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Focus on IP NetworksDeploying a Carrier-Class Metro Ethernet Networkfor PCCWPCCW selects ZTE’s field-proven 10-Gigabit EthernetSmart Ring (ZESR) solution in deploying its carrierclassmetro Ethernet networkZTE Builds an Advanced Gigabit Metro EthernetNetwork in AustraliaAll data and transmission products supplied by ZTEare running smoothly over the network, helpingAmcom achieve expected profits and win widespreadrecognition from the industry and end-usersThird EyeZTE Shines in CDMA MarketZTE’s increasing competitiveness is credited to itslarge installed base in China, India and emerging Asia-Pacific, as well as its long-term commitment andinvestment in CDMA technologyP18Tech FeatureEasyservice Reducing OPEX of Broadband ServicesThe OPEX of broadband services mainly involvesthree parts: management cost, maintenance cost andmarketing costEngineering ServicesETC’s Mobile Millennium ProjectZTE and ETC jointly formed a millennium networksafety assurance team to guarantee the stable networkoperation during the festival182021P212427Editorial BoardEditor-in-Chief: Gu YongchengDeputy Editor-in-Chief: Huang XinmingEditorial Director: Zhao LiliExecutive Editor: Yue LihuaEditor: Olga.SaprykinaCirculation Manager: Wang PingpingSubscription / Customer ServicesSubscription to ZTE TECHNOLOGIESis free of chargeTel: +86-551-5533356Fax: +86-551-5850139Email: wang.pingping@zte.com.cnWebsite: www.zte.com.cnEditorial OfficeMarketing System11F, R&D Building, ZTE Plaza,Hi-tech Road South, Hi-tech Industrial Park,Shenzhen, P.R.ChinaPostcode: 518057Tel: +86-755-26775211Fax: +86-755-26775217Email: yue.lihua@zte.com.cnZTE ProfileZTE is a leading global provider oftelecommunications equipment and networksolutions. ZTE's product range is the mostcomplete in the world—covering virtuallyevery sector of the wireline, wireless andhandset markets. The company deliversproducts and services to customers in morethan 135 countries.HandsetsZTE Unveils New Handsets in the U.S.May 2008 ZTE TECHNOLOGIES29

Industrial NewsAsia-Pacific Dominates Mobile GrowthMay 2, 2008More than half of the world’s fastestemerging mobile markets are in theAsia-Pacific region, according to anew Light Reading report titled Top 10Emerging Mobile Markets 2007.Of the 10 markets ranked by 2007subscriber growth, six are from Asia/Pacific, including the top four countries–China, India, Indonesia, and Pakistan.Vietnam is ranked seventh, followed byBangladesh in eighth place.Not surprisingly, those six countriesaccounted for a vast majority of near320 million new mobile customersadded by the 2007 top 10 emergingmobile markets: Together they added253.4 million new mobile accounts, or79 percent of the total.(www. unstrung.com)Romanian CDMA Operator, Zapp PlansUMTS RolloutMay 6, 2008During a press conference heldlast month, Chris Bataillard, CEO ofRomania’s Zapp announced that their2100 MHz network will be functionalby June 30th, providing mobile highspeeddata services based on ZTE’sUMTS/HSDPA solutions.As per their license obligations, Zapphas to deploy a full 3G network by endof 2011, the first step of this processbeing due on June 30th, 2008 and refersto covering 19 major cities in Romania.By the end of the first stage of theUMTS network build-up, over 5.5million people will be within the rangeof Zapp’s UMTS signal. It means thatthe company will have fulfilled itslicense obligations to provide UMTSservices to at least 26% of the Romanianpopulation.(www.cn-c114.net)Global WirelessChip Market Grew7.6% Last Year-ReportMay 20, 2008Wireless chip growth outpacedthe overall chip market in 2007, astudy from technology researcheriSuppli said.The study, quoted by a Reutersreport, also said Qualcommled with 24% chip revenuegrowth, helping it overtake TexasInstruments.Wireless chip sales grew by7.6 % to $29.5 billion in 2007compared with a 3.3% growthrate for the overall chip market,the Reuters report, furtherquoting iSuppli, said.(www.telecomasia.net)Qualcomm to Launch SmartphonesMay 14, 2008Mobile chipset maker companyQualcomm is in talks with vendors andOriginal Equipment Manufacturers(OEMs) to launch Smartphones in thecountry at a price tag of Rs 10,000 bynext year.“We are working with our OEMsto bring to market smartphones withfull in-built HSDPA next year,”Qualcomm India and SAARC PresidentKanwalinder Singh said.He said Qualcomm would work withOEM partners to make smartphonesa mass-use product. Qualcomm hasOEMs partners like ZTE, Huawei, LG,Samsung, HTC.Smartphones are full-featured mobilephones with personal computer likefunctionality with camera and emailcapabilities with a complete personalorganizer.(www.cn-c114.net)ZTE TECHNOLOGIES May 2008

Focus on IMSInterviewA Successful Promotion ofBalanced Development betweenProducts and Markets–Interview with Mr. Cui Yi, General Manager of the Asia-Pacific Region of ZTE CorporationZhao LiliMr. Cui Yi, General Manager of the Asia-Pacific Region of ZTE CorporationBefore people are aware,the emerging markets inthe Asia-Pacific regionhave become a cake beingsnatched by international operators andbecome strategic markets for globalhigh-end operators. The Asia-Pacificregion is one of the most importantmarkets for ZTE, where ZTE hasachieved eye-catching performance overrecent years. Then, how is ZTE’s marketdevelopment in the Asia-Pacific region?How do the products of ZTE changethe local market pattern and adapt to thelocal community? With these questionsin mind, we have an interview with Mr.Cui Yi, General Manager of the Asia-Pacific Region of ZTE Corporation.May 2008ZTE TECHNOLOGIES

Balanced Development betweenProducts and MarketsAt the beginning of 2005, ZTEestablished a regional platform in theAsia-Pacific region and started its allaroundlayout in terms of markets andproducts. This is an important milestonein the development of the Asia-Pacificmarket and from then on, its marketoperation in the Asia-Pacific regionentered a fast lane. After several years ofunremitting efforts, ZTE has achievedremarkable market performance.According to Mr. Cui Yi, GeneralManager of the Asia-Pacific region,ZTE has kept a stable momentum ofdevelopment in the Asia-Pacific marketthese years, and has seized variousopportunities in the market. Hence,ZTE follows the general trend of theAsia-Pacific market, and has a leapinggrowth every year. Two distinctivefeatures can be summarized: On the onehand, ZTE’s market development inevery country of the Asia-Pacific regionis relatively balanced. For example,in Indonesia, Malaysia, Philippines,Singapore, and Australia, ZTE showsa good momentum of developmentin terms of its local market position,market share, brand recognition, andproject growth. Among these countries,as Indonesia has a large population,ZTE has a large market share and highbrand recognition in Indonesia. Onthe other hand, in terms of products,fixed network, mobile and value-addedservices as well as terminal products,they all keep a balanced development.Especially in the last two years, terminalproducts increase at a remarkable speed.In 2007, ZTE’s 3G mobile phones brokeinto the high-end market in Australia ona large scale, and CDMA mobile phonesentered the Indonesian market, whichmake Indonesia and Australia two coremarkets of ZTE’s terminal products.Thanks to the balanced and stabledevelopment of ZTE in the Asia-Pacificregion in terms of both products andmarkets, a scientific prediction can thusbe made on the future planning of laborand resources, which greatly reducesrisks in various aspects. Meanwhile, themutual cooperation of various productsmay provide a comprehensive solutionfor customers, helping ZTE achievegood brand recognition among itscustomers.As for high-end internationaloperators in the Asia-Pacific region,according to Mr. Cui Yi, ZTE’s productscover nearly all mainstream highendoperators and it is cooperatingwith the top operators in each country.In Australia, ZTE has established apartnership with Telstra, the largestoperator in Australia and supplies it withWCDMA 3G terminals on a large scale.In addition, bearer network products,including Ethernet switch and DWDMtransmission products are supplied toAmcom in Australia on a large scale.Amcom is an important operator inWestern Australia and also the fastestgrowing broadband service providerin the country. In Singapore, ZTE’svalue-added services cover all threeoperators, SingTel, StarHub and M1,and bring them remarkable revenuesto these operators. SingTel is also themost influential multinational operatorin the region, which has establishedoperating organizations in 15 countriesand regions across the world. ZTEhas conducted all-around cooperationwith SingTel Group in Indonesia,Philippines, Thailand and Singapore. InMalaysia, ZTE is an important supplierof Telekom Malaysia. The companystarted cooperation on broadbandterminals, value-added services andother fields with Telekom Malaysia asearly as in 2003. In 2006, it succeededin its bidding for the 40% market shareof an MSAN project. In 2007, it gaineda 70% market share in the previousMSAN project and a 70% market shareof a power project. In addition, TelekomMalaysia International (TMI) is a majorinternational operator in Southeast Asia,boasting a large telecommunicationinvestment in Asia-Pacific and Africa.ZTE has conducted cooperation withTMI in India, Cambodia, Bengal,Sri Lanka, etc. In Indonesia, ZTEhas established a partnership withall mainstream operators, includingTelkom, the largest fixed networkoperator in Indonesia, Telkomsel, thelargest mobile operator, as well asIndosat, HCPT, SMART, M-8, etc. InIndonesia, ZTE’s CDMA system hasa capacity of 15 million lines in total.Optical transmission, power, fixednetwork broadband access products andVAS products are traditional competitiveproducts with stable large volumesales. From 2006, the sales of terminalproducts started to increase sharply, andnow ZTE has become a mainstreamsupplier of CDMA terminals and 3Gdata terminals in Indonesia. This year,the sales volume of GSM products alsobegan to increase stably, and the salescontract value has reached USD 200million in total. In Philippines, ZTE’sCDMA products have always rankedthe first in the market share. Besides, itsfixed network products are well appliedin Globe, Digitel and other operators.Generally speaking, ZTE supplies avariety of products in the Asia-Pacificregion, but wireless products andterminal products have seen the mostrapid development in recent years.Deep Analysis on Customer Demandto Seize Market OpportunitiesIn its development over the lastfew years, ZTE has closely followedthe development trend in the Asia-Pacific region, made a deep analysison customer demand, seized marketopportunities in a rapid manner, and thusestablished a good market pattern andbuilt a solid foundation for its furtherZTE TECHNOLOGIES May 2008

