoIP, 3G and VPN services;supporting more precise bandwidthresources management, IPTVmulticast, and broadband securitymeasures● Offering an operation & maintenancesolution that integrates test, testresult analysis, and maintenanceNext generation DSLAMTo meet requirements of thedevelopment of the network andservices as mentioned above, thebroadband access equipment willevolve towards an integrated platform.Digital subscriber line accessmultiplexers (DSLAMs) is a majorb r o a d b a n d a c c e s s t e c h n o l o g y.The development of DSLAM hasexperienced two phases. The firstgeneration DSLAM is based on ATM,and the second generation DSLAMis characterized by IP. Both of themfit uses of different networks andapplications. As the operators aretransforming themselves–transitioningt h e i r l egacy n e t w o r k s t o n ex tgeneration networks (NGN)–a thirdgeneration DSLAM–NG DSLAM is–introduced.According to the trends of theaccess segment of NGN and the varietyof services demands, NG DSLAMshall have the following features:● A n o p e n a n d m u l t i - g i g a b i tarchitecture that provides highbandwidthconnectivity and precisebandwidth control● Strong multicast control andswitching capabilities as well as acomplete QoS guarantee mechanism● Full service access with high servicesensitivity that enables controlof various classes of services.(A smooth evolution to FTTx issupported)● S e c u r i t y f u n c t i o n s s u c h a sidentifying the port of a broadbandsubscriber● Strong support for bandwidthoperation & maintenance system● Carrier-class reliability and serviceprotection capabilities● A uniform platform oriented to nextgeneration services and network,enabling seamless integration withNGNTypical NG DSLAM equipment–FSAPFull Service Access Platform(FSAP) is a typical NG DSLAMequipment.ZTE, leveraging years of R&Dexperience in broadband access, haslaunched the FSAP products to meetlarge capacity, high-bandwidth, andhigh-quality requirements of video,data and interactive services, easingthe transition to NGNs.Emerging new services suchas IPTV rely heavily on DSLAMto provide high bandwidth andmulticast capability. The ZTE FSAPhas a gigabit non-blocking switcharchitecture which can handle a highthroughput to ensure high qualityIPTV video.T h e F S A P h a s a p o w e r f u lZhongxing Group ManagementSystem (ZGMS). It does not onlysupports rich multicast protocols andtechnologies such as The InternetGroup Management Protocol (IGMP)Snooping, IGMP Proxy, IGMProuting, and IGMP v1, v2 and v3, butalso multicast VLAN, Channel AccessControl (CAC), program preview(PRV), call detail records (CDR), andcreation and execution of multicastcontrol policies, implementing anoverall control and management ofmulticast channels, multicast groups,and multicast users.Its capability to support the deliveryof triple play services was provedin a multi-service performance testorganized by China Telecom ResearchInstitute in March 2006. The resultsof testing demonstrated that ZTENG DSLAM has a perfect QoS andZTE TECHNOLOGIES 13

Tech Featuressecurity guarantee, winning praisesfrom officials and experts.As there is an increasing needto deliver high-speed symmetricalbroadband for advanced IPTV services,ZTE took the lead in the introductiono f t h e l a t e s t D S L b r o a d b a n dtechnology, called VDSL2.With a support for very-high-bitratedigital subscriber line2 (VDSL2)technology, the ZTE NG DSLAMprovides telecom operators withan image transmission monitoringsolution, and the key customer segmentwith a high-speed access solution.The ZTE VDSL2 has the followingfeatures:● High-speed transmissionThe ZTE VDSL2 can provide100Mbit/s transmission (both up anddown) over a short distance when aspectrum of 30MHz is used.● Remote transmissionThe ZTE VDSL2 has a maximumdownlink transmit power of 20.5dBmand can reach a distance of over 2.5kmwhen using an upstream “0” band,echo suppression and time domainequalization techniques.● Various configuration profilesThe ZTE VDSL2 has differentprofiles and bandplans targetingdifferent deployment scenarios. Itoperates at a maximum bandwidth of30MHz. For frequency band between1MHZ to 12MHZ, it is based on theexisting 997 and 998 plans includedin ITU-T Recommendation G.993.1.For frequency band between 12MHzand 30MHz, it adopts one or moreupstream and downstream bands tosuit various applications.