EMOBILE: the mobile broadband revolutionist - Huawei

Voice from Operators 

Perspective 

Tao of Business 

Winners 

02/09 

Initial issue 

Internet puzzle: how can 

operators solve it? 

Huawei views on future 

industry trends 

EMOBILE: the 

mobile broadband 

revolutionist 

Vodafone Romania: growth 

from one 2G/3G network 

China Mobile powered by All-IP

At Huawei, we know that simple ideas can lead to big things. In much the 

same way a tiny acorn can grow into an oak tree, we strive to realize your 

full potential through innovative products and solutions. 

We devote 43% of our entire staff of over 82,000 people to R&D, which is 

just one of the reasons why the world’s top telecom network operators 

choose us as their partner. 

We are committed to looking after your needs every step of the way. B y 

putting you first, we grow your business to be as lasting and enduring as the 

oak tree itself. That’s why at Huawei, we help you realize your potential from 

the simplest of ideas, to ultimate success.

02/09 

Initial issue 

Editorial 

Sponsor 

Huawei Technologies Co., Ltd. 

Publisher 

Huawei COMMUNICATE Editorial Board 

Consultants 

Hu Houkun, Xu Zhijun, Xu Wenwei 

Tao Jingwen, Huang Chaowen, Yu Xiangping 

Editor-in-Chief 

Gao Xianrui (sally@huawei.com) 

Editors 

Xue Hua, Pan Tao, Julia Yao 

Xu Ping, Xu Peng, Li Xuefeng 

Joy Zhou, Chen Yuhong, Liu Zhonglin 

Michael Huang, Joyce Fan, Wang Hongjun 

Mike Bossick, Gary Maidment 

Art Editor 

Zhou Shumin 

Contributors 

Zhu Yonggang, Hou Jinlong, Zhang Xinyu 

Lu Xingang, Xiong Wei, Xie Jingping 

Yan Yun, Zhang Qin, Mei Zheng 

Xu Yan, Cao Jianhui, Wu Yanning 

Sato Masako, Yang Xiaoxu, Robert Fox 

Tel: +86 755 28780808 

Fax: +86 755 28356180 

Address: A10, Huawei Industrial Base, 

Bantian, Longgang, Shenzhen, 

China 518129 

E-mail: HWtech@huawei.com 

Publication registration No.: 

Yue B No.10148 

The information contained in this document is for 

reference purpose only, and is subject to change 

or withdrawal according to specific customer 

requirements and conditions. 

Copyright © 2009 Huawei Technologies Co., Ltd. 

All Rights Reserved. 

No part of this issue may be reproduced or 

transmitted in any form or by any means without 

prior written consent of Huawei Technologies Co., Ltd. 

Winning the game 

Mushrooming growth, rushing revenue streams and skyrocketing share 

prices are the goals of most telecom companies. In pursuit of these ideals, 

a close eye should be kept on development and market trends, then select 

one or more successful enterprises in the industry as a benchmark, drawing 

upon the strength of others to avoid costly and unnecessary mistakes. 

In the past decade, the telecom industry has experienced dynamic 

growth and rapid development. In spite of ups and downs, transformation 

has continued unabated. New concepts, technologies, and models 

emerge in an endless stream driving the industry into new realms of 

communication. In 2009, against the backdrop of a global economic 

downturn, the telecom industry needs to adapt to meet new challenges 

and seize all opportunities to create even broader development space. 

As a comprehensive telecom equipment and solution provider, 

Huawei pilots the same course as the operators. Development trends in 

communications technology, including full-service operations, mobile, 

broadband, and the Internet, expansion of communications networks 

around the world, increasing market competition and technology upgrades 

create tremendous pressure and numerous challenges for all of us in the 

industry. 

There are many questions such as: What is the best way to ensure 

a smooth upgrade of current networks while protecting investment? 

How do you improve ARPU while reducing OPEX and CAPEX? How 

can materials, land, and man hours be saved while fulfilling the social 

responsibility of environmental protection, energy conservation and 

emissions reduction? How does a company enlarge the scale effect to cope 

with fierce competition in the global communications market? … 

To ring in the spring of 2009, we introduced this new publication, with 

a keen focus on creative solutions for dealing with the myriad of challenges 

in the current telecom operations market. Successful players in the global 

telecom market are invited to share their thoughts, reflections, and 

experiences in strategic conception, market operations, and technological 

choices. In the columns -Tao of Business and Perspective, senior industry 

experts are invited to elaborate on industry development trends and 

evolution. By probing a host of Winners around the world, we will share 

with you their wisdom, experience, and vision. 

We believe today’s rewarding practice promises to give you success 

recipes for the future. 

For electronic version and subscription, 

please visit www.huawei.com 

Kevin Tao 

President of Huawei Global 

Technical Sales Dept.

Voice from Operators Perspective Tao of Business Winners 

02/09 

Initial issue 



Huawei views on future 

industry trends 

EMOBILE: the 





China Mobile powered by All-IP 

02/09 

Initial issue 

WHAT’S 

INSIDE 

Voice from Operators 

01 

Bharti Airtel: leading mobile 

revolution through innovation 

Bharti Airtel is on a journey of 

excellence through innovation. This 

journey definitely has no destination. 

Other than that Bharti Airtel will 

continue to be a catalyst to India’s 

economy and an engine for the 

economic growth. –Manoj Kohli, 

CEO of Bharti Airtel 

07 

EMOBILE: the mobile broadband 


EMOBILE is Japan’s newest and 

fastest growing mobile operator. In 

less than two years, it has already 

carved out a strong niche in mobile 

broadband.What are its unique 

business model and future ambitions? 

Dr. Sachio Semmoto,the founder, 

Chairman and CEO, will tell us. 

Perspective 

11 

Huawei views on future industry 

trends


25 

AIS keeps Thailand smiling 

15 



Kevin Lee from In-Stat: 

Operators are in quite a 

predicament with value-added 

Internet services. But they are 

too big and slow on the uptake, 

not able to move as quickly as 

the small companies. How can 

operators solve the puzzle? 

28 

31 

PCCW builds a CDMA 

broadband bridge 

Reliance: growth has no limit 

35 

Orange dreams come true 

18 

Winners 

21 

Inspiration from 

Internet business models 

Internet reinforces its leading 

position with a growing 

penetration rate and fast-increasing 

user base. Can telecom operators 

transplant the Internet-related 

technologies and successful 

business models, so as to find a 

new profit stream? 

Optus: opening up the outback 

39 

42 

45 

China Mobile powered 

by All-IP 

MegaFon transforms and 

prepares for 3G 



In April 2008, Vodafone Romania heaved a sigh 

of relief: They no longer had to deal with the 

maintenance of independent and complicated 2G 

and 3G networks.

VOICE 

FROM OPERATORS 

Bharti Airtel 

leading mobile revolution 

through innovation 

“What is most innovative about Bharti Airtel in my opinion is their business model and how they 

construct their company. It’s quite different from the rest of our industry,” recommended by Craig 

Ehrlich, former Chairman of GSMA. At GSMA Asian Congress in November 2008, Mr. Manoj Kohli, 

President and CEO of Bharti Airtel delivered a keynote speech themed Leading Mobile Revolution 

through Innovation, and shared with the industry peers their key to success. 

By Manoj Kohli, CEO of Bharti Airtel 

Seizing the huge potential 

India has the second largest population in the world. 

In a couple of decades, India will probably surpass 

China in population. The GDP growth rate, which 

was around 9% in India has marginally come down 

to about 7%. This is actually a sustainable growth rate, 

given the current global financial impact of today. The 

GDP of India is about USD1 trillion and grows at a rate 

of about 8% a year. In six years, we can double the GDP 

to USD2 trillion . 

The India telecom sector will be a catalyst to the 

growing economy and continue to show healthy growth 

both in customers and traffic at a very speedy rate. 

Inflation has fortunately come down to 6% from a high of 

over 12%, meaning that there is more and more disposable 

income coming to the telecom, media, and Internet 

services from other sectors. Luckily for Bharti Airtel, a 

zero-debt company, financing is not a problem. We can 

finance the growth and lead future growth in a very robust 

way. 

The mobile penetration is quite low at around 27%, 

with over 346 million mobile subscribers as of the end of 

December 2008, among them over 84 million are Airtel 

(wireless) brand users. Unfortunately, the broadband 

penetration is as low as 0.42% with over 5.3 million users. 

The good thing is that now the government is promoting 

broadband, targeting to reach 20 million broadband 

subscribers by 2010. The broadband revolution is 

following the mobile revolution and the Indian economy. 

Clearly, India has deep domestic demand and fantastic 

potential for growth in the next few years. 

Key drivers of telecom growth 

Based on the prediction for the next five years for 

1 

Win-Win / FEB 2009

Bharti Airtel is on a 

journey of excellence through 

innovation. This journey 

definitely has no destination. 

Other than that Bharti Airtel 

will continue to be a 

catalyst to India’s economy 

and an engine for the 

economic growth. 

— Manoj Kohli, CEO of Bharti Airtel 

FEB 2009 / Win-Win 

2

VOICE 


Under our unique business model, we assume the roles of supervisor, planner, 

governor and quality control inspector. By partnering with strong global partners, 

we are able to successfully develop and focus on the core competence. 

the Indian telecom industry, the wireless subscriber base 

should grow from around 350 million in 2008 to 500 

million in 2010. It is safe to say that India is the second 

largest market after China, but still a very large market 

with only a 61% projected penetration rate by 2012. The 

wireless revenue could be about USD37 billion in 2012. 

What are the key drivers for growth? The most 

important thing is an affordable tariff, which is about 

1.5 cents/minute. That is why the MOU in India is about 

513 minutes a month. Second, incomes are rising, not 

only in the urban areas, but also in the rural areas. 

Third, I can remember the handset price at the 

beginning was USD200. We now have handsets that are 

USD20. This is definitely a big trigger of growth. 

Fourth, rural economic prosperity is certainly going 

up. In India, close to half of the economy is rural, and it 

is a cash economy. The money doesn’t go through banks. 

We have covered about 400 thousand out of a total of 600 

thousand villages. 

Fifth, the youth segment is going to develop. According 

to demographic analysis, young people are the highest 

percentage of the population in India. As many Asian 

countries are aging, the Indian population is becoming 

younger. The youth segment is important for all of the 

telecom operators in India. 

Finally, new technologies like 3G are going to be 

launched in India in 2009, providing another very good 

growth opportunity. 

The India telecom industry began taking off in 2003. 

During the last few months, we saw over 10 million net 

added subscribers per month in India. I don’t think any 

other countries in the world have achieved this kind of 

figure. It clearly shows that operators in India have rolled 

out the networks very swiftly and rolled out distribution 

close to customers, including their homes and offices. 

Innovation-Airtel’s key enabler 

India is the most competitive and a very hard-fought 

market in the telecom world. There are now about 11 

to 12 players in every state. In October 2008, three 

international brands including NTT DoCoMo, Telenor 

and Etisalat entered India and heated up the competition. 

We at Bharti Airtel welcome competition, and believe we 

can actually become stronger as new competition enters 

the marketplace. 

Bharti Airtel continues to lead the market, and our 

leadership is due to our commitment to affordability for 

Indian customers. Offering world-class, innovative and 

world’s most affordable tariffs at 1.5 cents/minute, we have 

achieved more than 33% of the regular GSM market share 

in India. More than half of our new customers are coming 

from the villages. 

Unique business model 

Innovation was not a choice for us, innovation was 

a necessity for us. For achieving the lowest costs for the 

production of minutes in India, we need to have the lowest 

cost possible. We therefore launched in 2002 a unique 

business model featuring outsourcing the five big portions 

of our operations. 

First, we outsourced our network to leading 

international vendors. In the network partner selection, we 

began with a very innovative way of buying networks since 

we started in 2003. At that time, we were buying about 

2,000 black boxes. We didn’t understand many of those 

black boxes as we are not technologists. But we understood 

customers, people, and the market. So we started buying 

lines and capacity from our partners. We paid the partners 

by every user capacity in terms of lines. We also had 

3 

Win-Win / FEB 2009

managed services managed by vendors. Today, I can say 

that those vendors have given us the power to rollout up to 

3,000 towers per month. I think this innovative business 

model has been very successful. 

IT outsourcing is more innovative than network. IT 

is the backbone for any telecom company in the world, 

whether it is the billing system, IN system, or CRM 

system. So we went to IBM in 2003 and let them run our 

IT systems end to end. Now, all hardware, software, and 

services are handled by the IBM employees who work for 

Bharti Airtel. 

IBM tailored 65 platforms for us and we pay IBM 

a percentage of our top line and revenue. There is no 

linkage with how many new services, new software, or new 

hardware has come online in a month. It is just simply 

linked to the top line and we pay this amount to IBM. 

There is a short case project for IBM globally. Based on the 

project, IBM is getting many new contracts in the telecom 

sector across the globe. 

For customer service and call centers, we have five to six 

partners who are high quality global partners. We know 

that if every customer calls us each month, we will have 

80 million calls a month. So we need very large capacity 

call centers. 70% of our present call centers are outsourced 

to our partners who are very high-quality global partners. 

30% of the present call centers are being outsourced now 

and will be completed within the next six months or so. 

These partners focus on the output factor of the customers. 

If the customer satisfaction goes up, these partners get 

more fees from us. If it goes down, these partners have to 

suffer. 

By completely outsourcing the entire distribution of 

the company, we have built up the strongest distribution 

force in India. We have thousands of distributors and 

more than one million retail points in India. Our target is 

that by 2010, the number of retail points will reach close 

to 2 million. There is a match box distribution strategy in 

India–wherever a match is sold, Bharti Airtel’s services will 

also be sold. This will make our distribution the deepest 

in the world. We see that local retailer and local outlets 

are the best way to promote Bharti Airtel. Hence, we do 

not own the distribution of the company, including large 

showrooms with our exclusive Airtel Relationship Centres 

and other small showrooms that are not exclusively Airtel. 

Last but not least, the passive infrastructure is all 

open for sharing with other operators. I think it is very 

important that we collaborate when the competitive 

intensity is at a cut-throat level in India. With more 

operators sharing the infrastructure, the cost of our 

network operation actually is coming down steadily. 