Focus on IMSInterviewdevelopment in the future.According to Mr. Cui Yi, there isan unbalanced development in thecommunication industry in some partsof the Asia-Pacific region and customershave different requirements for thecommunication services, but still, thereare great market potentials. On theone hand, in areas such as Philippinesand Indonesia, there is still huge spacefor development in the infrastructureconstruction, such as popularization oftelephones, and network coverage. Onthe other hand, Singapore and Australiaare developed countries with a hightelephone penetration rate, but a lot ofmarket opportunities can still be foundif these markets are segmented.There is a natural increase ofdemand for communications in eachcountry, and the increase keeps pacewith the economic development.This is more noticeable in developingcountries. Since the financial crisisin 1997 and 1998, there has been acommon down period of several yearsin the communication developmenti n e a c h c o u n t r y. B u t w i t h t h erecovery of the economy in 2003and 2004, the market has witnessedan obvious increase of demandfor communications. Especially inIndonesia where there is a vigorousdemand for infrastructure construction,ZTE has extensive cooperation withthe mainstream operators in Indonesiain terms of both wired and wirelessproducts. For example, in 2004,ZTE undertook the construction ofthe first DWDM national backbonetransmission network in Java Indonesia.Ever since then, its transmissionproducts have seen a steady growthamong the mainstream operators inIndonesia. In 2004, after successfullyestablishing a partnership with Indosat,ZTE started cooperation with suchoperators as TELKOM and SMARTon CDMA products, keeping a highmarket share. At present, ZTE alsohas good cooperation with Telkom,Telkomsel, Indosat, Mobile-8, SMART,STI and other operators in Indonesia onits terminal products.I n t h e h i g h - e n dmarket in Asia-Pacific,t h e d e v e l o p m e n t o fcommunications has notcome to a stop. Mr. Cui Yicontinued: In developedcountries, there is already avery high penetration rate oftelephones. For example, thepenetration rate of mobilephones in Singapore andAustralia has reached 100%.But does this mean that theyhave no further demandf o r c o m m u n i c a t i o n s ?N o . T h e r e a r e s t i l l alot of communicationconstructions in thesec o u n t r i e s e v e r y y e a r,w h i c h r e q u i r e s o u rconstant exploration anddevelopment. For example,in Singapore, ZTE accurately graspsthe customer demand and provides aColor Ring Back Tone (CRBT) platformand CRBT services for SingTel, thelargest operator in Singapore by meansof an innovative business model of“joint operation and maintenance andprofit sharing”, increasing its CRBTpenetration rate from the original 1.3%to 10% and bringing about considerablefinancial profits. Another example is:The operators have an urgent demandfor reconstructing their intelligentnetworks to enhance the chargingfunction and formulate highly attractivebusiness packages, which brings us newmarket opportunities. In July 2007, ZTEsigned a contract on an OCS projectwith StarHub, an operator in Singapore,to provide a complete mobile prepaidreal-time online charging system and acustomer handling platform. At present,ZTE has become a major servicesupplier in Singapore and one of thefew vendors that can provide serviceproducts for three main operators inSingapore.May 2008ZTE TECHNOLOGIES

Customization Capability to Breakinto the High-End MarketIn ZTE’s end-to-end solution, thesupply of customized terminals is quiteimportant. The fast customization ofterminals to meet the requirementsof operators is the competitive edgeboasted by ZTE in its differentiatedcompetition with other mobile phonevendors. Mr. Cui Yi described a successcase in Australia.He said, Australia is a high-endmarket, having high requirementson communication equipment andterminals, especially on customization.A t t h e b e g i n n i n g o f 2 0 0 6 , w elearned that Telstra, an Australiantelecommunication operator, needed abatch of highly customized 3G terminalswith a very special frequency, that is,850 MHz, and a strict delivery date. Fora project with such high requirements,we actively communicated withthe customer on the one hand, andcoordinated the product line of thecompany and promoted R&D of thecustomer-made products on the otherhand. From April 2006 when this projectwas initiated till October of the sameyear when the delivery started, until theend of 2006, we completed a deliveryworth tens of millions of USD. In 2007,we continued with the momentum andfinished a delivery worth hundreds ofmillions of USD, an increase of multipletimes. Therefore, in addition to our sharpinsight to seize market opportunities, thefast response capability of our R&D aswell as customization capability is a keyto the success of this project.Social Responsibility and Win-WinDevelopmentEnterprises are not only the operatingentities in economic activities, but alsoplay an important role in the society. Atpresent, many multinational corporationstake the social responsibility as astrategic target for their developmentin China and carry out a series ofactivities for public welfare, makingtheir due contribution for the societywhile creating wealth. Then, whilesuccessfully practicing the “goingabroad” strategy to achieve developmentand expansion in overseas regions, howdoes ZTE adapt to the local communityand make harmonious development?Obviously, Mr. Cui Yi has given adeep consideration to this issue. He said,when seeking overseas development,we shall not just do business and makemoney, but also take the initiative toshoulder the local social responsibilities.We shall build a good social atmosphereand highlight our sense of socialresponsibility through many means.For example, we have built a trainingcenter in Bandung, Indonesia, whichproves to be very successful. In ouropening ceremony that year, weinvited leaders from the governmentdepartments and telecommunicationoperators in Indonesia, receiving afavorable response from the society.In this training center, we not onlydeliver trainings to our customersand employees, but also recruit localtrainees in Indonesia and train talents,which gains an active response fromthe society. Many undergraduatesand people requiring re-employmenttrainings are enrolled. Our training centerboasts the most complete training andtesting facilities in the local community,allowing trainees to conduct on-siteoperations, thus creating a very goodresult. At present, our training enjoysa very high reputation in Bandung,recruiting trainees every semester, andattracting active enrollment without alarge-scale publicity. If we recruit 100trainees, there are usually 500 to 600people coming for the enrollment. Wedirectly recruit those with an excellentexamination record as permanentemployees of ZTE. In this way, wecultivate a large number of talents forthe local community every year andprovide a lot of job opportunities at thesame time, showing a very good socialeffect in the local community. Therefore,we shall not only provide goodproducts and communication networksat overseas regions, but also take theinitiative to take social responsibility.Only in this way can we adapt to thelocal community and achieve greaterdevelopment.ZTE TECHNOLOGIES May 2008

Focus on IP NetworksThe Four Principles for BuildingFuture All-IP Mobile NetworkCao JianAll IP and convergence havebecome an inevitable trendin the evolution of mobilenetworks. In the future,both the services and the bearer modesof voice, packet data and multimediawill be all IP-based.Wi t h t h e d e v e l o p m e n t o f I Ptechnologies, telecom networksgradually evolve into all-IP basednetworks which are interoperable andconverged. This will not only help theoperators to upgrade their networksgracefully and deploy them efficiently,but also effectively reduce capitalexpenditures (CAPEX) and operatingexpenses (OPEX) of the operators,thus protecting their investments andallowing them to gain investmentreturns quickly. Most important of all,this will make different networks andtheir services accessible.However, we must be aware of thefact that the global telecom revenuesmainly come from the traditional voiceservices, particularly in emergingmarkets where the operators’ revenuesfrom voice services account for morethan 80% of their total revenues.Therefore, no matter how the networkevolves, the voice service users and therevenues thereof will be the primaryfactor the operators take into accountin their network evolution. Currently,the Quality of Service (QoS) cannotbe guaranteed in the IP Multimedia10 May 2008 ZTE TECHNOLOGIES