● Compatible with ADSL/ADSL2+The ZTE VDSL2 uses DiscreteMulti Tone (DMT) modulation, amulti-carrier communication system.It supports STM and Packet Modetransmission (PTM) based on theIEEE802.3ah 64/65 byte encapsulation,in addition to the ATM transport usedby ADSL and ADSL2+ networks.● Better support for video servicesTo offer optimal video services, theZTE VDSL2 provides Impulse NoiseProtection (IMP) through the use ofinterleaving. The interleaving depthis dynamically adjusted accordingto varying error codes. Besides, itoffers a dual latency path for a mix oftraffic (especially the video service)that has different packet loss rates andlatencies.FSAP supports evolution to NGNZTE has actively attended standardorganizations such as DSL Forumand established itself as one of the topthree global DSL equipment vendors.The company has a deep understandingof broadband access networks as wellas supporting technologies and futuredevelopment trends.O p e r a t o r s a r e u n d e r g o i n gtremendous business transformation.Critical to this transformation is theintroduction of NG DSLAM whichnot only keeps in line with the networkevolution trend but also sustains longtermdevelopment as it has a strongscalability.T h e Z T E F S A P 9 8 0 0 s e r ve sas a powerful platform to helpoperators build a service-rich accessnetwork. It is a perfect fit for newgeneration communication servicesdue to its advanced architecture andextensibility. Moreover, flexibilityand upgradeability are required forDSLAM as the access network hasa large coverage area and scale.However the ZTE FSAP 9800 meetsall these challenges with the best ofbreed of features, allowing operatorsto successfully evolve into a nextgeneration network .14ZTE TECHNOLOGIES

ZTE—Your Expert on WDM OpticalTransmissionXiao LiAs data traffic, especiallyIP-based data trafficenjoys exponentialgrowth, and the Internet is gainingworldwide popularity, morebandwidth is needed. WavelengthDivision Multiplexing (WDM)technology which can optimizecost-efficiency in the network,tackle fiber constraints and solvelong-haul transmission issues hasachieved a dominating position inthe global trunk line transmissionmarket. Furthermore, its two maintechnical development trends,dense WDM (DWDM) and coarseWDM (CWDM) are widelyused for metro area networkconstruction and have an upwardspiraling growth tendency becauseof its distinctive advantages.A full line of WDM productsZTE is one of the backbone vendorsin China who began research anddevelopment of optical communicationproducts as early as 1990s. Withresearch on WDM underway for overa decade now, ZTE holds two editorpositions in ITU standard activitiesand is one of the main contributorst o d o m e s t i c W D M s t a n d a r d s .Having served the needs of operatorsworldwide, ZTE knows what acustomer wants, needs and expects.Today, it has successfully launcheda full line of products covering thebackbone, convergence and accesslayers of MANs.The ZXWM M900 trunk lineDWDM systemThe ZXWM M900 is a largecapacityultra long-haul DWDMequipment which provides full-rateoptical access to services with speedsfrom OC-3c/STM-1 to OC-192c/STM-64 as well as enablesintegrated access to POS, ATM,GE and PDH services.● Large capacity and ultralong-haulDWDM equipment. Itcan multiplex up to 160 differentwavelengths in a single core fiber,and its total transmission capacitycan reach 1600Gbs.● The modular design enables acapacity scale design of 400Gbs,800Gbs and even 1600Gbs. Thesystem adopts flexible designs:MUX/DMUX+Interleaver+C/Lpassband OMU/ODU to ensuresmooth scalability and capacityexpansion.● Using advanced technologiessuch as FEC/EFEC, Ramana m p l i fi e r, R Z c o d i n g , a n ddispersion management. The 160wavelength×10Gb/s system is ableto fulfill ultra long-haul transmissionover 5000km (54×27dB) without aregenerator.● Accommodating a variety ofservices, including STM-N, GE, FE,Fiber Channel, Enterprise SystemsConnection (ESCON), DigitalVideo, and Fiber Connectivity(FCON); WDM offers powerfulaccess and convergence capabilitiesfor low-rate services and is ableZTE TECHNOLOGIES 15