A clear example is Indus Towers, where Bharti Airtel, 

Vodafone and Idea Cellular are the joint venture partners. 

I think in the coming few years, the average tendency will 

be that one tower is shared by 2-3 operators. 

In conclusion, under this unique business model, 

Bharti Airtel has assumed the roles of supervisor, planner, 

About Bharti Airtel Limited 

Bharti Airtel Limited, a group company of Bharti Enterprises, is Asia’s leading integrated telecom services provider with 

operations in India and Sri Lanka and has an aggregate of over 88 million customers as at the end of December 2008. Bharti 

Airtel Limited has been voted as India’s most innovative company, in a survey conducted by The Wall Street Journal. 


4

VOICE 


Bharti Airtel continues to lead the market, and our leadership is 

due to our commitment to affordability for Indian customers. Offering worldclass, 

innovative and world’s most affordable tariffs at 1.5 cents/minute, we have 

achieved more than 33% of the regular GSM market share in India. 

governor and quality control inspector. By partnering with 

strong global partners, Bharti Airtel is able to successfully 

develop and focus on the core competence. 

Product innovation 

Production innovation is a delightful journey which 

has allowed Bharti Airtel to win the hearts of millions 

of Indian customers. Bharti Airtel comes out with new 

ideas and new products every month. Although some new 

customers don’t use them, customers like to feel that the 

brand image of Bharti Airtel is innovative and really brings 

new ideas every day. 

Examples include the Micro Prepaid. We started it 

in 2004, and now all our million plus retailers offer this 

service. Through e-charging, low-educated or even illiterate 

retailers can use e-charging instead of a paper recharge 

card. This is a very good innovation that customers are 

delighted with because they can buy talk-time near their 

offices or at home. Retailers are happy because they don’t 

have to keep a large inventory on hand. Money is all kept 

on the phone, which is fantastic. More than USD5 billion 

in transactions happen on this system every year. 

Another example is Lifetime Prepaid which we 

launched about two-and-half years ago. With the Easy 

Lifetime, a customer can stay mobile for his entire life by 

paying just about USD2 per month. Easy Lifetime is an 

unprecedented move in the Indian telecom sector. If you 

ask an Indian customer today which product he/she will 

buy, they will invariably say, “I will buy Lifetime Prepaid 

from Bharti Airtel.” Lifetime has lots of benefits for the 

millions of customers who are using it every month. 

On the content side, Indian people are really passionate 

about music, Bollywood, games and a lot of other content. 

We have been very innovative in this field and we believe 

that if we give more such exciting content to our customers 

that they use, it will keep them loyal to the brand. 

With all these products launched, including Hello 

Tunes, Music on Demand, Easy Music, and Song Catcher 

where you can get somebody else’s ring back tones, Bharti 

Airtel has become the largest music company in India. 

We are not a music company, but by being a telecom 

company, we are the largest music company, because the 

volume of downloaded music is the highest in India and 

more than any other music company. 

Innovation for the future 

We see the future very differently. We feel that in the 

future, technology will give us speed. The service providers 

have to aggregate. Customers do not want to go to many 

brands, customers want to have one brand which they 

like, and hence service providers have to aggregate and 

make it simple. Customers clearly want affordability and 

the differences between customers will vanish. If you 

move ahead, some customers want to use more music or 

data. The rural market is opening up, while the industry is 

seeing lots of convergence, including media, telecom, and 

the Internet. 

Exploiting rural and youth opportunities 

On the rural side, we are doing a lot of work at 400 

thousand villages in India. We are helping the farmers in 

India to get commodity prices, agricultural information 

and agricultural help lines for buying fertilizer and 

pesticide. We also help them to learn English. We are 

helping the fertilizer co-operative reach the farmers. About 

55 million farmers are going digital, including doctors 

5 

Win-Win / FEB 2009

We also focus on new business opportunities to gain higher share. 

Now we are focusing on the telecom wallet share. We are an integrated 

company, so we will pick up the entire wallet of our customers, whether it is for 

the Internet, media, satellite TV or IPTV. 

on call, health care givers, animal husbandry workers, 

veterinarians, etc. We really are impacting rural India in a 

very big way. 

Moving ahead, we also focus a lot on youth in India. 

They like chatting, dating, gaming, voice SMS. As an 

example, voice MSM simplifies the communication. We 

want to make our products and services a simple service 

like voice MSM that is close to the heart of our customers. 

Mobile commerce is also a big potential area. In India, 

we have domestic money transfers amounting to about 

USD40 billion and international remittances around 

USD42 billion, so we have more than USD80 billion in 

money transfers that we can do in India. Recently, Bill 

Gates was in India and helped us to get the automation 

done for money transfers. I think the bank is helping 

us, and GSMA is helping us as well. Mobile commerce 

actually will be a big part. 

Half the economy in India is a cash economy and we 

would like to help the consumers to transfer their money 

from one place to another, maybe from cities to villages, 

in a very secure fashion, so that people will have no worry 

of losing money at any time. We are helping customers go 

mobile with their transactions. For paying bills, money 

transfers, recharging and everything else, the mobile 

should be the only instrument needed instead of so many 

cards. 

Innovation is core 

Innovation is the core of success of Bharti Airtel. We 

will leverage the existing core capabilities to exploit rural 

and youth opportunities. We also focus on new business 

opportunities to gain higher share. Now we are focusing on 

the telecom wallet share. We are an integrated company, 

so we will pick up the entire wallet of our customers, 

whether it is for the Internet, media, satellite TV or IPTV. 

We are continuously redefining our business model so 

that we can become more and more viable, and our cost 

structure should come down more and more in the years 

to come. Of course, we are doing mass customization of 

the backend systems. The backend system is a big strength 

of our company. 

Innovation has to be based on “the smell of customers”. 

If you do not smell the customers, it is very difficult to 

innovate, because the innovation has to start from outside, 

and then into the company. You should know what the 

customers’ aspirations are for the next few years. We need 

to listen to customers and look beyond Airtel customers 

and even listen to non-Airtel customers too. We also 

have institutionalized the innovation framework within 

the company as the culture. Innovation can not be a 

department’s job, a function’s job, or a CEO’s job. It has 

to be carried out through the company. We have set up 

customer labs and we have rewards and recognitions for 

the people who really help us strongly in innovation. 

Our vision is simple and clear. By 2010 Bharti Airtel 

will be the most admired brand in India across all product 

and service lines, loved by the most customers, targeted 

by top talents, and benchmarked by more businesses. Our 

passion to innovate actually continues. We are confident 

that this vision and its excellent execution will be able to 

achieve sustainable performance for many years to come. 

Bharti Airtel is on a journey of excellence through 

innovation and through the employees’ passion. This 

journey definitely has no destination. Other than that 

Bharti Airtel will continue to be a catalyst to India’s 

economy and an engine for the economic growth. 

Editor: Gao Xianrui sally@huawei.com 


6

VOICE 


We are confident 

in providing a pipe. 

It is a pipe, but it 

is a GREAT pipe. 

High speed, flat-rate 


data is in itself a 

differentiated service. 

—Dr. Sachio Semmoto, 

EMOBILE Chairman and CEO 

Left: Dr. Sachio Semmoto, EMOBILE Chairman and CEO 

Right: Eric Gan, EMOBILE President and COO 

(Photo courtesy of EMOBILE) 

7 

Win-Win / FEB 2009

EMOBILE 

the mobile broadband 


EMOBILE, Japan’s newest and fastest growing mobile operator entered the market in March 2007. 

Skeptics thought they could not compete with the well-established and powerful big three operators 

–NTT DoCoMo, KDDI and SOFTBANK MOBILE. Yet, in less than two years, it has already carved out 

a strong niche in mobile broadband, and at the same, dramatically changed the existing mobile 

landscape. In January 2009, EMOBILE attracted the second largest number of newly added mobile 

subscribers, bringing its total to 1.19 million customers. EMOBILE founder, Chairman & CEO, Dr. Sachio 

Semmoto and President & COO, Eric Gan unveiled their unique business model and future ambitions in 

an exclusive interview with Win-Win. 

By Julia Yao 

Dr. Semmoto can be proud of his record as an 

entrepreneur. He is one of the co-founders of 

DDI (today part of KDDI), and founded the 

ADSL provider eAccess in Japan. In 2005, when 

he founded EMOBILE–the first new mobile operator 

in 13 years, Dr. Semmoto imbued the company with 

his entrepreneurial spirit and said, “EMOBILE is totally 

different from the incumbents. We are entrepreneurs. We 

are a start-up. We are a venture. We are a totally different 

species. You have to change your mindset. Otherwise, you 

can not understand our company.” 

A born revolutionist 

EMOBILE was a different species at birth. Unlike 

traditional operators in the market, EMOBILE started as 

a pure mobile data operator. With a strong belief that the 

whole broadband market in Japan would be the mobile 

broadband market in the future, EMOBILE focused solely 

on the 100 million user strong Japanese mobile broadband 

market. 

Eric Gan explained, “We started off with data 

customers and slowly moved into the voice market. That’s 

very different from traditional carriers for whom voice is 

the main business, and if they have some time, they do 

some data. The mobile data market is a very new area. We 

were very fortunate to have the new spectrum and to have 

built a new network with HSPA from scratch in record 

time.” 

EMOBILE began offering voice services starting from 

March 2008, but it is not a pure voice strategy. 

He continued, “We are focusing our voice service on 

the data product, like SmartPhone and PDA types, which 


8

VOICE 


We started off with data customers and slowly moved into 

the voice market. It’s not a pure voice technology. That’s very different from 

traditional carriers for whom voice is the main business. 

people are willing to carry as a second handset. Voice will 

be included in the data service. Like our new data modem, 

it’s a data card, but we put a voice function inside the 

data card. So, when people use it for data, if they lose the 

battery in the main handset, they can use the data card as 

the voice handset.” 

When speaking of mobile broadband, content is often 

said to be king, and traditional wisdom warns operators 

not to become a dumb data pipe. Yet, EMOBILE 

deliberately adopts the open platform strategy for both 

devices and application. Customers can choose from 

a great variety of terminals that can serve all kinds of 

PC functions, at the same time, they are free to enjoy 

streaming content, financials, interactive game and security 

services etc. 

Regarding the open platform strategy, Dr. Semmoto 

said, “We are confident in providing a pipe. It is a pipe, 

but it is a GREAT pipe. High speed, flat-rate mobile 

broadband data is in itself a differentiated service.” 

Market leader in mobile 

speed and price 

The “great” pipe delivers the fastest speeds coupled with 

the lowest flat-rate plans in Japan. 

According to Eric Gan, “EMOBILE’s customers are 

very speed sensitive as they basically use the mobile for 

a PC connection. So EMOBILE positions speed as its 

biggest differentiator. We are ahead of our competition 

in 7.2Mbps HSDPA product. On Nov. 20, 2008, we 

launched our HSUPA product with speeds up to 1.4Mbps, 

which was the first time in Japan. We just have to be the 

first one in Japan to do all these new services, compared to 

the existing operators.” 

EMOBILE offers not only the fastest speeds, but also 

the lowest price. “We are also the first in Japan to launch 

flat-rate in 2007.” The flat-rate plan Eric Gan mentioned 

is as cheap as USD10 a month, considerably less than its 

rivals’ wireless-broadband offerings which normally range 

from USD40 to USD80 for equivalent speeds. 

In addition to the lowest flat-rate, EMOBILE launched 

a revolutionary new data card bundling service with the 

UMPCs (Ultra Mobile PC) in July 2008. With a twoyear 

EMOBILE contract, the PC is priced at USD1 to 

USD200, compared with USD2000 to USD3000 for some 

big name brand PCs and customers can pay in installments 

for 24 months. “This changes drastically the business model 

for selling PCs for first time in Japan. The market actually 

exploded.” commented Dr. Semmoto, “This is extremely 

good considering the financial crisis. Consumers spend less, 

our network has the cheapest flat-rate, and you can get PC 

for USD1, or USD100. This is perfect.” 

To ensure EMOBILE’s ability to always lead in mobile 

speed and price in the future, Dr. Semmoto maintains 

that it is important to go for the mainstream technologies. 

“I doubt the future of CDMA2000, PHS and WiMAX, 

because major worldwide operators are moving to GSM/ 

WCDMA/LTE as the mainstream technology. We are now 

using HSDPA, and we just started with HSUPA. MIMO 

EHSPA (HSPA+) might join the stream, and LTE is 

coming, but the issue is when and how.” 

Competitive price structure 

To provide the lowest price without sacrificing the 

9 

Win-Win / FEB 2009

Now aided by very small, briefcase-sized radio units, you can even 

hang the equipment on the wall. So the price to build is just one tenth of the 

traditional base station, and we can build them very quickly. 

fastest speed, Dr. Semmoto explained, “We are very costconscious 

compared with the incumbent companies. We 

have a lot of wisdom in regard to cutting costs. That’s why 

we have much lower costs and prices.” 

One of the pearls of cost-saving wisdom is to keep the 

headcount as small as possible. “You don’t want to be a big 

company. Smaller is better. It’s the leader’s management 

philosophy. If you run the company like the incumbents, 

it’s a group of bureaucrats like government or big telecom 

companies.” 

EMOBILE has a surprisingly small headcount with 

only 560 employees, and new graduates comprise more 

than half of the total number. 

Eric Gan also highlighted the cost benefits by using 

small-sized Node B, “I think capital spending is the 

function of how to build the network. The radio station is 

the major cost for a mobile carrier. When deploying base 

station, operators normally put a huge cabinet in a big 

room with air conditioning. Also, it incurs more running 

costs, uses more electric power, consumes more rent and 

requires a higher backbone as well.” 

“Now with the latest technology, aided by very 

small, briefcase-sized radio units, you can even hang the 

equipment on the wall. So the price to build is just one 

tenth of the traditional base station, and we can build 

them very quickly. In Japan, we have earthquakes. A 

lighter base station to put on the rooftop is always easier to 

negotiate than the traditional one. Running costs are much 

cheaper, because we pay less rent and use less electricity.” 

Eric Gan added. 

The base station mentioned above is the distributed 

Node B designed and produced for EMOBILE by 

Huawei. 