Subsystem (IMS)-based voice services,and it is still a question whether QoScan be guaranteed in other IMS-basedreal-time services. As a result, evenwith radio access network (RAN) andcore network (CN) becoming all-IPbased, the voice services-oriented 3Gcircuit-switched (CS) domain and themultimedia services-oriented IMS willco-exist in future networks for quite along time.In addition, the operators arechallenged with other networkrelatedproblems, including capability,reliability, operating cost and QoS.Carrier-Class All-IP Platformto Establish a Solid NetworkFoundationThe development of all-IP networks,especially the interoperation of IP-basedservices in various networks, has laid asolid foundation for network integration.In the next generation networks, bearerand control will be separated. Thisidea resembles the evolution path ofSoftswitch-based IMS mobile networks.Being a leader and an activeadvocator of all-IP architecture, ZTEfirst launched a carrier-class all-IPplatform in 2004. This platform adoptsa system architecture that separatesthe media plane from the controlplane, which not only accords with thedevelopment trend of all-IP systems,but also ensures the system reliability.In the system, two Ethernet networksare designed: one for interconnectionof media streams and the other forinterconnection of inner controlstreams. This creative design ensuresthe system reliability because with themedia plane being physically separatedfrom the control plane, the impact ofburst media traffic on the control planeis avoided.The reliability of ZTE all-IP platformhas been proved. In the peak hours ofthe New Year’s Day of 2008, ZTE all-IP BSCs at Hyderabad, India survivedhuge traffic. At two of these BSCs, thevoice traffics in the peak hours were8.8 and 6.8 times, respectively, of thetraffics in normal hours. At that time, thenetworks of other operators in the samearea, i.e. Hyderabad, were all paralyzed,but ZTE’s equipment worked well.With its leadership in CDMA2000all-IP being further consolidated, ZTEhas already become one of the globalCDMA equipment leaders. One 2008Yankee Group report shows that ZTEranks top 2 in the years 2007-2009 interms of competitiveness of its CDMAequipment (see Figure 1).Complete Disaster ToleranceSolution to Protect the NetworkAs the capacity of a single system isquite large, the all-IP equipment requireshigh stability and high reliability. As aresult, it is necessary to make all-roundbackup at each layer.To protect the network to the utmostextent and ensure it to run reliably, ZTECDMA2000 all-IP solutions considerseriously the system redundancy backupmechanism in its design, and adopt thefollowing backup modes: 1+1, N+1 orN+M for core parts or equipment, and1+1 (active/standby) for core databases.Moreover, the network architectureis dual-network and dual-plane, thuseliminating any single point of failure inthe network.With respect to disaster tolerance ofnetwork elements, ZTE CDMA2000all-IP solutions support several backupmodes: Ap-Flex, Media Gateway(MGW) load sharing, Mobile SwitchingCenter emulation (MSCe) backup andHome Location Register emulation(HLRe) backup. These all-IP baseddisaster tolerance solutions takeadvantage of the flatness characteristicof IP networks and avoid transmissionresource waste, like the case in the TimeDivision Multiplexing (TDM)-basedsolutions.Most Efficient Transmission Schemeto Save TCOAn all-IP system can effectivelyimprove transmission efficiency, savethe network construction and rentingexpenses, as well as reduce the TotalCost of Ownership (TCO). Comparedwith TDM-based schemes, the IP overE1 scheme can incredibly improve theE1 transmission efficiency by 10 times,and the IP over FE/GE scheme can savethe voice transmission bandwidth by asmuch as 80%.Figure 1 Global CDMA equipment vendors’ competitiveness score and ranking (YankeeGroup, 2008)ZTE TECHNOLOGIES May 2008 11

Focus on IP NetworksFor the operator who has onlytraditional TDM bearer network, ZTEprovides the IP over E1 scheme to takefull use of the current transmissionresources.For the operator who has IP backbonebearer network, ZTE suggests the IPover FE/GE scheme to get the networkflatter and improve the scalability andflexibility of the network.For the operator who has remoteareas and islands to be covered but lackstransmission resources, ZTE offers thesatellite link solution and the microwavenetworking scheme to construct a largelocal network. In this way, the operatorcan have a bigger capacity with itslimited resources, and enhance theprofitability of the network.Optimal QoS Mechanism to EnsureGood Network PerformanceReal-time services, such as voiceservices, are the main challenge the all-IP mobile network has to face. Amongcurrent CDMA2000 all-IP networks,two of them support Voice over IP (VoIP)services: CDMA2000 MultimediaDomain (MMD) (IMS) and CDMA2000Legacy MS Domain (LMSD).C D M A 2 0 0 0 M M D n e t w o r k ,adopting end-to-end all-IP architecture,provides end-to-end VoIP services toreplace the traditional mobile telephoneservices; while CDMA2000 LMSDnetwork, where traditional mobileFigure 2 QoS models of CDMA2000 all-IP networkterminals are still used, applies IPtechnologies in its access networkand CS core network but keeps the airinterfaces unchanged. To distinguishthe two kinds of VoIP services providedin CDMA2000 MMD and LMSDnetworks, the VoIP services provided inLMSD network are often called “mobileIP Phone”.T h e b i g g e s t p r o b l e m i n t h edevelopment of VoIP services is anoptimal QoS mechanism, which ensuresthat the voice quality will not be poorerthan that in traditional mobile phonecalls.Figure 2 illustrates the differenceof end-to-end QoS mechanism INCDMA2000 MMD and CDMA2000LMSD networks.As shown in Figure 2, in the QoSmechanism of CDMA2000 MMDnetwork, the QoS strategy and servicesare implemented by terminals, accessnetworks and core networks together;while LMSD network, where traditionalmobile terminals are still used,guarantees its end-to-end QoS withaccess networks and core networks.Besides, to reduce the impact ofnetwork jitter, frame loss and packetdisorder, the system is also requiredto perform the QoS functions at theapplication layer: adaptive dynamicbuffer, packet reordering, missing framecompensation, etc. These functionsare performed by intelligent terminalsin CDMA2000 MMD system, butby access and/or core networks inCDMA2000 LMSD system.To reduce impact of frame loss onvoice quality further, ZTE has developeda patent technology, called SuperVT.This technology can effectivelyreduce the impact of packet loss onvoice quality. With this technology,LMSD system can greatly lower theindexes of the bearer network while theconversation quality can be satisfied:maximum one-way delay is less than200ms, jitter less than 80ms and packetloss ratio less than 5%.ConclusionI t h a s b e c o m e a n i n e v i t a b l etrend to converge IP-based telecomnetworks. The IP technologies wereoriginally designed for transmittingInternet services with “Best Effort”,so it is not an easy thing to constructa carrier-class all-IP network withgood performance, high reliability andoptimal QoS. In constructing the futureall-IP mobile networks, four principlesshould be followed: First, the systemarchitecture should separate the mediaplane from the control plane; second,the system should have a completedisaster tolerance backup solution;third, different interfaces should beavailable to allow flexible networking indiversified transmission conditions, thusimproving the transmission efficiencyand reducing the TCO of the operator;fourth, an optimal QoS mechanismshould be worked out.With four years’ experience in all-IP commercialization and continuousinnovation, ZTE has developed itsCDMA2000 all-IP networks, providingthe telecom operators with complete,one-stop solutions. Moreover, it iscommitted to long-term quality services,and truly helps the operators constructreliable networks and make profits on along-term basis.12 May 2008 ZTE TECHNOLOGIES

Focus on IP Networkstechnologies can bring more attractiveservices to mobile networks and increasethe operators’ ARPU.Pressure of network investment costsThe construction of bearer networkaccounts for a large part of the mobileoperator’s total investment costs.Currently, the costs for leased cablesand construction of SDH and MSTPnetworks are still quite high. With theincreasing demand for bearer networksin future network development, the costeffectiveEthernet network will findmore appeal with mobile operators.To cope with the pressures fromthe services, convergence, technologyadvancement and costs, the tendencytoward all-IP mobile networks isunavoidable. Carrier-class Ethernet isa new technology best fit in with thechallenges, which can help mobileoperators solve various problems in theaccess layer of mobile network.Key Technologies for All-IP RadioAccess NetworkDifferent from traditional Ethernet,carrier-class Ethernet has beensignificantly enhanced in technologyand performance to meet all kindsof challenges in mobile networktransformation.Clock and time synchronizationBasically all mobile base stationsrequire synchronization. TraditionalTDM transmission networks canrecover the synchronization clockvia the E1/T1 link. In carrier-classEthernet networks, two synchronizationtechniques are introduced to meet thesynchronization requirements: one isEthernet synchronization technologybased on the ITU-T G.8261, which is anetwork-based clock synchronizationtechnology independent of network load,latency and jitter; the other is packetsynchronization technology based onthe IEEE 1588v2, which makes useof packets to achieve synchronization,provides highest accuracy for point-topointlinks, and implements frequency,phase and time synchronization.Rich interfacesThe traditional Ethernet technologymainly provides Ethernet interfaces,while Radio Access Network (RAN) hasvarious TDM and ATM interfaces. Oneof the most important enhancements inthe carrier-class Ethernet switch is theprovision of TDM and ATM interfaces.This is a necessary process for IPtransformation of radio base stations.The carrier-class Ethernet technology isa solution for smooth transition to futureEthernet interfaces (3G and 4G) fromtraditional radio interfaces (2G).QoS guaranteeThe introduction of varieties of newservices, especially the high-bandwidthdata services in radio networks, hasgreat impact on traditional voiceand other real-time services. The“Best Effort” IP network can hardlyguarantee the QoS for key services.Therefore, future radio networks mustbe manageable, with guaranteed QoS.The carrier-class Ethernet technologiesadopt powerful hardware-based QoSmechanism and OAM functions.Through the enhanced Ethernet serviceclassification, bandwidth restrictionand flexible scheduling, the carrierclassEthernet network can implementhierarchical QoS based on services,users and applications. Meanwhile,various Ethernet-based OAM standardscan also provide better QoS guarantee.Tunnel technologyTunnel technology is an importantdemand of future radio networks. It isthe core of bearer network technologies,and also a hot technology of carrierclassEthernet. Presently, there aremultiple tunnel technologies availablein the market that develop and competewith one another.Different from traditionalEthernet, carrier-class Ethernet has beensignificantly enhanced in technologyand performance to meet all kindsof challenges in mobile networktransformation14 May 2008 ZTE TECHNOLOGIES