Tech Featuresto converge up to eight Any×Anyrates traffic onto STM-16/STM-64.● Easy maintenance is possiblethrough use of advanced techniquessuch as optical power control,wavelength stabilizing, on-lineadjustment of wavelength andpower, on-line performance test,built-in optical performance test,fault location function, and OTNoverhead testing.● Offering an industrial-leading,large scale.● I n d u s t r y - l e a d i n g i n t e l l i g e n tamplification and power controltechniques. In addition to automaticgain locking and EDFA gainvariable techniques, the system canbalance multi-power energy frompath to the multiplex section via lineattenuation compensation (LAC),variable gain slope compensation( V G S C ) , p a t h p o w e r p r e -balancing (VMUX), dynamic gainwhile allowing smooth upgrade andexpansion. Based on the reconfigurableo p t i c a l a d d / d r o p m u l t i p l ex i n g(ROADM) functions, operatorscan provision wavelength servicesdynamically, add or change servicesflexibly, simplifying network planning;create end-to-end wavelength servicerapidly and build mesh and ringtopologies.● Offering 80 optical transmissionchannels with a maximum capacityflexible, and mature protections o l u t i o n , c o n s i s t i n g o f s i xprotection modes for the optical andservice layers. They are 1+1 pathprotection, two-fiber bi-directionalpath shared protection (BPSR), twofiberbi-directional multiplexingsection shared protection, subnetworkconnection protection,1+1 multiplex section protectionand equipment-side 1:16 OTUprotection. The 1+1 path protectionand path shared protection havebeen put into commercial use on aequalization (DGE), and high-poweroptical booster amplifier (HOBA)techniques.● Flexible network typologies: chain,star, cross, two-ring tangent and tworingintersection networks, applicablefor different network layouts.ZXMP M800 metro ROADMsystemThe ZXMP M800 designed forMAN or local transmission networkss u p p o r t s f l e x i b l e w a v e l e n g t hd i s p a t c h i n g , s u b - w a v e l e n g t hswitching, multi-service convergenceof 800Gb/s. The node’s wavelengthis upgradeable from 1 to 32, 40, 80.The system has the ability to add/drop or multiplex any number ofwavelengths at any node to satisfydynamic requirements for servicedispatch.● Capability for transporting overallintegrated services. It offers openprotocols and rich client layerinterfaces, which can carry variousservices typical of a metro network,including STM-N (N=1, 4, 16, 64),GE, FE, Fiber Channel, ESCON,16ZTE TECHNOLOGIES

Digital Video, and FICON. It alsooffers highly efficient and flexiblesub-rate convergence of services,including 4×155/622Mbs, 2×GE, 4×2.5Gbs and 8×Any, incorporatingthe ability to realize multiple servicehybrid multiplexing.● Offering a flexible industrial-leadingprotection solution, consisting of sixprotection modes for optical layerand service layer.● Flexible networking modes. With aROADM, carriers can implementa variety of network topologiese.g. multi-ring interconnect, mesh,chain, star, cross, tangent ring,intersectant ring, which allowscarriers to develop new applicationor change service and trafficpatterns in metro networks.ZXMP M600 metro CWDM systemDue to low cost, large capacity,service transparence and scalability,the ZXMP M600 metro CWDMequipment is an economical andpractical WDM system. It is employedwidely in the metro convergence, andaccess layers and the metro backbonelayer of medium-sized and small cities.● Low cost. Typically, its cost is onlyone third of other DWDM products.● Transparent transmission ofintegrated services. It supportsservices with variable rates from10M to 2.5G and various protocolslike SDH, POS, ATM, GE as wellas Fiber Channel, ESCON, FICONand DVB-ASI.● Flexible sub-rate convergence. Thesystem can implement convergenceof 4×Any, improving transportnetwork channel utilization ratios aswell as reducing bit operation cost.It can also provide 1+1 path andmultiplex section protection modesfor services.● Easy scalability with modulardesign. Along with the increase inbandwidth, it can realize smoothcapacity upgrades on conditionthat the existing services are notinterrupted. Ease of maintenance,compact characteristics and lowpower consumption mean that itsatisfies the numerous requirementsof installation environments.Rapidly growing market shareZ T E a t t a c h e s i m p o r t a n c e t olowering network construction costand improving operation efficiency.Backed by strong R&D capabilitiesZTE is continually innovating andhas developed a range of advancedsolution to help provide high levels ofservices to customers. ZTE has beensteadily increasing its global marketshare of optical products with a seriesof significant achievements made.On the international front, followingthe deployment of national trunk linesand transmission networks in manycountries including India, Pakistan,Indonesia, Bulgaria, Portugal, Venezuela,Morocco, Algeria and Zambia, ZTE hasestablished a long-term partnership withKorea