A robust future 

Dr. Semmoto is quite positive about future market 

potential and said, “Although more than 80% of the 

Japanese population owns a mobile phone, there is 

evidence of an increasing demand for second handsets. We 

estimate combined demand in Japan is about 30 million 

additional subscribers. EMOBILE is focusing on this 

growth opportunity.” 

While the current financial crisis brings a lot of fear to 

the industry, EMOBILE actually sees great opportunity. 

“We are very fortunate that we completed full funding 

of USD1.4 billion in 2006 for the following 5 years until 

2011, before the current worldwide financial crisis.” More 

importantly is that, because of the financial crisis, people 

tend to be more careful with their spending, which brings 

great opportunity for EMOBILE. Eric Gan added, “People 

may not want to pay for an expensive fixed line. Instead, 

they may opt to use a mobile phone with a modem inside 

just to cut cost. This fits perfectly with our strategy to 

target at the price sensitive users.” 

Operators can not succeed all by themselves. To form 

strong partnerships with capable and devoted partners 

is imperative for sustainable growth. Dr. Semmoto has 

appreciated the collaboration and cooperation with 

Huawei. “Huawei from day one has been an excellent 

partner to us. In the past, Huawei was totally a stranger 

in the Japanese market. You have grown enormously in 

the last 20 years. You have now become one of the leaders 

in the telecom arena. I think that jointly EMOBILE and 

Huawei can be prosperous if we stay very entrepreneurial, 

very challenging and take risks.” 

Editor: Gao Xianrui sally@huawei.com 


10

11 

Win-Win / FEB 2009

Perspective 

Huawei Views on 

Future Industry Trends 

Over the last ten years, the telecom industry has 

grown and begun changing from the familiar 

patterns of the past. These changes have been 

driven by customer needs, technology changes 

and the emergence of new business models. 

As the industry enters 2009, the global financial 

turmoil adds a new dimension to an already complicated 

picture and deepens the existing challenges. The ability 

of the operators and their partners to rapidly seize new 

opportunities, anticipate customer demands and be able 

to quickly modify strategies will determine the ongoing 

success of the telecom industry. 

Huawei is in a unique position to have insights into the 

divergent global telecom markets and this paper shares our 

vision of where the industry is going and our views of the 

key trends that will impact success. 

Vision – networked world 

The concept of a Networked World has been discussed 

for some time, but we are now seeing the results in 

everyday life. Driven by the rapid deployment of new 

technologies and emerging user requirements, the boundary 

between software, IT and communications has become 

blurred. Added to the traditional telecom operators are 

service and content providers from the Internet, media 

and entertainment industries and these players will have 

a major impact on the industry. Huawei believes that the 

future Networked World will be profoundly influenced by: 

Mobile penetration saturation 

At the end of 2008, the number of mobile subscribers 

topped 3.5 billion and projections show that it will reach 

5 billion in just a few years, equaling the total number of 

potential users. Over 1 billion of those new users will come 

from emerging markets and this will result in a world which 

is fully interconnected and able to bridge the digital divide. 

Ubiquitous broadband 

The next few years will see the rapid deployment of 

high-speed mobile broadband and a major shift to higher 

speeds for fixed broadband. By 2013, 300 million new 

fixed broadband users will be added, doubling today’s total 

and, through the deployment of FTTx, they will have 

access to massive amounts of data. On the mobile side, 

1.2 billion new users will be added to the 200 million 

current users as the result of the HSPA technologies. 

The availability of this broadband will allow “3 Screen” 

(TV, PC and mobile handset) convergence with exciting 

opportunities for always-on networking. 

Cloud computing 

As high-speed data connections become common for 

both fixed and mobile users, the opportunity exists to 

provide previously unavailable services from “The Cloud”. 

The opportunities from what is becoming known as Cloud 

Computing will be enormous. The ability to offer end-users 

access to sophisticated information services without the need 

to buy expensive software and hardware, similar to the way 

we use electricity today without the need to buy our own 

generators and diesel oil, will abolish the boundaries between 

have and have-not information societies. In the next few 

years, cloud computing will go beyond the discussion of 

concepts and technologies and become widely available. 

A digital flood 

In the 5,000 years of recorded history, mankind 

generated the equivalent of 5 exabytes (10 18 bytes) 

of written information, but during 2006, over 280 

exabytes of digital content were generated. Driven by 

high-definition, three-dimensional and user-generated 

content, the annual volume By of Wang digital Kening information & Ling will Yun 


12

Perspective 

soon reach 1,000 exabytes, a veritable Digital Flood. 

The ramifications to the information infrastructure and 

backbone networks will be immense, with annual traffic 

growing by 10 or even 100 times. 

Ten future industry trends 

As we move to this Networked World, the factors 

discussed above will have real, practical impacts on the 

telecom industry. Emerging markets will become a major 

factor in industry expansion, but decreasing ARPU will 

act as stimulation for creative solutions. Uncovering these 

opportunities, providing products, services and support 

to operators as they deal with the emerging trends and 

successfully managing the impacts will be the key to future 

success. Huawei views the top 10 trends as being: 

All-IP transformation 

Operators are spending billions of dollars each year for 

network expansion, but are still not able to keep ahead 

of demand. We believe that the only way to build costeffective, 

flexible and expandable networks is to move 

quickly to All-IP for broadband. This applies to both fixedline 

networks, where high-capacity fiber-copper integration 

will become common, and to wireless networks, where 

single IP backbones will handle voice, data, media and 

signaling. In both cases, moving to All-IP control layers is 

also required to flatten the network and achieve CAPEX 

and OPEX goals. 

Carrier-grade IP 

As networks move to All-IP, it is becoming apparent that 

common Internet-oriented IP technology does not meet the 

needs of real-time delivery demanded by voice networks. In 

order to meet these requirements, a new class of solutions 

will be required. These solutions will ensure end-to-end 

high-quality voice-grade communications with carrier-grade 

reliability and maintainability. Without these advances, it will 

not be possible for operators to create the All-IP networks 

needed to meet the challenges of a Networked World. 

ARPU deterioration 

With most of the future growth coming from emerging 

markets, the low ARPU requirements of these markets will 

force operators to adopt creative solutions to capture the 

market while still maintaining profitability. As an example, 

72% of the Indian population is in rural areas, where the 

current telecom penetration is only 13%. This is a wonderful 

opportunity, but the ARPU is USD3-5 per month! Clearly, 

low cost networks and low cost terminals will be key factors 

for operators to develop services and make profits. 

Mobile broadband delivery 

Exploding use of mobile devices for high-speed data 

connections is one of the most exciting frontiers in telecom. 

Functionality which was previously only available from 

wired broadband connections can now be used from mobile 

devices, opening up new applications that are based on 

location, status or even the proximity of friends. Delivering 

this high-speed data experience to mobile users has a 

number of challenges which must be overcome. When 

the network bandwidth reaches 100M, the density of base 

stations will increase by 50 times. Our consultations with 

operators has underscored that the increased complexity of 

site selection, backhaul transmission, signaling schemes and 

operation & maintenance is becoming a serious burden. 

Optimizing the coverage of a Metrozone, base station 

minimization, packet transmission and level transmission, as 

well as organization of networks, etc. have the potential to 

restrict the development of mobile broadband. Since 2006, 

Huawei had been focused on base station minimization, 

support for packet-based backhaul transmission and plugand-play 

of self-organizing networks. These capabilities 

have been successful in solving the coverage problems of 

Metrozones. 

SingleRAN advances 

Continued rapid growth in users, along with the growth in 

mobile broadband requirements and advances in broadband 

technology will result in a very complex radio network 

environment. While operators will support market demand by 

quickly deploying new radio technologies, such as LTE, they 

must continue to support the existing GSM, EDGE, UMTS 

and HSPA networks for many years. Rather than building 

a complex “vertical” network of separate radios, the need is 

for a “horizontal” integrated radio network that supports 

voice, narrowband data and mobile broadband. Huawei has 

championed the “SingleRAN” concept to meet this need. 

With around 10,000 of these 4th-generation base stations 

deployed by O2 in Germany, the TCO savings of up to 30% 

and the smooth evolution capabilities are quickly proving to 

be a winning combination. 

Tera-scale networks 

Surging growth in data traffic continues to exceed the 

capacity capabilities of traditional telecom networks. Network 

modeling for developed countries in Western Europe suggests 

that data growth and network transformation to flat, All- 

IP architecture will soon require end-to-end Tera-bit bearer 

networks. The appetite for capacity will be even greater for 

countries like China and US that have large populations and 

13 

Win-Win / FEB 2009

equire broad geographic coverage. We believe that building 

a Tera-Scale bearer network will become a competitive 

requirement for leading global operators. 

With extremely high extendibility, Huawei IPTime 

Solution has the capability of 80T as Router Cluster System, 

which will reach even higher with the development of 100G 

interface technologies. Its adoption of unified control plane 

enables seamless interactions between the IP layer and the 

optical layer. Such architecture can offer higher transport 

efficiency, increasing return on investment and enhancing 

operators’ core competitiveness in the era of broadband. 

New voice business models 

Current mobile network operators receive 70% of their 

revenue from voice services, a market category that is 

being pressured by a continual decrease in ARPU. There is 

a natural shift in focus towards the more attractive revenue 

from data services, but this overlooks a critical element of 

user preference. Voice represents the most natural, efficient 

and convenient way of acquiring information that suits all 

scenarios and surroundings. How to capitalize on this and 

how to leverage voice as a new channel for communication 

and information acquisition, such as with the web, has 

turned into one of the most-debated and most difficult 

technical propositions. It is our belief that there is huge 

market potential to tap in voice. 

New business models are the answers to this need. A 

good illustration would be the “Best Tone” service offered 

by China Telecom. An industry-leading innovation and 

a fast growing service, Best Tone has become a significant 

driver for the operator’s voice revenue growth. 

Value creation in broadband 

While Moore’s Law will help decrease the cost, size and 

power of the equipment required to handle the massive 

increases in broadband data traffic, it can not keep up 

with the projected growth. The growth of the required 

equipment will result in significant increases in both capital 

and operational expenses, which can not be recovered 

from the revenue of passing basic data traffic. To tackle this 

challenge, operators will need intelligent traffic management 

to enhance bandwidth utilization, coupled with traffic-based 

user behavior analysis to generate additional revenue streams 

through targeted advertising or other new models. 

Content and media services 

To d a y t h e n e t w o r k i s t r a n s i t i o n i n g f r o m a 

communications vehicle into an infrastructure that sustains 

all elements of society. This will lead to a new trillion- 

USD market for businesses who provide their services 

over the Internet. As the new potential is unfolding, 

leading operators are all looking to transforming to add 

content and media services, on top of their traditional 

pipe offerings. The content and media arenas require new 

capabilities, skills and levels of user interaction that will 

challenge traditional operators. The service experience, 

development methodology and business model are 

dramatically different and community-based interactions 

are emerging as the fundamental trait of future services. 

User-driven and user generated content will be the 

prevailing theme and a large number of personalized 

offerings will enter the market based on the long tail 

theory. These offerings will be nurtured by the changing 

character of the network, where sharp declines in the cost 

of services will make it possible for “niche offerings” to 

win. Take publishing for example: traditionally the cost 

of a book could be recovered only if multiple thousands 

of copies were sold. With new network capabilities, 

the digital world increases competition, resulting in 

an ecosystem characterized by radical cost reductions, 

sometimes to zero, making on-line books profitable even 

with a small volume. 

Virtual computing 

The ability to deliver high-speed data connections 

anywhere allows the world of computing to shift from 

“buying products” (computers, storage and software) to 

“buying services” (IaaS, PaaS, and SaaS). This obviously is 

disruptive to conventional software and hardware vendors, 

but it also is disruptive to telecom operators because it 

provides an opportunity to re-think the boundaries of 

their networks. The network “cloud” can now include not 

only physical data centers, but also the virtualization of 

service capabilities that can be delivered along with dial 

tone to improve users’ lives. If we compare network traffic 

to rivers in the digital world, then data centers will be the 

future “reservoirs”. These new-generation data centers will 

require revolutionary shifts technologically, providing the 

capacity for massive data processing at a low cost. 

Even in areas where economies are experiencing a slump, 

the telecom industry is still able to maintain and even 

accelerate its growth. Successful societies are going to require 

greater connectivity, placing the social responsibility of 

bridging the digital gap on the telecom industry. During the 

last ten years, an information world has taken shape. Over 

the next few years, the universal spread of high-speed, lowcost, 

anywhere connectivity will be the driving force for the 

telecom industry’s development. 

In this process, innovation and transformation is an 

everlasting topic. Working together, we will create a truly 

connected world where people can have equal access to 

communications. 

Editor: Joy Zhou zhouhj@huawei.com 


14


Internet puzzle 

How can operators solve it? 

Operators are in quite a predicament with value-added Internet services. By and large, they are too big and 

slow on the uptake, not able to move as quickly as the small and lean development companies. Cooperation 

is their only option if they want to thrive in this ever changing and progressive environment. 

By Kevin Lee from In-Stat 

After the rousing success of 

the iTunes model of “Device 

+ Connected Service”, Apple 

keeps playing to a full house 

around the world. One month 

after the service was launched, 

users of the Apple Store, the 

a p p l i c a t i o n a n d s o f t w a re 

platform of iPhone, downloaded 

more than 60 million programs, 

generating a total of about 

USD30 million in sales (1 million dollars a day average). 

By the third quarter 2008, Apple sold 6.9 million 

iPhones, with sales of USD4.6 billion and became the 

third largest handset maker in the world after Nokia and 

Samsung. A remarkable achievement considering they did 

it by offering only two handset models. 

Also, 77% of iPhone users say that they use more 

mobile Internet services than before due to having an 

iPhone; and among the top 10 services frequently used, 

six are mobile Internet applications. It is safe to say that 

iPhone is the frontrunner in the mobile Internet race with 

operators trailing behind. 

Evolution of Internet consumption 

When talking about mobile Internet services, it is 

important to understand the eco-system and the evolution 

of consumption patterns. 

Fragmentation of time: Most people have limited 

time and increasingly more content is trying to attract 

attention. The number of media types has grown from 

four in the 1980s to eighteen now. That is a lot of different 

media trying to capture the web surfer. 