■ PBTB a s e d o n t h e M A C i n M A Cencapsulation, Provider BackboneTransport (PBT) provides enhancedcarrier-class OAM and protectionfunctions. It uses the existing Ethernethardware to offer a new forwardingmode, transforming the traditionallyconnectionless Ethernet into aconnection-oriented tunnel technology.With the reliability and manageablecapability similar to SDH technology,PBT provides private Ethernet lines withhard QoS and carrier-class performance.It has good expandability, disablingEthernet MAC address learning andbroadcasting functions. It uses the VIDand MAC address as the global uniqueaddress and the destination-basedaddress in its forwarding decision,removing the restriction for serviceexpandability. It provides bandwidthreservation and effective carrier-classprotection switching capability. Byusing the tunnel technology, PBT allowsinteroperability with services based onMPLS and L2 VPN, offering a costeffectiveand reliable bearer solution forEthernet networks.■ VPLSBased on MPLS, Virtual Private LANService (VPLS) is a L2 VPN technologythat can extend WAN MPLS to Ethernetaccess. Using the L2 MPLS labelencapsulation, VPLS is independentof physical topology and capableof supporting any logical topologyarchitecture. With flexible networkingcapability, it is applicable for point-topointand point-to-multipoint serviceapplications. With the hierarchicalmechanism, it provides enhancedscalability and support large-capacityapplication scenarios. Moreover, it usesthe MPLS Traffic Engineering (TE)to achieve resource optimization, andthe Fast Re-Route (FRR) to implementcarrier-class protection switching. VPLSis by far the most mature technology forFigure 1 Carrier-class Ethernet RAN solutioncarrier-class Ethernet, but it is expensivein terms of networking costs and iscomplex to configure and manage.■ TMPLSDefined by the ITU-T SG15,Transport MPLS (TMPLS) is aconnection-oriented packet transportMPLS-based technology. As anMPLS subset, TMPLS abandonsthe control protocol stack that IETFdefines for MPLS, simplifies MPLSdata plane, removes unnecessary IPbasedconnectionless forwardingprocesses, and adds ITU-T transportstyle protection switching and OAMfunctions. Backed up by a series ofITU standards, TMPLS can meet therequirements of carrier-class reliabilityand manageability. Although relativelymature in terms of technology, TMPLSneeds to be further improved in practicalcarrier-class Ethernet applications.ZTE’s All-IP Radio Access NetworkSolutionAs a leading global provider oftelecommunications equipment andnetwork solutions, ZTE activelycooperates with operators, equipmentm a n u f a c t u r e r s , a n d s t a n d a r dorganizations in carrier-class Ethernettechnologies, aiming to providecomplete solutions for RAN and futureFMC. Its carrier-class Ethernet RANsolution is shown in Figure 1.ZTE’s carrier-class Ethernetproduct family based on the traditionalEthernet technologies provide anadditional synchronization mechanismto implement Ethernet and IEEE1588v2-based synchronization.Its switches support various TDMinterfaces, satisfying the current accessrequirements at the radio sites; its accessdevices support Ethernet solutions,making preparation for future IP access;and its hardware-based hierarchicalQoS mechanism provides powerfulservices, users and applications-basedQoS control, meeting different servicelevel agreement (SLA) requirements oftelecom network. Furthermore, ZTE’scarrier-class Ethernet solutions can beimplemented over PBT, VPLS, andTMPLS technologies. Through yearsof active participation in tracking thedevelopment and evolution of the threetechnologies, the company is able to selectthe best suitable technology according tothe actual network conditions, offeringa complete carrier-class Ethernet RANsolution.ZTE TECHNOLOGIES May 2008 15

Focus on IP NetworksQuality IP Networks Enabling India’sNational Broadband PolicyLi Le Wang ChuanqiOn January 23, 2007, thePresident of India, APJAbdul Kalam, proclaimedi n h i s s p e e c h t o t h eCongress that 2007 would be a year ofBroadband in India. In response to thecall for broadband, Indian Governmentlaunches a national broadband policyand major players in the market arelooking forward to being at the forefrontof the broadband spread.Bharat Sanchar Nigam Limited(BSNL), the biggest state-ownedtelecom operator in India, holds thelicense to operate telecom servicesacross the country except Delhi andMumbai. The existing broadbandnetwork of BSNL covers only part ofareas in large cities such as Gurgaon,Chennai, Bangalore, Jaipur and Kolkata,and has extremely low coverage inrural areas and small and middle-sizedcities. Driven by the increasing demandsfor broadband services, BSNL hasenlarged its investment in the fixed-linebroadband project since 2006.BSNL’s broadband project is anationwide IP MAN constructionproject aiming to improve ruralnetwork coverage, increase efficiencyof government office automation,and speed up national broadbandconstruction. After completion, it willallow broadband users in 800 cities andsuburbs of the country to enjoy the highspeedADSL2+ and VDSL broadbandservices.With the global trend toward16 May 2008 ZTE TECHNOLOGIES

IP telecom service, IP technologiesf e a t u r i n g g o o d o p e n n e s s a n dextensibility have been widely appliedaround the world. The triple play ofvoice, data and video becomes aninevitable tend. A comment titled“Power to people!” in the March2008 issue of VOICE & DATA, afamous communications magazineserving India, stated: “Internet andcommunication technologies havebrought about unprecedented changesin the way people communicate andconduct businesses, and broadband isthe key contributor toward this change”.It is widely believed that societies thatadopt, adapt, and absorb the benefitsof broadband enabled information andcommunication technologies (ICT)services and applications quickly anddeeply, will achieve enormous benefitsin terms of productivity, innovation,growth, and quality of life. Therefore,the broadband project of BSNL is ofgreat significance in giving Indianpeople unimaginable power to access,organize, and transform information andin boosting economic development ofthe country.ZTE was selected by BSNL toconstruct the broadband project dueto its proven expertise in broadbandnetwork construction. It set up aprofessional team devoted to the earlyproject preparation, bidding procedures,technical presentation and clarification,engineering survey and implementation,etc. After half a year’s hard work,ZTE has built an advanced broadbandnetwork for BSNL. So far, the networkhas been put into smooth operation,delivering services to more than 2million broadband users in India.ZXR10 T64G (see Figure 1), ahigh-end switching router supplied byZTE, adopts the crossbar hardwarearchitecture capable of providing largecapacityL2/L3/L4 wire-speed and highbandwidthnon-blocking forwardingcapabilities. Itshardware-basedQoS can guaranteedeployment ofvarieties of valueaddedservices. Incompliance withthe global MetroEthernet Forum(MEF) standard,Z X R 1 0 T 6 4 Goffers carrierclassreliability.Additionally, itsVLAN and QinQfeatures provide broadband users withhigh QoS guarantee for both user andservice isolation, thus offering differentQoS for different services and allowingusers to have quality service experience.Due to its outstanding performancecostratio, the ZXR10 T64G highendswitching router stood out amongother products supplied by multiplevendors all over the world in the BSNLbroadband project, and received highpraise from the Bid Evaluation Group.Finally ZTE was awarded the contract tosupply 2200 ZXR10 T64G routers thatcover 800 large, middle and small-sizedcities such as Bhopal, Gwalior, Panjim,Ludhiana, Chandigarh and Indore, andFigure 1 Photo of ZXR10 T64GAbout the Metro Ethernet Forumalso cover vast ruralareas.A f t e r t h einitial project wascompleted, BSNLput the networkinto commercialuse. As the networkallows BSNL todeliver low-costa n d h i g h - s p e e dbroadband accesss e r v i c e s t o t h eusers, the numberof broadband usersgrows at an explosive pace, greatlyenhancing profitability of India’sbroadband network market. Withcontinual service development, ZTE, asa cooperative partner of BSNL, is readyto satisfy the customer’s requirements,managing to extend broadband coverageto more cities. In the capacity expansionproject, the ZXR10 T64G high-endswitching routers are being deployedin most cities of 23 states of Indiaincluding Punjab, Karnataka, UP–Eastand Andhra Pradesh, and also in thebiggest suburb broadband network.Accordingly, ZTE has become the topvendor of LAN SWITCH in the BSNLbroadband network project.T h e M e t r o E t h e r n e t Fo r u m ( M E F ) i s a g l o b a l i n d u s t r yalliance comprising of more than 120 organizations includingtelecommunications service providers, cable operators, MSOs,network equipment, test vendors, labs and software manufacturers,semiconductors vendors and testing organizations. The MEF’s mission isto accelerate the worldwide adoption of Carrier-class Ethernet networksand services. The MEF develops Carrier Ethernet technical specificationsand implementation agreements to promote interoperability anddeployment of Carrier Ethernet worldwide.ZTE TECHNOLOGIES May 2008 17