Telecom (KT) and SK Telecom, asubsidiary of SK Group. The successionof continuing contracts indicate thatZTE’s optical transmission productshave already entered a period of stablegrowth.Growth in the Chinese domesticmarket for ZTE’s optical transportproducts has also been strong in 2006,with a 70% share of China Telecom’s 2006WDM national trunk line project wonearlier 2006. ZTE also bid successfullyfor China Unicom’s first 800G nationaltrunk line project, China Netcom’sfive national WDM trunk lines, andthe northwest ring project of ChinaRailcom.In 2006, ZTE announced manymilestone achievements. The companyhas entered its fourth-phase expansionof China Mobile’s west ring project (thelargest DWDM backbone in the world),installed a CWDM network for ShanxiMobile (the largest CWDM networkin the world). For the world’s highestaltitude rail service, the Qinghai-TibetRailway, ZTE not only provided awireless communication network butalso built a video monitoring transportnetwork–the largest commercial RPRproject in China.With powerful technical strengthand rich experience in networkconstruction, ZTE has establisheda leading position in the opticaltransport market. At present, ZTE’soptical products have been deployedby over 130 operators in more than 70countries. By the end of September2006, the accumulated length of WDMtransmission lines built by ZTE wasover 230,000km which, if stretchedend to end, would go around the earthfive and a half times.In 2007, ZTE, as always, willprovide superior products and servicesfor carriers around the world andwork with them to create a newchapter of global optical transmissiondevelopment.ZTE TECHNOLOGIES 17

Tech FeaturesBooming Growth forZTE’s Data ProductsSandra Wang, Shirley YuIn 2006, ZTE has become the darkhorse of the data communicationsmarket. ZTE stood out as a strongperformer in 2006 when its sales ofdata products increased 100 percentcompared to the previous year. Its fullseries of routers and switches haveachieved continuous breakthroughsin the Chinese carrier and enterprisenetwork markets as well as theoversea markets. According to CCIDConsulting, ZTE became one of thetop three companies in the enterprisenetwork market in China.A full range of data productsData product was listed as one ofthe company’s strategic product seriesin 2005. With a devotion to providingcustomized data networking solutionsand high quality data products, ZTEhas developed more than 100 typesof products, which are categorizedinto seven series: Routers, EthernetSwitches, Broadband Multi-service18ZTE TECHNOLOGIES

Routing Switches, Broadband RemoteAccess Servers (BRAS), UnifiedNetwork Management System, ZTE IPService Access Management System(ZXISAM), and Broadband Value-Added Platform.The product line became morecomplete with the introduction ofthe ZXR10 ZSR3800 IntelligentIntegrated Service Router, ZXR105900 and 5200 Series IntelligentRouting Gigabit Switch, which haveearned a great reputation both inthe market and media. At the 7thCBI China IT Channel Forum 2006sponsored by Computer BusinessInformation Newspaper, ZTE won“the most satisfying brand” and “themost promising brand” awards for itsswitch products and router productsrespectively. In 2006, ZTE passedthe certification of “IPv6 ready”,demonstrating that ZTE has the abilityto provide globally standardized IPv6equipment.With strong product innovationFig. 1 ZTE’s carrier-class core routerscapability, ZTE leads the developmenttrend of data network. ZTE became ahighlight of the ITU Telecom World2006 in Hong Kong when it launchedthe intelligent IP network managements y s t e m , k n o w nas ZTE Smart IP.T h e “ S m a r t I P ”system is expectedto rebuild the IPvalue chain andenables carriersto transition frombeing traditionaltelecoms carrierst o i n t e g r a t e dinformation service providers. Inaddition, it solves a major issuefor enterprise CIOs by creating anintegrated and simple informationplatform for delivery of multiple voice,data and video services.ZTE is fined tuned to the customers’needs. Besides the heavy-weightSmart IP solution, the company alsoprovides a series of winning solutionsfor every segment of the market.For service providers, it providesa range of data network solutionsincluding Metro Ethernet Networks,IP Core Networks, NGN/IPTV/3G IPBearer Networks, etc. For enterprisecustomers, it offers integrated solutionsfor many industries, such as education,government, finance, transportation,electricity, energy, and manufacturing.Wide