Voluntary evolution: If you carefully study the 

differences between telecom networks and Internet 

networks, you will find that the two types of networks 

are like “voluntary evolution” vs. “intelligent design”. 

The nature of the Internet resembles Darwin’s Theory of 

Evolution, which emphasizes the “survival of the fittest”, 

while the telecom environment is suitable for intelligent 

design. 

The Internet generally uses some basic tools like IP, 

HTML, XML, etc. for diversified terminal applications. 

Only a few applications will evolve on a large scale and the 

speed of extinction is just as rapid as expansion. Voluntary 

evolution can be controlled by no one. It is characterized 

by progressive evolution, local evolution, a prosperity 

period and an outbreak period. Other characteristics 

include: genetic drift, such as VoIP coming from IM; 

evolution under environmental pressures, for example, 

rich Internet content leads to the prevalence of search and 

community networks. 

Google clearly sees the life cycle of “born and die” on 

the Internet and encourages small engineering teams to 

develop new applications and test them in the Google 

Labs. An application will graduate if it has sufficient users, 

or it will be left to die; survival of the fittest in action. 

Internet survival: The Internet has indisputably 

become the first media. This is particularly true along with 

the emergence of video sites, and users can find a lot of 

15 

Win-Win / FEB 2009

interesting video content on the Internet. Currently, more 

users are on the Internet than watching TV during prime 

time every day. It is no wonder that many professionals 

have an email complex. The first thing they do at a place 

with a network connection is to check their emails. 

Grassroots: In the mobile Internet field, operators have 

limited strength. It is not viable for operators to depend 

on their own resources for innovation. True innovation 

comes from the grassroots and a large number of small 

companies. Currently, users are not satisfied with only 

getting content from the Internet. They produce content 

of their own; examples include the content, editing, 

ranking and reviews on some most popular video websites. 

Grassroots involvement pools the wisdom of ordinary 

Internet users. One example is Goldcorp, a mining 

company based in Toronto that was having trouble 

locating exploitable gold and launched the “Goldcorp 

Challenge”. Contestants found 110 possible mining 

claims, 50 percent of which had not been previously 

identified by the company. Over 80 percent of the new 

claims yielded substantial quantities of gold. In fact, since 

the challenge was initiated, an astounding eight million 

ounces of gold have been found. 

Social networking: Since Internet content is so rich, 

users gather as communities and conduct and interact on 

specific topics. This is the basis of the wildly-popular social 

networking. For instance, an active user of Facebook on 

average, stays in the community for over 3 hours, far more 

than the time he or she spends on traditional portals. 

Internet predicament 

The changes in Internet consumption modes have 

brought new challenges to operators. Operators have 

endeavored to take the lead in mobile Internet services, for 

example, proactive promotion of handset customization 

(from hardware, operating system to chipsets). However, 

operators have little control over terminals. Innovation 

and operation related to handsets are controlled by 

handset makers. The appearance of the iPhone remarkably 

improved the use of the mobile Internet for users, but 

operators do not have the ability to realize their ambitions. 

Most operators lack comprehensive knowledge of 

the Internet industry and the operation of the Internet 

industrial chain. Moreover, operators lack the ability to 

innovate and cannot offer standardized products to meet 

the needs of the majority of their subscribers. Customers 

place more importance on participation and information 

selection. Operators have to cope with the “Long Tail” of 

the Internet. 

In fact, the Internet usage habits are established and 

the emerging mobile Internet merely uses another display 

and transmission pipe. Therefore, operators have to 

depend on cooperating with terminal manufacturers. For 

instance, China Mobile works with Samsung making 

custom terminals and even wants to launch its own 

handset operating system called the “Ophone”. In this 

environment, handset makers are given more power when 

negotiating with operators. Once handsets are in the 

hands of consumers, the manufacturers can use them to 

promote their own services, without paying attention to 

the operators, like the Apple Store does. 

On the other hand, operators have to take advantage of 

being the transmission pipe. Mobile operators dislike being 

called data pipes. While they suspect that certain risks on 

the Internet will cause them to only be data pipes, just 

providing the connection for handset users to access data 

and doing nothing related to the Internet. If this is the 

wave of the future, then mobile operators are re-treading 

the path of fixed operators in an uneconomical manner. 

From the commercial efficiency per bit (revenue per 

bit for operator), broadband access has much lower 

commercial efficiency per bit than SMS text messaging. 

In 2007, the revenue of China Mobile from SMS was 

approximately USD6.1 billion, while the revenue of 

China Telecom for Internet service was over USD4.5 

billion. Compared with SMS, broadband generates an 

astronomical amount of traffic. Mobile operators do not 

want to tread this path when the bandwidth of mobile 

data is realized on the wireless spectrum that is already a 

scarce resource. 

Faced with these conditions, operators first think of 

building a portal and only allow handset users to access the 

Internet through the portal. The portal of China Mobile is 

called Monternet. However, this mode was soon sloughed 

off and increasingly more third party mobile Internet 

websites have emerged. The “surf” key of iPhone allows 

users to easily access third party websites. Portals like the 

walled gardens of telecom networks will most likely not 

succeed and possibly could even become extinct. 

If this mode is not successful, operators have to 

improve the value of data traffic by enhancing the value 

of information through the telecom channels, becoming 

“information experts” instead of just “communication 

pipes”. 

BizNavigator, Best Tone of China Telecom, and 12580 

of China Mobile are all geared for precisely this type of 

transformation. However, such services cannot be said to 

be totally successful, because it is difficult for these value 

added services to be standardized like a telephone. Users 

have changing and diversified needs and operators cannot 

respond swiftly to meet their mercurial needs. Operators 

are in quite a predicament with value added Internet 


16

services. By and large, they are too big and slow on the 

uptake, not able to move as quickly as the small and lean 

development companies. Cooperation is their only option 

if they want to thrive in this ever changing and progressive 

environment. 

How can an elephant dance? 

Based on the advantages and disadvantages of operators 

and the characteristics of Internet services, mobile 

Internet services can be divided into two segments: 

Internet extension and mobile centric. Internet extension 

is influenced by the traditional Internet. Mobile centric 

refers to applications closely aligned with mobile services 

or applications with more mobile characteristics due to 

terminal factors. 

“Borrow a hen that lays golden eggs” 

For mobile operators, Internet extension services, such 

as search engines, do not offer much room to grow for 

operators as major players like Google, Yahoo, Baidu, etc. 

have the lion’s share of traffic. Cooperation is probably the 

best option. Google, Yahoo, MySpace and YouTube first 

generated their immense following with fixed Internet, and 

have now entered the mobile arena in cooperation with 

operators. 

In 2007, Vodafone worked with Yahoo to launch 

mobile advertising, and worked with MySpace to launch 

MySpace mobile social networking. In 2008, Verizon 

worked with YouTube to provide mobile YouTube. In 

similar cooperative cases, operators have increased network 

traffic and the resulting revenues with help from the 

big names of the Internet. Once wireless bandwidth is 

broadened with OFDM, MIMO and other technologies, 

both mobile and fixed Internet will share the same destiny. 

Bandwidth is used up by Internet applications, and 

operators turn to being data pipes. 

For mobile centric services, such as location based 

service (LBS), games and video, operators have relative 

advantages and can combine their understanding of 

user locations and applications. Operators can easily 

identify the location of a user through GPS and base 

station positioning, while subscriber privacy is ensured 

and operators can reach subscribers with SMS, voice or 

other approaches at any time. Currently, location is a 

key advantage for operators, and will be one of the core 

components of competitiveness in the mobile Internet 

era. This is why among the 10 top software applications of 

Google’s Android, nearly half are related to location. 

Dancing with the Internet 

If operators are not able to compete with the Internet 

giants, they can help them to offer better services. Take 

the content delivery network (CDN) for instance. Because 

more and more video websites desire to improve user 

access experiences, they need to have servers and mirrors 

at various network nodes, to allow visitors from different 

regions to have smoothly streaming videos. ChinaCache is 

such a company and to whom Tudou.com pays over 50% 

of its costs. 

On the mobile Internet, there are still remarkable 

overlaps between telecom networks and the Internet. To 

remedy the situation, mobile operators can take following 

measures: 

Terminal adaptation: Compared with the standard 

structure of PCs, handset terminals differ significantly 

from each other in hardware, operating system, etc. 

Operators may provide adaptation at the network side to 

reduce the immense costs of application developers for 

terminal adaptation. 

Data mining/differentiated operations: Operators 

have a large base of subscribers. For example, China 

Mobile has over 400 million subscribers. Through data 

mining, the operators can know subscriber information, 

such as age, voice bills, occupation, income, etc., to better 

understand users and identify smaller market segments. 

In the future, operators may become intermediary service 

companies operating with subscriber data, which lays the 

foundation for targeted advertising. 

Opening telecom capabilities: This is also known as 

mashup. A mashup is a web application done by access to 

open application programming interfaces (APIs) through 

HTTP. Mashups are for developers and presented as 

Widgets to users. A mashup is an interesting new type 

of application, similar to the API of computer operating 

systems. 

EVDB for example, provides a database of events 

calendar. It opens the database, and a developer can develop 

new applications based on the web API, such as an agenda 

for reminders or where you should go at a given time. 

Google releases map data on the web, and craigslist.org, 

the classified ads site gives the link to Google Maps so real 

estate for sale can be easily located. Housingmaps.com was 

born in this same manner. 

Some operators have indeed noticed and opened up to 

application developers for serving as the API of the telecom 

network. For instance, British Telecom (BT) offers the 

“I’m Hungry” service. BT gives the location information 

of subscribers to the application developers and their 

applications help subscribers to find the nearest restaurants 

and book seats by either voice calls or SMS. 

Editor: Chen Yuhong chyhong@huawei.com 

17 

Win-Win / FEB 2009


Inspiration from 

Internet business models 

Internet reinforces its leading position with a growing penetration rate and fast-increasing 

user base. Can telecom operators transplant the Internet-related technologies and successful business 

models, so as to find a new profit stream? 

By Chen Fudong 

Land of opportunity 

or a black hole? 

As is known to all, the predecessor 

of the global Internet was the 

Advanced Research Projects 

Agency Network (ARPANET) 

developed by the United States 

Department of Defense in 

1969. In1990, the hyper text 

protocols of Tim Berners-Lee and Robert Cailliau allowed 

the technology and application to swiftly morph into 

the world wide web of today. In less than 40 years, the 

Internet has grown from the original four nodes to around 

400 million nodes, with over a billion users. This can be 

attributed to the web breaking out of the circle of science 

and research and being easily accessible to ordinary users 

and geeks alike. 

Along with constant expansion, network performance 

has also consistently improved through software hardening 

(which uses hardware devices to replace software modules 

for packet forwarding). A number of new stars have been 

born. 

We can see the shining stars as well as the dark side 

in the course of Internet innovation. In reality, there 

are far more losers than winners. Microsoft is a vivid 

example. They have invested heavily in Internet services 

including: Internet Explorer, MSN, Hotmail, MSNM, 

Live, Space, and Facebook among others. Their assets 

span the industrial chain upstream and downstream, 

from television (MSNBC) to consumer electronics (Xbox 

360). Nevertheless, the return on the Internet investment 

is nothing to crow about. It is obvious that, even for 

Microsoft it is difficult to succeed in the Internet. 

Transitions of Internet business 

models 

The earliest mass commercialization was the ISP era 

represented by AOL, and the business model was to bill 

dialup subscribers by usage or by the hour. Later, the 

Internet entered the portal era as represented by Yahoo!, 

and it gained revenues from display ads based on the 

number of clicks and views by users. The value of an ad 

depended on the popularity or amount of traffic on the 

site. 

Then Google exploded onto the scene and led the 

search engine era and the successful model became 

targeted advertising. The value of this type of advertising 

lies in accurately steering the user to commercial sites he/ 

she might have interest in making purchase forms. 

The current era is represented by social networking 

sites such as Facebook and the business model shifts to 

recommended advertising. The value lies in word of mouth 

marketing, also known as viral marketing. 

The commercialization process progresses with how well 

the Internet understands people. In the era of the portals 

around 2000, subscribers were just contributors of traffic. 

A popular saying was, “On the Internet, nobody knows 

you’re a dog”. The era of search, however, was focused on 


18


your intention and needs, and search engines gave you 

what you wanted. In the era of social networking, your 

needs are nurtured from recommendations by your friends. 

Even if you have no needs, a larger space is given for 

imaginative ad-driven business models. That is a primary 

reason why social networking websites have become so 

popular in recent years. 

The ultimate objective of Internet is to perceive the 

desires of users. Therefore, every website endeavors to 

provide as many applications as possible. For instance, 

Google provides a wide range of seemingly unprofitable 

and even money-burning applications including YouTube 

and Maps, and numerous Facebook applications on its 

open platform. Their hope is to make users leave more 

historical data when using applications on the Internet, 

to manifest user behaviors from more dimensions, to 

identify values of the users via further data mining (artificial 

intelligence), to establish user profiles, and finally to 

provide high-value, precise ads to affect consumer behavior 

and drive profits. 

This is one of the reasons why Google is interested in 

entering the mobile communications field. GPhones are 

carried anytime by the users who access various mobile 

Internet applications, indicating that increasingly more 

personal information is being digitalized. Fed with this 

massive amount of digitalized information, the Internet 

is constantly enhancing its IQ and EQ, for a better and 

more accurate understanding of the users and the ability to 

provide services for them. 

Cloud computing on the horizon 

Cloud computing is Internet (“cloud”) based 

development and use of computer technology 

(“computing”); its infrastructure is intended to better 

support the ultimate objective of the Internet. Realization 

is still far off, but the goal is in sight and being driven by 

diversified Internet applications. It promises to bring about 

remarkable changes in the experience of Internet users. 

Currently we need to install software applications 

before using various Internet applications. For instance, 

we use Outlook to discuss which film is worth watching, 

download the film with BitTorrent, open the film with 

Media Player, and enter forums or blogs to post our 

reviews regarding the film. Information on behavioral 

patterns is scattered in different applications and cannot 

be integrated systematically, plus the user has to reinstall 

the applications to use another machine to run the 

applications. 