Focus on IP NetworksDeploying a Carrier-Class MetroEthernet Network for PCCWLi LeCarrier-Class Metro EthernetNetwork Becomes a Global TrendThe carrier-class Ethernett e c h n o l o g y h a s b e e nwidely applied in Europeand the U.S., and is beingincreasingly recognized around theworld. Many global top-tier telecomoperators have successfully deployedcarrier-class metro Ethernet networks.According to Heavy Reading, a leadingtelecom market research firm, thecarrier-class metro Ethernet technologywill become an inevitable global trend.Currently operators in each country areaccelerating their deployment of carrierclassmetro Ethernet services to meetnew challenges brought by continuoussubscriber growth. To develop a carrierclassEthernet network has become akey task for the operators. Additionally,the Metro Ethernet Forum (MEF)certification can help service providersoffer carrier-class Ethernet servicesconforming to the related specifications.About PCCWPCCW is a major telecom operator inHong Kong and a leading information &communications company in Asia. Thecompany is dedicated to developmentof innovative telecom technologies andservices, especially the new-generationfixed-line and mobile telephone service,broadband information technology,radio communication, customercommunication center service, andbroadband TV service delivered throughthe broadband TV network. Its businesscovers 14 countries across the world,providing the industry with cutting-edgetechnologies and high-quality networkcommunication services. PCCW helpscustomers expand their services to theAsian market and then to the globalmarket.As a MEF member, PCCW has wonthe prestigious Annual Excellent Asia-Pacific Service Provider Award fromMEF. With the development of IPTV,NGN and 3G services, PCCW needs toestablish an integrated network platform.IP is the core and basis of the integratedsolution that can achieve unified bearingof multiple services.From the market perspective,enterprise users are PCCW’s targetcustomers. As the enterprise users areshifting their requirements from theoriginal simple broadband connectivityto the personalized services tailoredto specific applications, it is necessaryfor the network to support complexL2 and L3 functions. Operation ina single service mode would fail toretain customers or grow revenue. Thekey enabler for integrated broadbandaccess service required by enterpriseVPN, virtual private line, virtual LAN,and high-speed Internet is carrier-classmetro Ethernet service, because allcarrier-class metro Ethernet networksset the same requirements for TCOsavings, QoS guarantee, reliability andscalability.Highlights of ZTE’s Carrier-ClassMetro Ethernet Network SolutionZTE has technical advantages inthe deployment of carrier-class metroEthernet network. Its data productsconsist of the ZXR10 G-series andZXR10 8900-series switches usedat the core and convergence layersof the metro Ethernet network, theZXR10 5900-series and 5200-seriesGigabit Ethernet switches used at theconvergence layer, and the ZXR102900-series switches used at the accesslayer.PCCW selects ZTE’s field-proven10-Gigabit Ethernet Smart Ring(ZESR) solution in deploying itscarrier-class metro Ethernet network.It adopts the ZXR10 G-series highendrouting switches featuring modularand distributed architecture and theZTE’s patented ZESR technology thatneeds less than 50ms switching timein case of link failure and can provideideal end-to-end QoS for varieties ofservices by using traffic classificationand queuing technologies. The ZXR10G-series core switches fully supportmulticast, VPN and network securitytechnologies, allowing operators touse the same bearer network to carryIPTV, VoIP, broadband and enterprise18 May 2008 ZTE TECHNOLOGIES

IPTVNGN3Gprivate network services. ZTE’s dataproducts can perfectly support not onlythe earliest QinQ, ZESR and VLANtranslation features, but also the latest802.1ag, 802.3ah, and IEEE 1588v2functions.End-to-end QoS guaranteeZTE’s data products feature nonblockingwire-speed forwarding,DiffServ,/ToS and IEEE 802.1p/qfunctions. They can provide end-to-endQoS guarantee for data, voice, video,and broadband VPN services and satisfythe IPTV service requirements forbandwidth, delay and jitter.Complete redundancy protectionmechanismZTE’s patented ZESR technologyis able to implement fast convergenceand provide less than 50ms protectionswitching time for key services incase of link failure, thus guaranteeingstable service delivery and carrier-classreliability of the network.Effective bearing of voice and videoservicesThe ZXR10 G-series, 5200-seriesand 5900-series switches can all supportmulticast communication. They have thecontrollable multicast capabilities suchas multicast management, multicastsecurity control and static multicastconfiguration, allow separation ofunicast and multicast communicationand support fast switchover of channels.Efficient management andmaintenance mechanismIt is necessary to enhance servicemanagement capability based on thetraditional network management.Services are identified at the edge layerso that classification, scheduling andshaping of the flows can be done toeffectively control point-to-point (P2P)traffic.User and network securityguaranteeZTE’s series of switches candistinguish users, implement secureseparation and fully support networksecurity technologies, enabling operatorsto carry multiple services with onebearer network.Resource savingsZTE’s G-series core routing switchesprovide powerful service supportcapabilities as well as abundant andextensible interface types to satisfyPCCW’s needs for rapid capacityexpansion. Moreover, they are fullycompatible with the operator’s incumbentnetwork and can support smooth upgradeby software, thus helping the operatorsave lots of equipment costs. During thenetwork upgrade and evolution, theycan also save fiber, interfaces and othernetwork resources.SummaryA standards-based network must havethe features of scalability, QoS guarantee,reliability and carrier-class management.Guided by this idea, PCCW joinshands with ZTE to construct a robustbroadband access network. The networkserves as a multi-play platform capableof carrying IPTV, NGN, 3G and metroEthernet services, and provides PCCW’senterprise users with high bandwidth,high QoS, and highly-reliable 10 GEservice access.ZTE TECHNOLOGIES May 2008 19

Focus on IP NetworksZTE Builds an Advanced GigabitMetro Ethernet Network in AustraliaYu LitingOn M a r c h 1 4 , 2 0 0 8 ,A u s t r a l i a n t e l e c oc a r r i e r A m c o mTelecommunications wonthe 17th Western Australian InformationTechnology and TelecommunicationsAwards (WAITTA) for its DWDMand Gigabit Ethernet Network. Thisaward-winning network adopts ZTE’sintegrated Metro Ethernet networksolutions.Amcom, a major Western Australianbasedtelecom operator, has beendevoted to delivering telephony, fibre,DSL broadband and Internet servicesto consumers and business customerssince it was founded in 1988. Today,the company has become the fastestgrowingbroadband service provider inAustralia.Due to the increasing growth ofsubscribers and insufficiency of networkcapacity, small-capacity switchesand broadband remote access servers(BRAS) are encountering bottlenecks.Broadband services are restricted toInternet access and enterprise dedicatedline transmission, so it is difficult todeploy new value-added services.Facing fierce market competition,Amcom realizes that it is an urgent taskto restructure the exiting metro networkinto a new one capable of deliveringintegrated services. In addition toexpanding its IP core network, Amcomneeds to consider enhancing thebandwidth access capability of devicesat the convergence layer to deploymore value-added services. Amcomstarted the metro Ethernet networkproject in 2006, aiming to build a highqualitymulti-service bearer platform totransfer voice, data and video services inWestern Australia and provide end-userswith VoIP, broadband access, and IPTVservices.After careful sifting throughnetworking solutions proposed by globalleading equipment vendors and stricttests conducted for the equipments theysupplied, Amcom finally selected ZTEto build its new metro Ethernet networkin December 2006.Amcom adopts ZTE’s field-proven10-Gigabit Ethernet Smart Ring (ZESR)solution, where ZXR10 G-series highendrouting switches used. With modularand distributed architecture, ZXR10G-series core switches not only providestable and large-capacity wire-speedswitching, but also make use of ZTE’s patented ZESR technology that needsless than 50ms switching time in case oflink failure and can provide ideal endto-endQoS for varieties of services byusing traffic classification and queuingtechnologies. In addition, ZXR10G-series core switches can fully supportmulticast, VPN and network securitytechnologies, enabling Amcom to carryIPTV, VoIP and broadband services viathe same bearer network.To solve the network bottleneckproblem, Amcom deploys ZTE’s10G MPLS routing switches (ZXR10T64G) and ZXR10 3906 switches insix major cities across the country,offering superior large-capacity dataswitching and access capabilities. Todeliver multiple services such as voice,data, video and other broadband valueaddedservices, Amcom puts strictrequirements on network latency, jitterand packet loss rate. It adopts ZTE’snon-blocking routing, IP Diffserv,ToS and IEEE 802.1p/q technologiesto provide reliable end-to-end QoSguarantee.After the Gigabit Metro Ethernetnetwork was built and put into service,Amcom has seen an unprecedentedgrowth in broadband users. All data andtransmission products supplied by ZTEare running smoothly over the network,helping Amcom achieve expected profitsand win widespread recognition from theindustry and end-users.20 May 2008 ZTE TECHNOLOGIES