applicationsTo date, ZTE’s data products havebeen widely deployed in both theChinese domestic and the internationalmarket, providing reliable services tomillions of users.In the Chinese carrier market, ZTEhas established close cooperation withChina Telecom, China Netcom, ChinaUnicom, China Railcom, etc. ZTEhas accomplishedmany projects that areoffered as models. Forinstance, when ChinaTelecom was buildingan IP Next GenerationNetwork, or CN2,ZTE deployed a highendrouting switchin the core of ChinaT e l e c o m ’ s C N 2project; and built an IP metro areanetwork in 2005 in Mianyang City,Sichuan Province, which is a CN2MAN optimization trial.Its G series 10G routing switchesare now widely used in the carriermarkets in Jiangsu, Guangdong,Sichuan, Fujian, Hebei, GuizhouProvinces, and etc.In the IPV6 field, ZTE providedits high-end routers for core nodes ofChina Telecom and China Mobile; forthe China Next Generation Internet(CNGI) backbone network of ChinaUnicom; and for IPTV bearer networksof the Jiangsu, Guangdong, Shanghai,Kunming, Quanzhou, Tianjin branchesof China Telecom..Meanwhile, its middle-range andentry-level switches are applied in theconstruction of carriers’ broadbandaccess networks.In 2006, ZTE’s high-end routersand switches continued to demonstrateits strength in the market. ZTE wasselected as the service router vendorfor the metropolitan networks ofthe Sichuan, Yunnan, and Guizhoubranches of China Telecom. Thecompany was also awarded anexclusive contract to supply serviceZTE TECHNOLOGIES19

Tech Featuresrouters to Shaanxi Telecom’s CN2MAN project.The company has also achievedgreat success in the Chinese enterprisemarket by entering many key industrieslike government, finance, education,establishing partnerships with over 400companies. At present, ZTE has set upa tiered distribution channel structure,which includes general distributors,industrial agents, primary agents,core dealers, channel dealers, seniorregional agents, and project agents,implementing integrated distributionchain.The distributor channel networkis expanding and an efficient channeld i s t r i bu t i o n s y s t e m i s g e t t i n gestablished in China. Through amultitude of distribution channels, ZTEdata products were used in variousprojects in China. For examples,a police metro area network inChangsha, Hunan Province; an electricpower communication network inTongchuan City, Shaanxi Province; amining security information network inJixi, Shanxi Province, an educationalbackbone network in Jiangsu, aswell as a national military broadbandnetwork; and etc.ZTE not only reaped a good harvestin the Chinese domestic data market,but also recorded an outstandingperformance overseas. ZTE dataproducts have successfully enteredthe market of developed countries inEurope and North America. To date, itsdata products have been widely usedto construct the carrier networks andenterprise networks in more than 30counties and regions.Its G series high-end switches and Tseries high-end routers have penetratedcountries including Colombia,Vietnam, Thailand, India, Indonesia,and etc.Its mid-range and entry-level switchseries are shortlisted by Telefonica,one of the world’s largest multinationalcarriers, and Etisalat, the multinationalcarrier in the Middle East, and haveentered the European high-end marketse.g. Romania, Finland.With its IP data network solution,ZTE has built the Bulgarian integratedtriple play delivery platform, ColombianEmcali’s NGN-based bearer network,Greek Telepassport’s IPTV bearernetwork, and CDMA-based IP bearernetwork in the Philippines.A bright futureInnovation-based product is keyto the company’s market success.Reinforcing its R&D is a must for ZTEto maintain its core competitiveness. Atpresent, there are more than 1000 R&Dengineers on data communications,half of them are Ph.D and MasterDegree holders.In May 2006, a data researchsub-center was set up under thecentral academy at the company’sheadquarters, to consolidate researchand development of IP stack and highendrouters through efforts done atcompany level.T h e f o l l ow i n g A u g u s t , Z T Elaunched a Beijing data research subcenterwhich is engaged in researchan development on Ethernet switch,enterprise networks products, andsecurity products. Apart from a strongR&D team of elite talents, the companyalso has a complete marketing, R&D,manufacturing, logistics, and qualitymanagement systems to satisfy theneeds of its customers.A d va n c i n g w i t h eve r l a s t i n ginnovation, ZTE accomplishedfruitful achievements in the datacommunications market. At the 2007China Telecommunication MarketAnnual Conference organized byCCID Consulting, ZTE won theChina Data Communications BestBrand of 2006. With the continuousdevelopment of its R&D, products,distribution channel, and service,ZTE believes that the company willbecome a mainstream provider of datanetwork solutions to the global market,providing worldwide customers withhigh-class technical support andmaintenance services.20ZTE TECHNOLOGIES