With cloud computing, desktop and mobile terminal 

systems only need to have a browser. The user can use 

the same account to open the applications in different 

environments without worrying about whether the local 

machine has the appropriate software or operating system. 

For instance, you just need to register one iGoogle 

account to use any combination of services (Gmail/ 

YouTube/Blogger/etc). Your browser acts as a window that 

gives you a similar user experience with either a desktop 

device or a smart phone using either Windows or Android. 

Recently, Google released Chrome, a new generation 

browser, to promote the penetration of cloud computing, 

with enhanced browser performance, reliability, safety and 

other key features and improved SaaS usability. 

As to the external business value of cloud computing, 

we can summarize it as: “to organize the personal 

information and make the Internet push targeted ads with 

more accuracy and value”, by following Google’s vision, “to 

organize the world’s information and make it universally 

accessible and useful”. 

“Plumbers” have a newfound status 

With the centralized intelligence of cloud computing, 

it is not difficult to see that among the technical divisions, 

the backstage of the Internet is intensive computing for 

19 

Win-Win / FEB 2009

The entire network solution is not just focused on traditional 

networking abilities, such as bandwidth allocation and packet forwarding. 

Through integration of computing and storage, network capabilities will be 

stronger and more practical. 

services; the terminals are for presentation of services; 

and the networks between the two components are the 

plumbing or pipeline for information transmission. 

Many people are indifferent to the role of a network 

plumber, thinking that the ability to provide enhanced 

value-added network services should be the keynote for 

telecom operators to forge their core competitiveness. But, 

the Internet is a highly risky, highly profitable industry 

where only a fortunate few can mine the gold; while the 

requirements for traffic bearing infrastructure keeps on 

growing regardless of concepts, making it lucrative for the 

plumbers. 

For fixed broadband networks, the number of end users 

is calculated by households; however, in mobile Internet, 

the customer base is calculated by individuals, who may 

have multiple Internet terminals. Therefore the number 

of terminals to access the Internet will be larger by order 

of magnitude. The data package of the T-Mobile G1 

phone, which supports HSDPA, is priced at USD25 per 

month, equivalent to the monthly bill from AT&T for 

1.5M DSL broadband. This just might be the reason why 

both T-Mobile and AT&T are quite enthusiastic about 

merely being plumbing contractors and introducing the 

G1 phone and the iPhone respectively and exclusively in 

North America. 

Operators can introduce Internet experiences and 

related technologies to their services, particularly HD video 

services, to take full advantage of local resources, including 

infrastructure and user information and to improve the 

service ability of All-IP networks and increase profitability. 

Content distribution network (CDN) technology and 

location-based precise advertising technology can then 

be introduced into Multi-Play bearer network solutions. 

This reduces the pressure on bandwidth for large scale 

video transmission and improves the experience of end 

users, while improving the ability of revenue generation of 

services and opening up more revenue streams for telecom 

operators. 

The entire network solution is not just focused on 

traditional networking abilities, such as bandwidth 

allocation and packet forwarding. Through integration 

of computing and storage, network capabilities will 

be stronger and more practical. With the standard 

optimization for digitalized information (XML/Flash/ 

H.264/etc), the new network of “networking + computing 

+ storage” is able to perceive services and contents; an 

understanding of both bit and byte information. Only in 

this manner can a telecom operator do a superb job as a 

plumber, while trying to create new services and business 

models using the network as an information circulation 

platform and improving its IQ and EQ. 

There are two sides of Internet commercialization: It 

not only brings about both opportunities for start-up 

business and improved experiences for consumers, but 

also opens the door to those who profit from invading 

customers’ privacy or maliciously misguiding the 

customers via spam, viruses, spyware, malware, and misuse 

of personal information. More and more websites are 

trying to influence consumers by page layouts and various 

information rating and ranking technologies, such as paid 

placement, search engine optimization (SEO) etc. These 

are all aimed to direct traffic to a select group of sites, 

limiting the choices for casual users. 

Apparently, these negative aspects damage the 

creditability of the Internet and loosen the cornerstone of 

Internet advertising. Google took “Don’t Be Evil” as its 

motto after it became popular, to alleviate any concerns, 

especially since Google has the best resources to be evil 

only if it wanted to. 

The overwhelming success of Google is a testament to 

the adage that, Internet commercialization is a double-edged 

sword, and playing business integrity is the only way to ensure 

the sound development of the Internet industry. 

Editor: Li Xuefeng xuefengli@huawei.com 


20

Winners 

OPTUS 

Australia has an unevenly distributed population with relatively few people living inland in the outback. To 

achieve full mobile network coverage, an operator needs to invest heavily and in relation to technology, 

capital, and cost, make wise equipment and partner choices. 

opening up the outback 

By Li Xiaojuan 

Editor: Julia Yao julia.yao@huawei.com 

21 

Win-Win / FEB 2009

In recent years, governments around the world 

have ramped up development of moblie 

broadband. The underlying initiative is to 

bridge the digital divide with technology that 

allows people in more remote and less-developed 

areas to experience the benefits of wireless 

broadband. Australia, with extensive hinterland 

and the very low population densities throughout 

its vast interior, provides a sterling example of need 

and fulfillment. 

The wide coverage to bridge 

the digital gulf 

According to Australian Bureau of Statistics, 

the number of broadband users in Australia 

now exceeds 3.5 million, or 17% of the total 

population. Canberra, the nation’s capital, has the 

most with 58% of households using broadband 

technology. 

In Southern Australia, the broadband 

penetration rate is only 32%. Back in October of 

2006, Telstra, the top mobile operator in Australia 

had deployed a nationwide HSDPA network, 

named Next G, operating on 850MHz frequency. 

The biggest competitive edge of Next G lies in its 

wide coverage–up to 98% of the population. The 

service penetration of the network is also worth 

mentioning. 

In May 2007, the Australian government 

announced funding for building a national 

broadband superhighway to extend access to underdeveloped 

areas. The goal of the project was to 

provide broadband services for 4 million individual 

and commercial users with particular focus on 

sparsely populated remote areas. 

Telstra’s early advantage placed considerable 

pressure on Optus, the No.2 operator in Australia. 

Not wanting to lag behind, Optus quickly 

responded to the government afforded opportunity 

and commenced an in-depth search for a vendor 

who could offer the necessary combination of 

capability, value and coverage that would allow the 

operator to participate in this vital national project. 

To achieve full mobile network coverage that 

reaches an unevenly distributed population across 

many thousands of square kilometers, an operator 

in Australia faces heavy up-front investment costs, 

all of which makes prudent selection of a reliable 

equipment vendor an essential priority. 

After careful consideration, in December 2007, 

Paul O’Sullivan, CEO of Optus, announced a plan 

to expand the capacity of the company’s existing 

3G network. According to the plan, by the end 

of 2008, Optus would improve network coverage 

from 60% to 96% (based on population), and 

expand the covered area to 650 thousand square 

kilometers. In addition, Optus would upgrade their 

existing network to HSPA with a download rate 

of 3.6Mbps. Meanwhile, Optus specified UMTS 

900MHz as a core part of future mobile strategy 

and chose Huawei as their exclusive vendor for 

deploying the UMTS 900MHz network in rural 

areas. 


22

Winners 

This moment is a defining one in Optus’ and the Australian 

telecom history–it’s leading edge, an Australian first and a 

first for the southern hemisphere! 

The expanded horizons of 

UMTS900 

Optus had already deployed a 2.1GHz UMTS 

network. Even in areas with sufficient 2.1GHz 

frequency resources, Optus still decided to deploy 

a UMTS 900MHz network to achieve wider 

coverage at lower cost. 

Compared to the 2.1GHz frequency band, the 

900MHz frequency operates on a lower frequency 

with a higher penetration capability and a single 

Huawei base station covers much wider areas. 

Tests proved that with a Huawei UMTS 900MHz 

system, 60% fewer base stations would be required 

for rural areas. With such a vast region to be 

covered, Huawei’s UMTS 900MHz was clearly the 

perfect choice for Optus. 

In the past, Optus had invested AUD2.5 billion 

in their GSM network. Their top priority had 

always been to minimize network construction cost 

while introducing new technologies. By deploying 

a UMTS network on top of the mature GSM900 

network, they would be able to take full advantage 

of sites and antennas in the existing network. This 

decision would not only help them introduce 3G 

services quickly in markets where network coverage 

already existed, but would also lower construction 

operational costs when expanding to cover new 

areas of the country. All of which could be passed 

on to the end user, building competitiveness and 

customer loyalty, in the form of lowered access 

costs and added, cost-effective services. 

The remote area rewards of 

Re-farming 

Despite its many advantages, UMTS 900MHz 

is not entirely free of challenges. This technology 

is still in the process of being fully exploited by 

supporting industries and the variety of terminals 

is limited. Currently, only one operator, Elisa, in 

Finland has deployed a commercial UMTS900 

network, implemented on November 11, 2007. 

When the UMTS 900MHz was introduced, 

the biggest concern for operators was interference 

between GSM and UMTS networks. A UMTS 

network capitalizes on the GSM frequency band. 

Inappropriate planning may not only jeopardize 

the performance of the UMTS network, it can also 

degrade the quality of an existing GSM network. 

After extensive calculations, Optus found 

that they could only assign a 4.2MHz frequency 

bandwidth to the UMTS network. The greatest 

challenge for Optus and Huawei is to make a 

network with only a 4.2MHz effective frequency 

bandwidth perform as well as one with a 5MHz 

frequency. In response, Huawei made creative 

use of Re-farming, a network transformation 

process, to reorganize the frequency, cutover, and 

optimization of the GSM900 network. 

The planning stages stimulated positive reactions 

from technical personnel on the combined Optus 

and Huawei team. “Although testing had been 

conducted in Europe, nothing is more exciting 

than witnessing the whole process in your own 

23 

Win-Win / FEB 2009

ackyard,” one engineer said. Just the idea of 

implementing transformation over a large-scale trial 

network within only three months was something 

that stimulated everyone’s minds. 

Test results showed that Re-farming could 

minimize the bandwidth required in construction 

of the UMTS 900MHz and the carrier spacing 

between GSM and UMTS networks. Addressing 

the limited bandwidth constraints, Huawei used 

wave-trap technology to ensure the performance 

of the UMTS network with 4.2MHz frequency 

bandwidth. 

In April 2007, a maiden call was made between 

the UMTS 900MHz network and the existing 

GSM network in the South Pacific. Moments 

after completing his first UMTS900 exchange 

over the trial network, Darren Rogers, Optus’ 

Network Strategy Manager, announced, “This 

moment is a defining one in Optus’ and the 

Australian telecommucations history–it’s leading 

edge, an Australian first and a first for the southern 

hemisphere!” 

The rapid deployment of 

UMTS900 

With the biggest challenge of UMTS 900MHz 

behind them, Optus began to maximize the 

fast and efficient deployment features of UMTS 

900MHz. The small size, light weight, site 

flexibility, and easy installation of Huawei’s 

compact distributed base stations allowed for fast 

side-by-side installation with existing GSM sites. 

Even if a site was already crowded, Optus quickly 

discovered that Huawei’s BBU could easily be 

installed in a standard cabinet with 19-inch width 

and 2U height and the RRU could be pole based or 

installed in the same cabinet. in this fashion Optus 

was able to reuse the site resources of the existing 

GSM network in the UMTS 900MHz network, 

including equipment room, air conditioners, power 

supply, and transmission equipment. 

Huawei’s Same-band Antenna Sharing Unit 

(SASU) scheme enabled the sharing of antennas 

between two systems with the same frequency 

band. Sharing reduces investment, frees the trouble 

of network re-planning, accelerates the 3G network 

construction, reduces man hours and speeds up 

commercial usage. 

Thanks to Huawei’s innovative solutions, Optus 

saved AUD300 million and achieved its interim 

goal of covering 80% of the population by June 

2008. 

Recently, with the goal of increasing the 

percentage of broadband users in the total 

population from 96% to 98%, Optus CEO 

Paul O’Sullivan announced an AUD315 million 

investment plan to be exclusively applied the 

extended deployment of UMTS 900MHz. Optus 

also announced the intention of establishing a 

Mobile Innovation Center with Huawei to deepen 

cooperation and support the company’s overall 

expansion strategy. Optus and UMTS900 continue 

to open up Australia’s outback everyday. 


24

Winners 

AIS 

keeps Thailand smiling 

AIS can set the BTSs to GSM mode, ensuring communication quality. When the demand for mobile broadband 

services increases, AIS can add UMTS carriers to offer GSM and HSPA services simultaneously. 

By Xu Yan Editor: Xue Hua xuehua@huawei.com 

25 

Win-Win / FEB 2009

As the largest and leading mobile 

operator of Thailand–the “Land of 

Smiles”, Advanced Info Service (AIS) 

has realized a ubiquitous and rich 

information network through its brands such as 

GSM ADVANCE, ONE-2-CALL!, GSM1800, 

and MPAY STATION, which cater for the 26 

million local subscribers and tourists. 

The dominant influence of AIS has ensured 

critical involvement in the development of 

Thailand’s domestic telecom industry which, in 

turn, has profoundly and positively impacted the 

Thai economy and its 64 million inhabitants. 

Elevating 2G services 

Thailand has been noted for its outstanding 

scenery and remarkably friendly locals. As one 

of the world’s most popular tourist destinations, 

Thailand boasts an internationally famous cuisine 

and a wealth of attractions. In the first half of 2008, 

Thailand hosted around 5.62 million tourists; 

approximately 70% of the country’s industries are 

related to tourism, and over 7% of its GDP directly 

results from its visitors. 

Fulfilling the communication requirements of 

this significant tourist economy is vital for AIS to 

realize full value potential. However, prior to 2008, 

this objective was hampered by networks in tourist 

heavy-traffic areas such as Bangkok. At that time, 

the AIS network for Thailand’s capital city was based 

on European-sourced equipment. Each cabinet 

occupied around 1m 2 , weighed up to 600kg, and 

only supported the S4/4/4 configuration. 