Third EyeZTE Shinesin CDMA MarketFebruary 2008, Nigel Wang and XJ Wang,from the well-known market research firm Yankee GroupCD M A , a s o n e o f t h em a i n s t r e a m c e l l u l a rtechnologies, has beentremendously successful inthe past 10 years. The North Americaand advanced Asia (including Japan andSouth Korea) markets have been drivingthe growth of CDMA, particularlyCDMA2000 1x EV-DO. TraditionalCDMA equipment manufacturers,namely Alcatel-Lucent, Nortel andMotorola, have been dominant inthose markets. As North American andadvanced Asian markets mature with amobile penetration rate more than 80%,emerging markets such as China, India,other emerging Asia-Pacific countries,Africa and Eastern Europe will drivethe growth of CDMA during the next5 years. More than 70% of the newCDMA subscriber base will come fromthe China and India markets.ZTE has performed extremely wellin the CDMA markets. Not only hasZTE sold more than 20 million CDMAhandsets globally, it has also wonmore than 70 CDMA infrastructureexpansion and new contracts in 2007,which placed it first in contract winsin 2007. ZTE has shipped more than68,000 sets of base stations since itentered the CDMA markets. ZTE’sglobal installed subscriber lines havemore than tripled from 30 millionlines in 2005 to 110 million lines bythe end of 2007. With the “swap out”agreement with Ericsson and ChinaUnicom in December 2007, ZTE isnow the dominant CDMA equipmentv e n d o r i n C h i n a ,w i t h m o r e t h a n34% market share,followed by Motorolawith 21% and Alcatel-Lucent with 20%.ZTE also holds acommanding positionin the Indian CDMAmarkets, to whichZ T E h a s s h i p p e dmore than 20,000 setsof base stations and10 million CDMAhandsets.I n t h i s Ya n k e eGroup Report, weevaluate major CDMAequipment vendors’c o m p e t i t i v e n e s su s i n g s e v e n k e yfactors, which areprice, technology,existing installed base,integration capability,product portfolio, government supportand company culture. We also divideCDMA markets into North America,Advanced Asia-Pacific, China, India,emerging Asia-Pacific, Africa, LatinAmerica and Eastern Europe. We thenweight competitiveness scores basedFigure 1 Global CDMA equipment vendor’scompetitiveness score and rankingZTE TECHNOLOGIES May 2008 21

Third Eyeon the subscriber ratio (ratio=regionalsub number/global sub number). Asshown in Figure 1, Alcatel-Lucent isranked number one, and will maintainits leadership position until 2009. ZTE isranked number two from 2007 to 2009–the gap between Alcatel-Lucent and ZTEis closing every year. Nortel and Huaweiare ranked third and fourth, respectively,in 2007 and 2008 with very small margin.ZTE’s increasing competitiveness iscredited to its large installed base inChina, India and emerging Asia-Pacific,as well as its long-term commitment andinvestment in CDMA technology.CDMA Market OverviewThe number of global CDMAmobile subscribers will grow from 381million in 2007 to 435 million in 2011,with the penetration rate reaching closeto 40%. 57% of the CDMA subscriberbase is in North America (UnitedStates and Canada) and advanced Asia-Pacific (South Korea and Japan). Themobile market in both North Americaand advanced Asia-Pacific is saturatingbecause of high mobile penetrationrate. In the past 10 years, NorthAmerica and advanced Asia-Pacifichave driven the growth of the CDMAmarket but as the market matures,the growth of the CDMA market willcome from the emerging markets.Particularly, China and India willbe the main driving force of CDMAduring the next 5 years.China will drive growth with theissuance of the 3G license and thetelecom market reorganization. Indiawill drive growth with Reliance, thesecond largest operator in India, addinga significant number of subscribers inaddition to further expansion of wirelesslocal loop (WLL) for Reliance, BSNLand Tata Telecom. Both cellular CDMAand WLL CDMA will grow in Indiabecause Reliance is committed to thelong-term development of CDMA.Furthermore, WLL is also set to developquickly in India given the need for costeffectiveways of extending telecominfrastructure in the vast rural areas ofIndia. In mature markets like NorthAmerica and the advanced Asia-Pacificregions (South Korea and Japan), systemupgrade to CDMA2000 1x EV-DORev. A and beyond is the main marketopportunity.CDMA Vendor CompetitivenessAnalysisThe CDMA supplier landscapehas changed significantly in the pastfew years. Emerging vendors ZTEand Huawei have been very activein emerging markets such as China,India, Africa and Asia-Pacific. Mostof the traditional suppliers, namelyAlcatel-Lucent, Ericsson, Motorola,Nortel and Samsung, have decided tocut back their R&D spending on theCDMA product portfolio. Ericsson’s exit from China Unicom is a goodexample. In this section, we use sevenkey factors to analyze CDMA vendors’competitiveness.■ Seven factors that reflect vendors’competitivenessYankee Group uses seven factorsto analyze a CDMA equipmentmanufacturer’s competitiveness. Ouranalysis is based on each vendor’s pastperformance and regional market growthpotential. We apply the same sevenfactors in different regional markets,which include North America, advancedAsia-Pacific, China, India, emergingAsia-Pacific, Africa, Latin America andEastern Europe. We rated each vendoron a scale of 1 to 5, where 5 indicates“best.”Factor 1: PriceCDMA equipment pricing is verysensitive in emerging markets, butless sensitive in mature markets suchas North America and advanced Asia-Pacific. In our analysis, we have scoredalmost the same for all vendors in NorthAmerica and advanced Asia-Pacific.Both Huawei and ZTE have been giventhe highest score in this category inemerging markets.Factor 2: TechnologyWe not only evaluate the technologycompetitiveness based on the currentCDMA technology maturity, but also thecompany’s commitment to the CDMAmarket and its continued investment inthe CDMA-related R&D. We gave highscores to Alcatel-Lucent, Huawei andZTE in this category.Factor 3: Existing installed baseExisting installed base is veryimportant for CDMA equipmentvendors’ market positioning. We gaveAlcatel-Lucent and Nortel very highscores in North America and advancedAsia-Pacific because of their dominantmarket position in those markets. Wealso gave Alcatel-Lucent, ZTE andMotorola very high scores in China.Huawei scored high in emerging Asia-Pacific and Latin America.Factor 4: Integration capabilityTheir integration capability is alsoa key factor for CDMA equipmentvendors to win business. We not onlyconsider the vendor’s experienceand track record in the area, but alsoanalyze how the vendor develops itsprofessional services business strategy.In this category, traditional vendors suchas Alcatel-Lucent, Nortel and Motorolahave clear advantages over emergingvendors such as ZTE and Huawei.Factor 5: Product portfolioProduct portfolio includes a radioaccess network (RAN), core networkand terminals. Huawei and ZTE have aclear advantage in this category. Alcatel-Lucent and Nortel scored low becausethey lack terminal products.Factor 6: Government supportIn this study, we use this factor toassess a government’s impact on a localtelecom market. In mature markets,22 May 2008 ZTE TECHNOLOGIES