team and between front line personneland back side support personnel.Project closureThe last phase of the projectincluded outputting the networkoptimization report for each servicearea to capture experience of, andlessons learned from the project. At theend of the project, the Erl drop ratioof the optimized service area had beengreatly increased, realizing the initialobjectives of the project.Network optimization servicesThe CDMA network optimizationproject was focused on improving theErl drop ratio results. In cases wherean important network performanceindicator is focused, the “TOP10”analysis method can improve the workefficiency. The Erl drop ratio is anapproach to understand the networkperformance, and it is computed usingthe following formula: the busy hourErl drop ratio (in minutes) = Busy hourtraffic load (Erl) (without handover)×60/total number of dropped calls in atraffic channel.It is obvious that to improve the Erldrop ratio, it is necessary to reducethe number of dropped calls. Theproject team began the optimizationprocess by selecting the top 10 basestations that had the largest numbersof dropped calls; finding out reasonsof dropped calls and poor qualityservice by analyzing the equipment,network, and resource utilization; andoffered targeted technical assistanceto enhance the overall performance ofbase station controllers (BSC).The engineers adopted the followingtechnical methods to reduce droppedcalls at a certain base station:● Single-station check and preoptimizationtestThe team performed single-stationcheck on most new BTSs as wellas the old BTS that had highdropped call rates throughanalyzing drive testdata and backgroundstatistics data. SomeBTSs were foundto be improperlyi n s t a l l e d .I n f o r m a t i o ncollected at thes i t e s a r e u s e f u lfor the future RFoptimization.● Statistical analysis ontest data and backgrounddataDespite heavy workload and tenseschedule, the team members finishedanalyzing the drive test data at anearly time and made a correspondingnetwork optimization plan. Thetest data and background statisticsdata acquired after implementingnetwork optimization, proved that theoptimization measures were effective.● RF optimizationThe RF optimization includesadjusting antenna pointing and height.● Wireless parameter optimizationA f t e r c h e c k i n g t h e w i r e l e s sparameters of all BTSs, the teamoptimized the wireless parameters ofthe BTSs that had high dropped callrates.With three-month effort, theGuizhou CDMA network optimizationproject had made remarkable progress.Take the Guiyang service area as anexample, its busy hour Erl drop ratiohad been greatly improved. The busyhour Erl drop ratio ofBSC0 hadi n c r e a s e dfrom 127 minutes to 172 minutesafter optimization, which not onlymet, but exceeded Guiyang Unicom’sexpectation (160 minutes). Similarly,the busy hour Erl drop ratio of BSC1had increased from 90 minutes to 132minutes.By applying the PMBOK theory,the project team strengthened theproject management which includesclarifying project goals, specifyinghow goals are achieved, along withproject control. With a focus on aseries of project-specific factors(time, scope, labor, quality, cost,risk, and communications), thenetwork optimization project cameto a successful conclusion within thespecified timeframe.ZTE TECHNOLOGIES 25