Toward the end of 2007, AIS was confronted 

with untenable circumstances and apparently 

impossible problems. Service capacity expansion 

would require heavy investment in additional 

equipment rooms and related engineering. The 

resulting CAPEX coupled with a slow market 

response would have been disastrous for the 

company’s development and revenue streams. This 

situation was exacerbated by the network’s low 

power output and reception sensitivity, both of 

which restricted uplink and downlink coverage and 

greatly degraded service quality. Additional BTSs 

were clearly indicated to remedy this situation, but 

again this would increase the company’s CAPEX 

and OPEX beyond acceptable limits. 

Back in 2007, the lag problems in Bangkok were 

not the only ones confronting AIS. The original 

GSM equipment covering the northeast and south 

of Thailand had been in use for over five years; the 

original manufacturer was unable to provide further 

technical support; the network framework could not 

support EDGE services, and future evolution based 

on the old equipment was out of the question. AIS 

could not accommodate the apparent upgrade costs 

but, in the midst of a boom in Thailand’s tourism, if 

they did not upgrade they would lose vital end user 

revenue to the advantages offered by the improved 

quality of competing vendors networks. AIS had no 

choice but to refine its original network, particularly 

in peak traffic areas, and extend coverage to boost 

user QoE. The question was, how to do this costeffectively 

and time-efficiently while hopefully 

gaining long-term advantages at the same time? 

As 2007 drew to a close, AIS embarked on a 

cooperative venture with Huawei. The two companies 

carefully analyzed Thailand’s key GSM markets 

with the goal of invigorating the AIS network and 

accommodating immediate and future expansion. 

In early 2008, AIS embarked on Huawei’s solution 

for GSM equipment replacement in Bangkok, and 

across the major tourist areas of north, northeast, 

and south Thailand. In three short months, and in 

good time to realize benefit from the heavy local 

traffic increase and tourist surge occurring around 

April’s Thai Water Festival, a remarkable total of over 

10,000 carriers were replaced. 

In key areas such as Bangkok, AIS opted for 

Huawei’s highly integrated indoor and outdoor 

macro base transceiver stations (BTSs). Occupying 

less than 0.5m 2 , the Huawei BTS supports up to 18 

or 36 carriers, and simplifies constructing S8/8/8 

sites and those of a higher configuration. During 

seasonal traffic peaks, using software to upgrade RF 

modules in phases from one carrier to six carriers, 

AIS can now configure the Huawei BTSs to meet 

demand. The Huawei solution eliminates the need 

for on-site engineering and antenna adjustments, 

significantly reducing AIS’s O&M costs and 

accelerating their ability to more quickly respond 

to market requirements. 

In remote scenic spots and along the highways 

linking Thailand’s tourist cities, AIS adopted 

Huawei’s small, six-carrier GSM BTSs. These BTSs 

meet requirements for capacity and coverage without 

the need for deploying additional equipment and 

equipment rooms, but can still be located outside 

and withstand the humid and rainy local climate. 

Along the highway to Chiang Mai, for example, AIS 

was able to discretely mount the compact Huawei 


26

Winners 

GSM BTSs in an environmentally friendly ways that 

occupied no ground space, yet still allowed for easy, 

low-cost maintenance. Once again, AIS was able to 

expand coverage and quality while avoiding much of 

the previously anticipated high costs. 

AIS realized optimal industry standards of 

GSM carrier output power and receive sensitivity. 

Subsequent road test statistics revealed that voice 

service KPI had been dramatically improved, 

benefiting both local and tourist economies 

through appreciation of the elevated QoS. 

Solving Thailand’s 3G puzzle 

Both voice services and mobile broadband 

services now thrive in Thailand. “Laying new fixed 

line connections is expensive and inefficient so 

high-speed mobile networks are Thailand’s best bet 

to realize the many social and economic benefits 

that arise from widespread access to broadband 

services,” said Ricardo Tavares, Senior Vice 

President for Public Policy of the GSMA. 

Constructing a UMTS network over the 

operator’s mature GSM900 network would make it 

possible for AIS to quickly introduce 3G services to 

their existing market. AIS also required the solution 

to minimize network construction costs and OPEX 

in new coverage areas. With a 3G license, AIS 

regarded this solution as essential for successful 

launch of its 3G marketing strategy. 

Prior to AIS selecting the 900MHz band for its 

UMTS solution, Huawei had already assisted Optus 

construct a 900MHz HSPA network in Australia with 

4.2MHz valid bandwidth. This achievement realized 

the world’s first large-scale commercial UMTS900 

network. This notable accomplishment reinforced 

AIS’ final decision to partner with Huawei to develop 

the operator’s 900MHz-based HSPA network. 

In May 2008, as a prelude to expanding 

service throughout Bangkok, AIS commenced 

operation of a 900MHz 3G network in Chiang 

Mai. By applying Huawei’s portable UMTS900 

distributed BTSs, AIS was able to quickly 

construct a commercial network without the 

costs of cumbersome hoisting equipment and 

complicated engineering. The resulting AIS 

network provides end users with HSDPA services 

at rates of up to 7.2Mbps. These accelerated speeds 

are complemented by Huawei’s stylish USB HSPA 

modems, which have emerged as a popular tool for 

many of Thailand’s laptop users. 

In the near future, AIS believes the demand for 

mobile broadband services will increase and their 

UMTS900 network will be extended. In order 

to construct a UMTS network over the existing 

GSM network and realize unified access while 

maximizing site and antennae sharing, AIS is 

employing Huawei’s 4th generation BTS solution 

to replace earlier vendors’ BTSs and support both 

GSM and UMTS requirements. 

With Huawei’s new equipment, AIS can set the 

BTSs to GSM mode, ensuring communication 

quality and wide coverage at a 60% lower power 

consumption rate than conventionally encountered. 

When the demand for mobile broadband services 

increases, AIS will be able to reduce the number 

of GSM carriers. Meanwhile, AIS can add UMTS 

carriers to simultaneously offer GSM and HSPA 

services, until all functional modules are set to the 

UMTS mode. 

Huawei’s solution neatly sidesteps the difficulties 

AIS previously faced in terms of strategizing its 

3G network and optimizing its 2G network. As a 

result, AIS will be firmly ahead of the game as the 

undisputed leader of the country’s 3G market. 

The solution neatly sidesteps AIS’s difficulties in strategizing 

its 3G network and optimizing its 2G network. As a result, 

AIS will be firmly ahead of the game as the undisputed 

leader of the country’s 3G market. 

27 

Win-Win / FEB 2009

PCCW 

builds a CDMA broadband bridge 

By adopting Huawei’s 4th generation BTSs on its CDMA2000 network, PCCW is now able to provide 

advanced broadband data and global data roaming services for both local and overseas’ CDMA 

subscribers in Hong Kong. 

By Zhao Yahui Editor: Li Xuefeng xuefengli@huawei.com 


28

Winners 

Operating a CDMA2000 network in the 850MHz band 

will give PCCW the performance, cost-effectiveness 

and network adaptability to own a decisive stake of 

Hong Kong’s mobile telecom market. 

With its strategic location and a 

history as an international finance 

center, Hong Kong accommodates 

visitors and business people from 

all over the world, including CDMA subscribers 

from North America and the Asia-Pacific 

region. However, Hong Kong’s lagging CDMA 

infrastructure has for some time challenged the 

city’s ability to cope with subscribers’ broadband 

communication requirements. 

In a decisive move, Hong Kong’s largest 

integrated telecom operator PCCW decided 

to eliminate this problem. In November 2007, 

PCCW acquired a 15-year CDMA2000 operating 

license, and began construction preparations for its 

CDMA2000 1xEV-DO Rev. A network. 

Quality first 

P C C W i s n o t o n l y o n e o f A s i a’s m o s t 

powerful communications service providers, but 

also a leading ICT enterprise. For PCCW, the 

opportunity to rapidly construct and operate a 

high-quality CDMA2000 network provided a 

means for the company to further enhance its 

brand equity in the Asian-Pacific region. Richard 

Midgett, the Managing Director of Mobility at 

PCCW, stated that, “CDMA2000 will enhance our 

capability in offering advanced broadband wireless 

services to subscribers. The technology will provide 

a valuable roaming footprint and help to further 

boost our brand.” 

The increasing intensity of competition in Hong 

Kong has meant that network coverage and service 

quality have overtaken price as the preconditions 

for market success. To realize a sustainable 

business model, PCCW sought a solution capable 

of delivering differentiated services quickly and 

economically. As a result, PCCW collaborated with 

Huawei in June 2008 to launch Hong Kong’s first 

CDMA2000 network. 

Speeding the dream 

Rapid deployment 

Hong Kong is characterized by an unusually 

complex terrain that encompasses islands, hills and 

bays. The myriad fingers of towering buildings 

punctuate the city’s skyline. People crowd every 

square kilometer of Hong Kong and its bustling 

central business districts. All in all, more than 7 

million residents, and nearly 3 million visitors every 

month, pack themselves into the densely developed 

areas of this incredibly dynamic city. 

Not only is Hong Kong’s wireless network 

construction environment probably the world’s 

most complex, it is also extremely hard to obtain 

wireless sites, which is exacerbated by some of 

the world’s highest rental terms. Leveraging an 

existing investment, PCCW decided to co-locate 

its new CDMA network with its existing UMTS 

network to fully utilize resources and cut CAPEX. 

One problem was the prohibitively large size and 

voracious power demands of traditional CDMA 

BTSs. These negative attributes would dramatically 

increase OPEX and off-set any CAPEX savings, 

while adversely impacting the local environment. 

With these challenges and factors in mind, 

PCCW found a solution with Huawei’s 4th 

29 

Win-Win / FEB 2009

generation BTS. Based on advanced power 

amplification and multi-carrier technologies, the 

compact 4th generation BTS is highly integrated 

and efficient. Not only does it occupy smaller 

space, but it also reduces power consumption by 

as much as 60%, which in turn lowers the power 

needed to cool equipment rooms. Moreover, 

BSC requires only one tenth of the power used 

in traditional solutions, substantially minimizing 

the network’s total eco-footprint and significantly 

curtailing OPEX. 

Huawei’s 4th generation BTS adopts a modular 

and distributed design with a 2U BBU. In turn, 

the normal complexity of excessive cabling is 

dramatically reduced, allowing the unit to be 

housed with other equipment without requiring 

any special facilities. Small and light, the RRU can 

be installed near the antenna and connected to the 

BBU with fibers to reduce feeder loss. The coverage 

of the BTS is expanded, and installation is much 

quicker and less costly. 

Enhanced performance 

In addition to minimal TCO and rapid network 

deployment, PCCW imposed strict requirements 

on network performance and evolution capabilities. 

Compared with the traditional solution, the 

Huawei BTS enhances transmit power and receive 

sensitivity by at least 3dB, which is equivalent to a 

40% increase in coverage. 

This in turn greatly reduces the number of 

BTSs required in the solution, while network 

performance and subscriber experience are also 

considerably enhanced. 

Based on the complex environment for wireless 

network construction in Hong Kong, Huawei 

provided the innovative PerformA solution, which 

features a network health check function to improve 

overall performance. By employing comprehensive 

QoS and QoE testing technologies, hidden network 

problems can be quickly located and rectified to 

maximize overall KPI. Advanced performance 

translates directly into improved subscriber 

experiences, increased traffic and revenues. 

Featuring high capacity BSCs, BTSs, and an 

intelligent QoS control algorithm for PerformAbased 

voice and data services, PCCW’s data service 

and control flexibility capabilities were significantly 

enhanced, all of which paved the way for highspeed 

data provision across the CDMA network. 

Evolving the network by using Huawei’s 4th 

generation BTSs based on IP and broadband 

technologies has increased PCCW’s RF channel 

bandwidth and transmission interface bandwidth 

to more than 20Mbps and 100Mbps respectively. 

Moreover, data configuration protects PCCW’s 

investment by enabling the BTSs to be used in 

multiple systems. 

The communications bridge 

In December 2008, after successfully completing 

its CDMA network in the Kowloon peninsula and 

the northern area of Hong Kong, PCCW launched 

its CDMA2000 services. Network deployment has 

been planned over three phases, the culmination of 

which will extend coverage to central Hong Kong, 

airports, railway stations, tunnels, and border 

control stations. 

In the meantime, PCCW has signed roaming 

agreements with numerous operators including 

China Telecom, the Asia Pacific Telecom Group, 

KDDI, SK Telecom, LG Telecom, Sprint and 

others. Overseas CDMA subscribers arriving in 

Hong Kong are automatically switched to PCCW’s 

CDMA network and can surf the Internet through 

CDMA mobile phones or computers with a 

CDMA adapter. 

With Huawei’s solution, PCCW is well 

positioned to handle the intricate ramifications of 

this formidable city’s mobile broadband needs for 

many years to come. As Perry LaForge, CDMA 

Development Group’s Executive Director, points 

out, “Operating a CDMA2000 network in the 

850MHz band will give PCCW the performance, 

cost-effectiveness and network adaptability to own 

a decisive stake of Hong Kong’s mobile telecom 

market.” 


30

Winners 

RELIANCE 

growth has no limit 

Reliance Communications reduces its mobile network TCO through integration. Meanwhile, it adopts Huawei’s 

4th generation BTS for network construction, laying a firm, cost-effective foundation for future growth and 

maintaining a substantial market share. 

By Xu Yan 

Editor: Liu Zhonglin liuzhonglin@huawei.com 

31 

Win-Win / FEB 2009

Managing the largest network 

expansion in the world 

India is experiencing the fastest CDMA 

subscriber and market growth rate of any 

country in the world today. Reliance, the 

second largest telecom operator in India, 

was established in 1999, is an integrated telecom 

operator that initiated its original network 

almost 10 years ago. In recent years, faced with 

extraordinary competition from India’ several 

rival telecoms, Reliance felt an urgent need to 

accelerate CDMA network optimization and 

expand to address GSM network needs, while 

reducing CAPEX and maintenance costs through a 

nationwide integration program. 

Reliance’s original TDM based CDMA network 

generated significant problems. Network coverage 

expansion entailed extremely high costs if TDM 

construction was to be involved, and network 

structure complexity and OPEX would both 

subsequently increase. There would also be some 

inherent impediments to the speedy launch of new 

services and the ability to conform to IP network 

development trends would be severely inhibited. 