we gave Alcatel-Lucent, Motorola andNortel relatively high scores. For China,India and other emerging market, wehave given Huawei and ZTE relativelyhigh scores. A government’s impact ismore significant in emerging marketsthan mature markets.Factor 7: Company cultureCompany culture reflects thevendor’s relationship with carriers,employee turnover and localization.Alcatel-Lucent, Nortel and Motorolascored high in North America andadvanced Asia-Pacific. Huawei and ZTEscored very low in North America, butrelatively high in China and India.■ Vendor competitiveness analysisUsing the seven factors, we scoredmajor CDMA equipment vendors’competitiveness by major markets. Asshown in Figure 2, Alcatel-Lucent andNortel are the most competitive vendorsin North America and advanced Asia-Pacific, followed by Motorola. ZTE isthe most competitive vendor in China,followed by Alcatel-Lucent, Motorola,Huawei and Nortel. ZTE is the mostcompetitive vendor in India, emergingAsia-Pacific and Africa, followed byHuawei and Alcatel-Lucent. Huawei isthe most competitive vendor in LatinAmerica, followed by ZTE, Alcatel-Lucent, Motorola and Nortel. InEastern Europe, ZTE is ranked as themost competitive vendor, followed byHuawei, Motorola, Nortel and Alcatel-Lucent.ZTE has been winning market sharein the CDMA market. Among the top sixCDMA operators, namely Verizon (with64 million subscribers), China Unicom(with 41 million subscribers), SprintNextel (with 35 million subscribers),Reliance (with 31 million subscribers)and KDDI (with 29 million subscribers),ZTE has a strong presence and installedbase with both China Unicom andReliance. The company’s strongposition in China, India and emergingmarkets has rated itvery competitive basedon our seven factors.A m o n g t h e s e v e nfactors, ZTE’s topthree competencies arecompetitive pricing,technology and productportfolio that coversRAN, core networkand terminals. ZTE isthe most competitivetelecom vendor inChina, India, emergingAsia-Pacific, Africa andEastern Europe.Market Opportunityfor CDMA VendorsCDMA2000 EV-DORev. A and BeyondAlcatel-Lucent hascaptured most of theCDMA2000 1x EV-DO Rev. A networkupgrade business so far through networkupgrade deals with Verizon Wireless andSprint Nextel. Most recently, Alcatel-Lucent also won the first commercialdeployment of CDMA2000 1x EV-DORev. A network in Macau for ChinaUnicom. The CDMA2000 networkupgrade opportunity is clearly inCDMA2000 1x EV-DO Rev A. Onlya company with strong CDMA20001x EV-DO Rev. A solutions will havea chance to continue competing in theCDMA markets.Noticeably, according to CDG,ZTE has won more than 10 contractsin deploying commercial CDMA20001x EV-DO Rev. A networks, includingone with AirCell in the US market.Recently, top CDMA operator VerizonWireless announced that it will adoptLTE as its 4G evolution strategy.This has opened new opportunity forcompanies such as Alcatel-Lucentand ZTE, both have been developingLTE products for CDMA2000 1x EV-Figure 2 CDMA equipment vendors’ competitiveness by regionDO Rev A. Verizon’s move will likelycreate challenges for its traditionalinfrastructure vendor Nortel andMotorola; both have been cutting backtheir R&D investments on CDMAproducts. The lack of R&D capabilityin developing LTE for CDMA2000 willeventually prompt Nortel and Motorolato work with either ZTE or Huawei inthis area.We believe CDMA migration pathfaces great uncertainty beyond EV-DORev A. The US wireless market hasbeen the home of CDMA. With Verizonand Sprint Nextel picking LTE andmobile WiMAX as their 4G evolutionpath, respectively, it is almost certainthat CDMA’s life will not go beyondEV-DO Rev A. CDMA’s 4G migrationpath using LTE or mobile WiMAX willcreate new opportunities for Alcatel-Lucent, ZTE and Huawei. Alcatel-Lucent and ZTE, with their largeexisting installed base, have the bestchance to win CDMA’s 4G evolutionbusiness.ZTE TECHNOLOGIES May 2008 23

Tech FeatureEasyservice Reducing OPEXof Broadband ServicesWang Fengyan24 May 2008 ZTE TECHNOLOGIES

With the fast developmentof broadband accesstechnology, broadbandservices are receivingincreasing popularity. Almost all fixedlineoperators are deploying or goingto deploy their broadband accessnetworks, trying to develop morevaluable broadband services to increasetheir revenue. Meanwhile, customersalso show deep concern in broadbandservices and are willing to pay moremoney for experiencing new services.According to the PointTopic statistics,by the end of Q3 2007 there were328.8 million broadband subscribersworldwide and in the next few yearsthe broadband subscriber base willmaintain a very high annual growth rate.The broadband services have generatedsignificant revenue to operators.Especially, the revenue from broadbandvalue-added services continues to growat faster pace. Broadband services arebecoming a main revenue resourcefor fixed-line operators and will playan important role in their businessoperation.Broadband services not only bringabout considerable revenue but alsopresent a big challenge to operators.The capital expenditure (CAPEX) andoperating expenditure (OPEX) are thetwo dominant cost factors that operatorsneed to consider during the wholelife cycle of the services. Comparedwith CAPEX, the OPEX issue is moreimportant because it is basically a longtermexpenditure that covers very broadaspects. Many high-end operators paymore attention to the OPEX factor ofbroadband service solutions, and aretrying to find out an effective modeto cut it down. The OPEX issue hasbecome an important and urgent task foroperators’ business operation.T h e O P E X o f b r o a d b a n dservices mainly involves three parts:management cost, maintenance costand marketing cost. The managementcost is based on the new technologym a n a g e m e n t , n e w e q u i p m e n tmanagement and the associatedhuman resource management. For theintroduction of a new technology, itmight take a long time and cost a hugeamount of money for operators tounderstand and master the technology.For the new equipment, operators shalllay down some related managementprocedures and regulations and establisha new management team as required,which also needs a certain numberof investment portfolios. Generally,the new technology managementand new equipment management areboth related to the increase of humanresource cost, thus resulting in theincrease of OPEX. The maintenancecost includes the maintenance toolsfee, onsite maintenance fee, customerservice center operation cost andrelevant traffic fee. Currently the mostpopular broadband access is the DigitalSubscriber Line (xDSL), and the PassiveOptical Network (PON) technology willbe widely applied in the coming years.According to the statistics, about 65%of all broadband application failuresoccur at the broadband home user side ,25% of the failures occur at the copperor fiber access side, and only 10% ofthe failures are found on the broadbandaccess and upper-level systems. Thestatistical figure clearly shows mostof the maintenance cost is caused bythe failures at the users’ home side,which leads to the increase of OPEX.Therefore, it is very important foroperators to reduce the related onsitemaintenance cost. The marketing costis another factor contributing to highOPEX. To attract more users, operatorsneed to launch more aggressivemarketing campaigns such as newservice and product announcements,advertisements and telephone callpromotion.An effective way to cut down OPEXis to build a new business operationmode, i.e., service-oriented and pointto-pointservice operation. Under thismode, the network operation featuresthree major transformations: fromaccess-oriented to service-oriented,from equipment-centered to customercentered,and from manpowerconcentratedto knowledge-based.With the three transformations, theservice operation is greatly enhanced.Firstly, a knowledge-based system isZTE TECHNOLOGIES May 2008 25

Tech Featureset up to help operators understand andmaster new technologies. Secondly, anoperator-to-user channel is created notonly to help users handle exceptions andfaults but also to help operators launchand promote new services. Thirdly, thebroadband services operation procedureis established to help operators optimizeservice management.Considering all these factors,ZTE has developed and launched itsEasyservice (ZXESS), a new broadbandservices supporting system to helpbroadband service operators reducetheir OPEX. Easyservice is a serviceorientedand expert knowledge-basedservice supporting system that consistsof a series of software function modulesat both the office side and the broadbanduser side. The software modules atthe office side are normally deployedin the operator network side and theones at the broadband user side aredeployed in the user home. Throughthe cooperation of these two parts, theEasyservice system forms a unified endto-endbroadband service supportingsolution, enabling operators to expandtheir service operation scope from thetelecom network equipment to the homeusers.As shown in Figure 1, the software atthe office side contains five functionalmodules: EasyCSM, EasyOptical,EasyMaintenance, EasyGateway andEasyMarketing. EasyCSM located in theFigure 1 Architecture of Easyservicecustomer service center is responsible forfault complaint handling. The positionoperators working in the customerservice center can use EasyCSM tohandle fault complaints and remove thefaults, especially home network relatedfaults. Through the import of diagnosticcodes and expert knowledge base andwith the assistance of EasyAssistantat the user side, EasyCSM can helpoperators dramatically reduce onsitemaintenance and thus lower broadbandcomplaints. EasyOptical is the PONorientedmaintenance proceduremanagement software responsible forPON fault diagnosis, maintenanceprocedure management and PON accesscapability optimization. Adopting theservice application-oriented failurediagnosis technology, EasyOptical canhelp operators optimize the managementprocedure, shorten failure diagnosistime, and improve PON maintenanceefficiency. EasyMaintenance is theDSL-oriented maintenance proceduremanagement software that fulfilssimilar functions like EasyOpticalover the DSL network. EasyGatewayis the Customer Premises Equipment(CPE) remote management softwarebased on the TR-069 protocol. It actsas an Auto Configuration Server (ACS)and implements remote managementof home network terminals includingremote terminal version management,software upgrade and fault diagnosis,thereby reducing onsite operation andmaintenance and improving serviceefficiency. EasyMarketing is the valueaddedservice supporting softwareresponsible for broadband servicespromotion management. It is speciallydesigned to help operators change theirbusiness marketing mode, drive thepenetration of broadband services, andboost marketing efficiency.The software at the broadband userside consists of two functional modules:EasyGuider and EasyAssistant.EasyGuider is the terminal installationnavigation software that helps operatorsaddress the service access issue at theuser side, lowering service fulfillmentcosts and improving the efficiency.EasyAssistant is the home networkservice terminal software that canresolve failures related to broadbandaccess, including the failures occurringin both the PC and CPE. Through theself-diagnosis function of EasyAssistant,users can detect and remove mostof the failures themselves, thusgreatly lowering the operator’s O&Minvestment and enhancing broadbandservice quality. Moreover, EasyAssistantbuilds a broadband service supportingchannel between broadband users andoperators, so that operators can easilypush new services and advertisements tobroadband users the first time and meettheir specific needs for customization.As the broadband technology andservices are developing day by day, theservice supporting technology also has tobe developed accordingly. Easyservice,as a future-oriented broadband servicesupporting system, is now following thelatest trends in broadband, supporting notonly fixed-line broadband services butalso mobile broadband services basedon the WiMAX or 3G in the near future.With the abundant experience in thebroadband field, ZTE’s Easyservice willbring more convenience and cost savingsto service operators.26 May 2008 ZTE TECHNOLOGIES