Press Clipping'In 2007, we expect to sell around 25 mn handsetsglobally of which 10 mn will be sold in India'He Shiyou, SVP of ZTE Corporation and General Manager of Handset Division, talks to VOICE&DATAmagazine about the company's handset strategy and its strategy for the Indian market.JANUARY 2007What’s your handset strategy?From 1998, ZTE has been manufacturing handsets and ispresently a well-known brand. We have a complete portfolioof handsets both on 2G as well as on 3G spaces. On thetechnology front, we cater to GSM, CDMA, PHS, and TD-SCDMA. When we started in 1998, we were strong incommunication systems and started our global expansionin 2004. Presently, we have our presence in 50 countries.Earlier to 2004, we were focusing only on China and utilizedour handset experience and understood the requirements ofdifferent handset segment categories for different markets.Basically, we are focusing on two markets–developedand developing. In developed, we are looking at WesternEurope and North American market whereas in developingmarket we are looking at India, Pakistan, Latin America, andAfrican countries. For developing market, the focus is onmultimedia handsets, Mobile TV and HSDPA whereas fordeveloping market, we are looking at basic voice and SMS.How would you rate India vis-à-vis other markets?What’s your strategy for the Indian market?India is a very important market for ZTE. There is a hugepotential for local companies to contribute to the Indianeconomy. Since 2005 and till date, we have sold more than5 mn handsets in India. Our next strategy is to bring moreproducts and technologies, localize manufacturing andR&D facility. By serving Indian market we can contribute toother developing market also. India, China and developingeconomy are the foundation triangle for our growth. Soour focus will be investing more in R&D and services, thuscontinue to grow the market.We started our GSM expansion in 2006. We visualize thatthere is a huge growth in Indian GSM market and plans areto replicate CDMA success in GSM. For CDMA, we arefocusing on US, Canada, and Mexico whereas for GSM weare looking at India, Africa, and Latin American markets.In 2007, we expect to sell around 25 mn handsets globallyof which 10 mn will be sold in India. On the technologyfront, GSM will contribute around 40% whereas CDMA willcontribute around 60% for the India market.Are you planning to change your distributionstrategy in 2007?In China, we used to sell through distributors but in 2007we are changing our strategy to sell more handsets throughoperators.When are you planning to close the megaorder with Reliance Communications for GSMinfrastructure?So far there is no official announcement, Presently, ifsomething happens we will put it on our website.What’s happening on the BSNL 70 mn tender ?As you know operators have own right to make decisionand there are many factors affecting their decisions. Fromsupplier’s point of view, ZTE is involved in negotiating andparticipation in this kind of project and we make sure toalways do our best.How are you planning to move ahead on the FIPBfront for setting up a manufacturing base in India?As you know communication system is complex and weneed approval from Indian authorities. We will move stepby step so that our manufacturing technology can be fullybrought to India.Will ZTE set up a manufacturing base in India in2007?Since we have a comprehensive product line, I won’t put anytimeline. For certain products, some part is manufactured inIndia whereas some part is manufactured elsewhere. There isalways a gradual process of bringing manufacturing in India.26ZTE TECHNOLOGIES

HandsetsZTE Inks Deal with ChinaUnicom for CDMA HandsetsZTE Corporation, a leading globalprovider of telecommunicationse q u i p m e n t a n d n e t w o r ksolutions, has won a contract to provideChina Unicom with 900,000 CDMAhandsets during the operator’s 2007 Q1central procurement period.Seven vendors in total were namedas suppliers in the contract. ZTE wonthe biggest proportion of the contract,agreeing to provide 40% of the totaltwo million handsets to the operator.ZTE is currently the leading supplierof CDMA handsets to the rapidlygrowing Chinese market, and hasalready supplied over 16% of ChinaUnicom’s CDMA handsets.ZTE will provide the award-winningbar style C172 and C300 models andthe clamshell style C350. The handsetsprovided will be customized for ChinaUnicom’s urban low-end and ruralmarkets to enable China Unicom tooffer a very competitive price, but theywill still be able to support multiplevalue-added services.China Unicom adopted a centralhandset procurement model in 2005,and its sales of CDMA handsets rose20 percent to a record high of eightmillion in 2006.ZTE has been providing CDMAhandsets to China Unicom for overfive years, covering high, middle andlow-end markets. In January of thisyear, China Unicom awarded the“Most Popular CDMA Handset” titleto ZTE because of its leading salesfigures. By August of last year, ZTE’sglobal CDMA handset shipments hadexceeded 10 million, around sevenpercent of the world market.C350C172C300ZTE TECHNOLOGIES27

ZTE TECHNOLOGIES