After an exhaustive assessment evaluation of the 

world’s leading vendors, Reliance embarked on a 

network commercialization contract with Huawei 

in late 2006. Just six months later, Reliance 

awarded Huawei 60% of their massive network 

transformation project. On July 12, 2007, Reliance 

and Huawei officially signed a long-term strategic 

cooperation agreement detailing a next generation 

integrated digital network construction; integrating 

mobile and fixed lines; supporting voice, data, 

and video, and covering over 600,000 villages and 

20,000 towns. The ultimate goal is to create India’s 

largest telecom network. 

New and improved 

competitiveness 

Reliance’s strategy is to quickly enter the GSM 

market and grab market share after shifting its 

CDMA network operation to GSM and CDMA 

dual-network operations. Simultaneously, they 

optimized the original CDMA network, improving 

competitiveness and keeping subscribers, while 

entering the GSM market quickly to maximize 

expansion. 

Enhancing spectrum usage 

The GSM spectrum allotment of Reliance 

is rare. It is not quite enough for large-scale 

networking in metropolises such as Delhi, Bombay, 

and Chennai. How to deploy larger sites with 

limited spectrum resources that could handle the 

demands of these densely populated urban areas? 

Huawei offered fast and efficient frequency reuse 

solutions to help them tackle the problem. 

Reliance succeeded in deploying the S4/4/4 

sites to aggressively reuse 4.4MHz bandwidth 

frequency sources. Limited spectrum bandwidth 

is a thing of the past and now they have enough 

to provide enhanced subscriber services in the 


32

Winners 

As of September 2008, Reliance had 55 million mobile 

subscribers in India or 18% of the market. They provide 

coverage for 20,000 towns and 450,000 villages, with 

dramatic growth that shows no signs of slackening. 

dense urban environs of these megalopolises. The 

U Interface Soft Synchronization (UISS) and 

interference elimination technologies are used to 

reduce interference between networks, allowing 

subscribers to enjoy better quality and experiences. 

Saving equipment room space 

With CDMA sites already being deployed, the 

extra space should be utilized for placing the GSM 

equipment to reduce TCO. 

Reliance uses Huawei’s highly integrated GSM 

base station which supports up to 18 GSM carries 

by using one cabinet in an area of less than 0.5 

square meters. What’s more, extra space is reserved 

in the base station for expansion. The footprint is 

small and the sound adaptability is so superb that 

Reliance is considering sharing its site resources 

with other operators to convert its costs into added 

revenue. 

In big cities like Bombay and Delhi, co-location 

of GSM and CDMA sites is largely used by 

Reliance to share auxiliary devices like antennas, 

feeders, and power supplies. The construction cost 

is then far lower than that for conventional separate 

network construction. 

Decreasing power costs 

India has been dealing with a power shortage 

for years. As the prices of gas and coal rise, so does 

electricity costs and leads to soaring electricity 

prices. What’s more, due to equipment aging and 

electrical loss during transmission, the transmission 

loss rate is up to 50% in New Delhi. Power costs 

make up over 60% of the Reliance’s operational 

expenditure (OPEX). 

It was imperative to lower electricity costs in 

thousands of base stations while still providing 

excellent service. Reliance searched for the most 

efficacious way and found Huawei’s high-efficiency 

power amplification (PA) technology. The PA 

efficiency keeps ahead in the industry, cutting the 

power consumption of the base station by over 

60% while providing the same coverage. This is 

important in India where electricity is expensive 

and the electrical transmission loss is high. 

Moreover, Reliance adopted Huawei’s intelligent 

power control technology. When traffic is low, a 

single or even several carrier modules are used for 

subscriber services and other idle resources are shut 

down. Alternately, different parts of time slots on 

one carrier are shut down to lower transmission 

energy consumption. This way the idle energy 

usage of base stations is minimized and a high level 

of quality of service (QoS) is ensured. 

Reducing transmission costs 

In India, traffic is much more concentrated 

and heavier in some areas with a great number of 

calls in one base station or one BSC. In traditional 

GSM solutions, this kind of traffic is transmitted 

to the core network equipment and then sent 

back to the initial base station after switching. In 

other words, the traffic data stream starts out local, 

travels a long distance and finally returns back. The 

process wastes transmission resources on the uplink 

33 

Win-Win / FEB 2009

and downlink. 

To remedy the situation, Reliance adopted 

Huawei’s local switching solution: In a base station, 

the traffic data stream is directly sent to another 

subscriber without traveling through the core 

network equipment, dramatically reducing the 

requirements for transmission bandwidth. If this 

solution is used in 40,000 base stations, a great deal 

of transmission and maintenance expenses can be 

saved. 

Winning the future via an 

advanced platform 

3G is a significant strategy for Reliance. One of 

the main reasons why Reliance chooses Huawei for 

GSM network construction is to pave the way for 

3G. 

By applying Huawei’s future-oriented GSM 

solutions, Reliance’s network can be easily upgraded 

to 3G. In Huawei’s highly integrated GSM base 

station, part of the cabinet space is sufficient for 

the need of capacity, and the remaining space 

can be used for placing Huawei’s 4th generation 

UMTS RF module and baseband processing unit. 

UMTS sites are supported by simply upgrading 

the base station, without changing its structure and 

avoiding large-scale reconstruction. In one cabinet, 

2G and 3G networks operate at the same time, 

fully extending the life cycle of equipment. 

Reliance can even use Huawei’s 4th generation 

BTS to provide multiple access services. According 

to market development, they can smoothly adjust 

the system capacity to match network operation 

strategy. With the unified platform of Huawei’s 4th 

generation BTS, Reliance can combine multiple 

networks into one network, readily catering to the 

complex, capriccioso demands of the market. 

The dual-mode operation of the UMTS/LTE 

and CDMA/LTE as demonstrated by Huawei 

has given Reliance complete confidence in future 

LTE evolution. Based on Huawei’s experience in 

smooth multi-path evolution, they are deploying 

the 4th generation multi-mode base stations to 

ensure smooth evolution from the UMTS to the 

LTE and from the CDMA to the LTE, creating a 

rock-solid, yet flexible foundation for the future. 

Network reliability, QoS, service innovation, and 

launch speeds have been rapidly improved so as 

to guarantee a fast increase in subscriber numbers, 

enhance customer loyalty and increase market 

share. 

As of September 2008, Reliance had 55 

million mobile subscribers in India or 18% of the 

market. They provide coverage for 20,000 towns 

and 450,000 villages, with dramatic growth that 

shows no signs of slackening. Reliance is known 

for its network reliability and is reliably expanding 

because it understands the reality of telecom 

service in India and is committed to providing its 

customers with the best service at the best price. 

Huawei is more than pleased to be a reliable 

partner in their continued success. 


34

Winners 

ORANGE 

dreams come true 

After many years in business, and a massive operational effort, Orange now ranks fourth in the world 

and number two in Europe as a full-service operator. Meanwhile, the cooperation between Huawei and 

Orange has moved into the fast lane. 

By Zhao Yuan Editor: Li Xuefeng xuefengli@huawei.com 

35 

Win-Win / FEB 2009

In Paris, London, Belgium, and even Egypt, 

you will find the uniform service brand of 

France Telecom–Orange, which has built its 

brand loyal customer base on outstanding 

and responsive services. After many years in 

business, and a massive operational effort, Orange 

now ranks fourth in the world and number two 

in Europe as a full service operator. Orange has 

distributed its mobile networks in 23 countries, 

covering 110 million subscribers and operating the 

biggest 3G network in the world. 

Story behind the glory 

France Telecom has consistently been regarded 

as highly innovative among the world’s leading 

telecom operators and launched its three-year 

transformation strategy named “NExT” in June 

2005. They have made great strides ever since. In 

2007, France Telecom’s annual sales revenue was 

EUR52.9 billion, which was an unprecedented 

amount of income. 

NExT is focused on mobile broadband service 

and subscriber numbers continuously rise. In 2006, 

there were 5.8 million Orange mobile broadband 

users, compared with 1.6 million users in 2005. 

The number of broadband users kept streaming 

upward in 2007 and net profits increased by 52% 

compared to 2006. 

It is Orange’s diligence that has brought those 

remarkable numbers. As one of the most powerful 

operators in terms of research and development 

in Europe, Orange knows quite well that network 

transformation is the most direct and most effective 

support to service transformation. 

Success in transformation depends heavily 

on deployment of advanced networks that can 

smoothly evolve in the future. Success of mobile 

broadband service is also inseparable from advanced 

networks, especially for the high-speed data 

service. To smoothly develop mobile broadband 

service, strong co-operative links in the chain are 

indispensable. 

Orange has stringent standards when it comes to 

choosing strategic equipment suppliers. Its partners 

must be leaders in the technological fields, stable 

and resourceful enough to cooperate on a longterm 

basis. 

In early 2006, Orange launched the re-bidding 

for the 3G RAN project, which was to be held 

every three years. Based on strict testing procedures 

and whole-process auditing, the capacity test results 

showed that Huawei’s HSDPA, high-speed railway 


36

Winners 

The Orange dream of providing a whole lot more 

advanced communications services to more people all 

over the world is coming true. The popularity of the 

brand shows the positive response from users. 

coverage, and power amplification efficiency were 

all beyond the expectations of Orange’s R&D 

department. Due to excellent product performance 

and distinctive HSPA solution, Huawei beat the 

competition and a successful co-operation between 

Orange and Huawei began. 

Initial success in mobile 

broadband 

The previously used 3G network could not meet 

the requirements for mobile broadband service 

development, so in December 2006, Orange 

Romania decided to swap its 3G network. As the 

sole supplier, Huawei changed and constructed 

thousands of 3G base stations in more than 30 

cities for Orange Romania. 

Upon completion of the whole network, 

multiple KPI values of the Orange Romania 

network surpassed those of the former network 

(e.g., the success rate of 2G/3G handover in 

the new network was up by 5%). The customer 

satisfaction rate was also markedly higher. The new 

3G network elevated the subscription base up to 

10 million in March 2008 for Orange Romania, 

which reinforced the Group’s trust in Huawei. 

Similarly, the second largest operator Mobistar 

(Orange-owned) in Belgium also faced the problem 

of having to relocate the former 3G base stations. 

The focus was especially on Brussels, capital of 

Belgium, home to the European Union, and HQs 

of multiple international organizations. Many 

high level international meetings of all sorts are 

held in Brussels each year, so ensuring high-quality 

mobile communications service is a top priority for 

Mobistar. 

Based on a detailed survey and a careful plan, 

Huawei implemented the new radio network 

conforming to the local environmental conditions. 

Older network equipment was replaced with the 

new distributed base stations, lowering the call 

drop rate, enhancing the network stability, and 

improving the throughput capacity of the system 

bandwidth. 

For the first time, Orange Belgium realized 

end-to-end All-IP after the new 3G network was 

set up. The end-to-end All-IP provided users with 

abundant services, such as mobile broadband, VoIP, 

and CMMB, and met the requirements for highspeed 

mobile data service during the F1 Belgian 

Grand Prix. 

The NExT strategy has been successful from 

the beginning and Orange has officially started the 

strategic partnership with Huawei. 

Pursuing green 

Environmental protection, energy conservation 

and emission reduction lower operational costs 

while showing social responsibility. Besides new 

services for the high-quality network users, Orange 

is also actively responding to the EU’s Green 

Action Plan and diligently taking green actions. 

Because of its large number of users and sizeable 

income, the sub-network in Poland ranks among 

the top four in the Orange Group (the others: 

37 

Win-Win / FEB 2009

England, France, and Spain). 

The old mobile network created a lot of pressure 

for Orange Poland due to the large sizes of base 

stations, high power consumption, and high total 

cost of ownership (TCO). The CEO of Orange 

Poland attached great importance to technical 

innovation and wanted development of the 3G 

network and HSPA. Nevertheless, the former 

equipment simply could not satisfy their needs in 

terms of HSPA performance and network evolution. 

Orange started to test the RAN10.0 with 

Huawei in 2007. Comparing the former base 

stations with Huawei’s with the same configuration, 

Orange found that the power consumption of 

Huawei’s base stations was 30% lower than the 

base stations they were previously using. Then the 

news came that Huawei had successfully swapped 

this kind of base station for Vodafone Spain and 

the KPI substantially rose. Orange chose Huawei 

to adjust and expand its 3G network in Poland. 

During construction, advantages of the 

distributed base station were obvious. The largesized 

micro base stations of the old network must 

be installed by using a crane which costs EUR1800 

each time. The distributed base station features a 

small size (1/3 of the former base station) and is 

lightweight, making it portable, easy to install by 

hand. 

Meanwhile, prices started soaring after Poland 

joined the EU. Leasing costs for the equipment 

room and electricity also rose. It was a timely 

implementation as the small size and low power 

consumption of the distributed bases station 

effectively lowered the construction and O&M 

costs. 

All base stations adopt the same type, 

configuration, and software. The BBU of the 

distributed base station can be integrated to the 

cabinet of the 2G base station, which integrates 

the resources, eases the O&M, and lowers the 

operational expenditure (OPEX). 

The newly constructed 3G network is also 

outstanding in the HSPA capacity. Orange is the 

first operator to provide commercial HSUPA 

services. In a few months, Orange quickly took the 

leading position for 3G data service providers in 

Poland. User numbers increased by 20%, ranking 

first in Poland and the ARPU for data downloading 

doubled, strengthening their competitiveness. 

Thereby, Orange Poland’s CTO specially sent a 

thank-you letter to Huawei’s project team. And Ms. 

Grazyna Piotrowska Oliwa, Chairman & CEO of 

Orange Poland highly lauded Huawei. “We believe 

that Huawei can enable us to implement the most 

modern telecommunications technologies and 

provide high quality networks and services, while 

significantly reducing the total cost of ownership,” 

said Ms. Grazyna Piotrowska Oliwa. “This contract 

recognises Huawei’s commitment to helping PTK 

Centertel to achieve its strategic objectives.” 

Orange is pretty confident about the network’s 

smooth evolution in the future. With the open 

modular structure, the distributed base station of 

Huawei features rich functions, easy upgrades and 

respective evolution between the baseband and the 

RF. Meeting the LTE development requirements of 

the 3G network and ensuring advancement of the 

network in Poland should not be a problem in the 

future. 