Engineering ServicesETC’s MobileMillennium ProjectWu Xingyu, Qi DianningEthiopian TelecommunicationsCorporation (ETC) is oneof the earliest state-ownedcompanies in Ethiopia thatholds the country’s telecom monopoly.ETC has deployed a 900M/1800M GSMnetwork with a capacity of 800,000lines in Addis Ababa, the capital city.The GSM system in 1800M frequencyband was constructed by Nokia, and hasa capacity of 450,000 lines; the GSMsystem in 900M frequency band wasinstalled by Ericsson, and has a capacityof 350,000 lines. The actual users hadreached 750,000, reaching saturationlevels. The network is severelycongested that ETC stopped selling SIMcards at the beginning of 2007, and aSIM card became hardly available. Sucha network cannot accommodate thegrowing traffic volumes and the needto upgrade the current network becameincreasingly urgent with the advent ofEthiopian millennium.Striking the DealAccording to the Ethiopian calendar,September 11, 2007 is the start ofthe 2000th year. To ensure that allmillennium activities were carried outsmoothly, the Ethiopian governmentrequired ETC to guarantee a smoothand trouble-free mobile communicationduring the millennium celebrationperiod. ETC, accordingly, put forwardthe “millennium project”. In late 2006,ETC signed a three-year frameworkagreement with ZTE as the sole supplierfor its expansion projects worth US$1.5billion. In April 2007, ETC signed aformal contract with ZTE. Under thecontract, ZTE will upgrade ETC’snetwork for the upcoming Ethiopianmillennium celebration.This is the first substantial contractsince the framework agreement wassigned between ZTE and ETC. Itssuccess would have a far-reachingZTE TECHNOLOGIES May 2008 27

Engineering Servicesimpact on ZTE’s development in theEthiopian market. ZTE paid muchattention to this project, and madea series of plans while developing aschedule of the milestones of the project.A Key PathThe core network construction timeis long, and the debugging of otherequipment could not be completedwithout the cooperation of the corenetwork. Therefore, the project teamdecided to devote strong forces tobuilding the core network in advance.In the process, several team membersspent multiple sleepless nights in theoperator’s equipment room while thebackline experts stayed in the equipmentroom of Nanjing R&D Center to provideremote online support.A Race Against TimeEthiopia’s rainy season starts frommid-to-late June, which presentsan unfavorable condition for theconstruction of base station sites,especially the iron tower groundwork.To ensure project progress, the projectteam decided to complete the site civilengineering as much as possible beforethe rainy season.The project team concentrated theirefforts on the iron tower groundwork assoon as the materials arrived. After onemonth’s hard work, ZTE had finished thecivil engineering of most sites by the endof June 2007, building a solid foundationfor the commissioning of new sites.Elaborate OrganizationMassive base station and powersupply modules arrived in mid-July 2007, and ZTE had to completeequipment installation before August15th, 2007. Because of time pressure andheavy workload, the frontline leadersurgently transferred an engineering teamof hundreds of workers from China tothe project site.There existed many coordinationdifficulties in commissioning the basestations in the capital city, but underthe elaborate organization of the teamleaders, all base stations in the capitalcity were unexpectedly installed on time.Removing Problems to ImprovePerformanceSeptember 1st to 6th 2007 was theperiod to improve an overall networkperformance before number allocation.Cross talk effects occurred in a largeThe EthiopianPremier Meles Zenawi highlypraised the project, ' This isunprecedented in the Ethiopiantelecommunications history'area on September 1st; facilitated bythe project team, ETC engineers locatedthe problem at a BSC of the N companyafter one day’s dial test, and coordinatedwith the N company which then quicklysolved it. On the night of September7th, it became impossible to call froma number segment; dialing a regularnumber would initiate the prepaidservice process; with the help of theproject team, the problem was located atan intelligent network of the H companythrough dial test and signal tracing, andwas soon settled. For some particularareas that experienced severe congestionproblems, the project team balancedthe network traffic and improved thenetwork performance by adjustingcell reselection parameter, handoverparameter and antenna feeder, as well asproviding Half Rate (HR) support.Millennium EveZTE and ETC jointly formed amillennium network safety assuranceteam to guarantee the stable networkoperation during the festival.On September 16th, 2007, a goodnews was sent from Ethiopia: “Ethiopiannetwork got through millennium’speak traffic in a stable manner”. SinceSeptember 10th, 2007, the new networktraffic had reached record heights andsurged from 9,000 Erl per hour to thehighest peak 14,000 Erl per hour onthe night of September 12th, 2007,and the whole network operated stablythroughout. The whole network traffic inthe capital city had decreased to a normallevel by 6:00 in the evening of September13, indicating the networkhad gotten through the peaktraffic during the millenniumcelebration. Currently, allnetwork performance indiceswere superior to the indicesbefore the cutover. The GSMnetwork added nearly 90,000subscribers in just four days,and the Ethiopians, for the first time,enjoyed GSM short message service atNew Year’s Eve.Good Project Leads to New ContractThis project lasted for less than 5months, starting from April 25th untilSeptember 11th, 2007, Ethiopia’s newmillennium. The team members haveovercome many difficulties: shortperiod, rainy season, and high technicalrisk involved in relocation and cutover.And they finally completed the projecton schedule, with the required quality,giving a millennium gift to Ethiopians.The Ethiopian Premier Meles Zenawihighly praised the project, “Thisis unprecedented in the Ethiopiantelecommunications history”.The successful implementation ofthe millennium project also resultedfrom ETC’s effective coordinationand support. After the millenniumcelebration, another piece of goodnews came: “ZTE received a phase twocontract valued at US$500 million fromETC”.28 May 2008 ZTE TECHNOLOGIES

HandsetsZTE Unveils New Handsets in the U.S.Two multimedia AWS handsets offer U.S. carriers additional choices fordevices operating on the AWS spectrumZTE USA, Inc., a subsidiary ofZTE Corporation, announcedat CTIA Wireless 2008 theavailability of two newhandsets for the U.S. market, the ZTEC78 and the ZTE C79 music phone. Thehandsets are among the first in the U.S.market to operate on the AWS frequencybands, in addition to the PCS andCellular bands. Carriers who operateon these frequencies can now providesubscribers access to current and nextgeneration voice, data and multimediaapplications with ZTE’s high qualityand affordable multimedia handsets.The C78 and C79 will join the recentlyannounced C88 in ZTE’s portfolio ofhandsets for the U.S. market.“With the recent availability ofthe new AWS spectrum, carriers nowhave the potential to provide expandedwireless services to U.S. customers.Selecting the right device is a keyto bringing the benefits of the newspectrum to life for end-users,” said Dr.George Sun, CEO of ZTE USA. “OurC78new handsets allow U.S. carriers, bothlarge and small, to leverage the AWSspectrum and fully profit from theirinvestments in the spectrum.”The C79 is a full-featured and easyto-useflip phone which includes anMP3 music player, 1.3 megapixelcamera, stereo Bluetooth, a 2 inchhigh resolution screen and support forMicroSD removable memory cards.The C78 handset is an affordable“candy bar”-shaped phone equippedwith a VGA camera and capabilitiesfor multimedia messaging and Internetbrowsing. It also enables hands-freeC79conversation through wireless headsetssupporting Bluetooth.As with all its products, ZTE bothdesigns and manufactures its handsetsin-house. This end-to-end approachenables ZTE to offer feature-rich, highquality phones at an attractive pricepoint.ZTE offers a full portfolio of end-toendwireless handset and networkingsolutions in the U.S. that are designed tooffer quality and technology innovationat affordable prices. The company’sh a n d s e t s h a v e w o n n u m e r o u sinternational design awards.ZTE TECHNOLOGIES May 2008 29

30 May 2008 ZTE TECHNOLOGIES