The Orange dream of providing a whole lot 

more advanced communications services to more 

people all over the world is coming true. The 

color orange is bright, warm, and optimistic; the 

popularity of the brand shows the positive response 

from users. Huawei is an important partner and 

has co-operated with Orange in constructing 17 

sub-networks. With development of the Orange 

brand all over the world, the successful partnership 

between Orange and Huawei will surely grow as 

fast as orange blossoms on a sunny day. 


38

Winners 

CHINA MOBILE 

powered by All-IP 

Market competition is cut-throat, and competitors are aggressively courting new subscribers with 

attractive subsidies and tariff packages. How does China Mobile adjust its development strategy to 

ensure the leading position? 

By Wu Yanning Editor: Michael Huang huangzhuojian@huawei.com 

39 

Win-Win / FEB 2009

Few people are familiar with China Mobile’s 

difficult past. Without implementing 

an All-IP strategy earlier than its rivals, 

the Chinese giant might be away from 

its rightful position as one of the globe’s leading 

operators. 

As China’s leading telecom services provider, 

China Mobile boasts the world’s largest mobile 

subscriber base. Serviced by a unified, all-digital 

mobile network, its subscribers topped 450 million 

on November 30, 2008, while the number of new 

monthly subscribers to its services has reached a 

staggering 4 million. China Mobile’s GSM and 

GPRS global roaming services cover 219 and 138 

regions and countries respectively. The creative 

addition of value-added services has culminated in 

27% of its revenue deriving from non-traditional 

services such as CRBT, music downloads, and a 

range of Internet-based services. 

Time for a bold move 

2003, however, marked a year replete with 

difficulties for China Mobile. Market competition 

was cut-throat, and competitors were aggressively 

courting new subscribers with attractive subsidies 

and tariff packages. Internally, the company was 

saddled with a TDM-based network that was at 

80% capacity and betraying signs that customer 

demand would soon outpace its capabilities. 

While new domestic subscribers had grown from 

60 million in 2001 to 62 million in 2003, China 

Mobile actually lost its new subscribers during the 

same period, suffering a sharp decline from 32 

million to 24 million. This was nothing short of a 

crisis in a market with a mobile penetration rate of 

only 21%. 

To reverse the situation, China Mobile decided 

to adjust its development strategy in a number of 

ways. Firstly, the company decided to reconstruct 

its network with future-oriented nascent 

technologies to enhance service capabilities and 

reduce TCO. Secondly, it sought to transform its 

role from a “mobile communications expert” to a 

“mobile information expert”. 

The legacy TDM network of China Mobile 

had been the largest mobile network in the world, 

providing services for 150 million subscribers a 

decade after its inception. Network expansion, 

however, would increase topology complexity, 

resulting in declined quality but increased ancillary 

costs, including the costs related to transmission, 

equipment rooms, power consumption, and 

human resources. In a bold move fraught with risk, 

China Mobile acted decisively and positioned All- 


40

Winners 

IP transformation as the core of its strategy, opting 

for a 3G-ready network that was optimized for the 

currently prevalent 2G environment. 

China Mobile selected Huawei as its strategic 

partner to realize All-IP transformation due to the 

latter’s impressive aggregate experience in numerous 

related fields. The Huawei solution incorporated 

2G/3G IP-based core networks coupled with 

a voice quality enhancement (VQE) solution 

capable of delivering carrier-class QoS for voice 

services. With a resulting 50% efficiency increase 

over TDM, the entire network was restructured to 

preempt the hidden problems that can infect a new 

Reaping major benefits 

Project progress was mirrored by the cumulative 

benefits visited upon China Mobile. From 2004 to 

2007, subscriber numbers doubled, during which 

time traffic skyrocketed to 1.8 trillion minutes with a 

completion rate of 99%. OPEX was greatly reduced, 

with average MSC power consumption dropping 

by 63%, and 20% OPEX savings were gained by 

optimizing systems and centralizing O&M. 

These reductions allowed China Mobile to 

penetrate the vast rural market, which propelled 

IP transformation of the whole network is a grand project, 

it requires a partner who understands both IP and mobile 

communications technologies. We are pleased to have 

Huawei as our partner. 

—Ms. He Bin, Vice President of China Mobile Shaanxi 

IP infrastructure. 

To meet the requirements that the new 

network dealt, China Mobile adopted a multilevel 

management system with centralized realtime 

monitoring, dual-homing, N+1 backup, and 

mobile switch center (MSC) pool. These measures 

optimized security for the variety of All-IP NEs. 

The risk minimization strategy established three 

major strategic phases. The first phase constructed a 

tandem IP backup network parallel to the existing 

tandem TDM network in order to seamlessly 

migrate traffic to the IP network. The second phase 

expanded the IP bearer layer to the local network, 

under which the control and transmission bearers 

were based on All-IP. The final stage transformed 

the wireless access layer to All-IP. 

the company’s growth rates with considerable force. 

By utilizing a dual 2G/3G IP based core network, 

China Mobile completed a crucial network control 

and service transmission phase in terms of 3G 

infrastructure without activating any of the risks 

that accompanied the scheme. 

China Mobile acted swiftly and confidently in 

the face of a plethora of challenges from its rivals 

coupled with the lagging legacy network. The 

bold move to All-IP and the choice of Huawei 

as its partner spearheaded a flexible, reliable, and 

expandable network that drove China Mobile’s 

efforts to widen their market lead. As the network 

begins to accommodate more 3G traffic, the results 

of this far-sighted strategy are becoming more 

evident. 

41 

Win-Win / FEB 2009

MegaFon 

transforms and prepares for 3G 

MegaFon was quickly expanding throughout the Russian Federation but their MGC-based network could not 

keep up. As the expenses mounted, with the looming award of 3G licenses, MegaFon decided to transform their 

network to All-IP. 

By Lu Chao Editor: Joy Zhou zhouhj@huawei.com 


42

Winners 

After the transformation, MegaFon could easily meet the 

user capacity expansion requirements for the solution’s 

large capacity of up to 3.2 million users in a single MSS. 

MegaFon was quickly expanding 

throughout the Russian Federation 

but their MGC-based network 

could not keep up. As the expenses 

mounted, with the looming award of 3G licenses, 

they decided that they needed to transform their 

network to All-IP. After partnering with Huawei, 

MegaFon implemented an All-IP converged 

2G/3G core network that reduces their costs and 

positions them to continue growing. 

Covering the Russian 

Federation 

MegaFon was the first all-Russian GSM mobile 

operator. It was founded in 2002 through the 

combination of a number of regional operators 

and provides end users with comprehensive 

mobile communications services across the 

Russian Federation. After telecom reform in 

1992, Russia and the CIS telecom industry grew 

rapidly, especially the mobile market. By the end 

of Q3 2008, MegaFon has more than 41 million 

subscribers and its consolidated revenue grew 

24.9% for the nine months past. MegaFon is 

committed to its goal to become the revenue leader 

in Russian mobile communications. 

Out of capacity with surging 

subscriptions 

Two factors were influencing the direction of 

MegaFon’s planning. The first was dramatic growth in 

users. The second was caused by the fact that Russia 

planned to release 3G licenses for operators to deploy 

high speed mobile data service at the end of 2007. 

As a result of surging subscriptions, MegaFon’s 

existing core network was rapidly reaching its 

limit. Because the network was composed of oldstyle 

MSCs, which have a low individual capacity, 

the only way to increase capacity was to add 

more MSCs, but this would dramatically increase 

the network interconnections, raising costs. 

The existing network was also not well suited to 

handling mobile broadband connections, even for 

the relatively slow-speed EDGE connections. 

Based on the deep understanding of IP 

network, MegaFon had rolled out a 3-step All- 

IP transformation strategy, covering fiber to BTS/ 

Node B, IP-based core network, and IP RAN. 

One of the goals for MegaFon was to have a core 

network that could not only handle the growth 

of subscribers and low-speed data, but also be 

able to easily expand to support 3G in a way 

that optimized their investment. This new core 

network should simplify maintenance and reduce 

operational costs as well. 

Converged 2G/3G All-IP 

softswitches solve the problem 

MagaFon realized that the utilization of existing 

43 

Win-Win / FEB 2009

network resources must be maximized to host a 2G 

and 3G integrated network. Only in this way could 

MagaFon safeguard investment, lower TCO, and 

facilitate smooth future evolution to All-IP FMC 

networks. By partnering with Huawei, MegaFon 

implemented an All-IP converged 2G/3G core 

network that reduces their costs and positions them 

to continue growing. 

The successful deployment of a Huawei IP 

mobile softswitch (MSS) solution that replaced 

the traditional exchange network solved the 

problems MegaFon was encountering. After the 

transformation, MegaFon could easily meet the 

user capacity expansion requirements because of the 

solution’s large capacity of up to 3.2 million users 

in a single MSS. With 2G/3G dual access support, 

MegaFon can share the 2G core network resources 

with upcoming 3G users which will substantially 

save CAPEX for future 3G network construction. 

In addition, the IP MSS solution also supported 

increasing the capacity of the existing bearer network. 

Increased capacity, but 

reduced costs 

Even though the network capacity was greatly 

increased, the reduction in managed control 

points reduced routine operational expenses. The 

use of VoIP on the bearer network, with Huawei 

enhancements to IP capacity and quality, cut 

transmission cost by 25%, power consumption by 

60% and footprint by 74%. Huawei’s specialized 

network design, high-quality products, timely 

delivery, and professional services helped MegaFon 

Ural capture emerging market opportunities, 

building a strong competitive position. 

According to Mr. Roman, a network manager of 

MegaFon Ural, “Huawei mobile softswitches with 

high capacity have simplified the network and they 

are quite stable, especially on overload condition.” 

Keeping a leading position 

When faced with a severe capacity problem 

and the future opportunities related to mobile 

broadband, MegaFon chose to make a major 

change to their network to embark on an IP 

transformation. 

To meet its strategic goals, MegaFon has been 

unrelentingly stringent in its choice of partner. 

TDM-to-IP transformation involves lengthy 

research, end-to-end solutions, and rapid network 

deployment. Not only does suppliers have to 

demonstrate relevant technological expertise, but 

their brand equity, service response, and delivery 

capacity are also under scrutiny. 

Since 2005, Huawei has been MegaFon’s major 

partner, and the two have cooperated in a wide 

range of fields spanning mobile BTSs, softswitch, 

wavelength division transmission, IP bearer, and 

service. As a young, ambitious company, MegaFon 

remains committed to maintain its leading All-IP 

position through customization, innovation and 

evolution. 


44

Winners 

VODAFONE RO 

growth from one 2G/3G network 

In April 2008, Vodafone Romania heaved a sigh of relief: They no longer had to deal with the maintenance of 

independent and complicated 2G and 3G networks. 

By Zou Chun Editor: Joy Zhou zhouhj@huawei.com 

45 

Win-Win / FEB 2009

MANIA 

In April 2008, Vodafone Romania heaved 

a sigh of relief: They no longer had to deal 

with the maintenance of independent and 

complicated 2G and 3G networks. The 

original 20 switch nodes had been replaced with 

six unified core network (CN) nodes. The network 

architecture was greatly simplified and capacity rose 

from 460,000 lines to 1.2 million lines. Because of 

its advanced network architecture, the network can 

seamlessly evolve to IMS in the future. 

Leader in 2G and 3G 

Vodafone Romania is the largest mobile operator 

in Romania, with 48% of the market. It has a 

GSM mobile network and has recently introduced 

3G services. Vodafone Romania provides mobile 

services to 8 million users, accounting for 35% of 

the country’s total population. 

Two networks, twice the 

headaches 

When Vodafone Romania began to offer 3G 

services, they did so by implementing a separate 

network, exclusively for 3G. The 2G network used 

TDM-based MSC core network switches and the 

3G network was based on ATM. As both the 2G 

and 3G networks grew, the network soon had 

numerous network elements (NEs), which had 

to be individually managed. This required a large 

amount of work for O&M and therefore exerted 

great pressure on human resources. 

In addition, the individual network elements 

had a relatively small capacity and could not meet 

the rapid growth of users, requiring continual 

expansion. This network architecture necessitated 

establishing a large number of small CN offices, 

each of which required expenditure on site rental, 

power, and local personnel. The overall result was a 

high level of CAPEX and OPEX. 

One network for growth and 

low costs 

To provide for future growth and to meet the 

demands for new services, while reducing operating 

expenses, Vodafone Romania decided to move 

to an All-IP core network architecture. This also 

would provide a platform to allow them to offer 

fixed-mobile convergence (FMC) services. 

From January to April 2007, Vodafone Romania 

tested the CN solution provided by Huawei. 

The solution passed the strict testing on 643 

items. In September 2007, Vodafone signed the 

project contract with Huawei to supply a 2G/3G 

integrated All-IP mobile softswitch network to 

support both the visited mobile services switching 

centers (VMSC) and the tandem mobile-services 

switching centers (TMSC). 

The completed network was characterized by a 

more flexible networking model. The sixteen 2G 

MSC servers, two 3G MSC servers, and two transit 

layer gateway mobile-services switching centers 

(GMSCs) of the former network were integrated 

into six 2G/3G MSC servers and two standby 

MSC servers. This integration of the original 

independent 2G and 3G networks into a unified 

CN, greatly simplified the network architecture 


46

Winners 

We were very pleased with the responsiveness and 

professionalism of the Huawei team. The outstanding result 

for this project is why we awarded them the Excellence 

Diploma. —Vodafone Romania 

and enhanced the network performance. 

The All-IP mobile softswitches of Huawei are 

based on the 3GPP R4 architecture, conforming 

to the GSM/EDGE and 3GPP R99 WCDMA 

standards, which helped Vodafone Romania 

transform the traditional TDM network into an 

IP network, which can interconnect with an IMS 

network in the future. 

To create a secure and reliable network, Huawei 

also provided a dual-homed solution. When 

a server fails, the standby server takes over the 

services promptly, ensuring uninterrupted network 

operation. 

Simplification brings service 

and cost benefits 

During the deployment, Vodafone Romania did 

not need to upgrade the RNC/BSC, which helped 

reduce investment. Extensive planning and detailed 

procedures ensured that the cutovers did not affect 

the services of the existing network. 

The completed network is characterized by a 

more flexible networking model. The centralized 

management and unified O&M of the network 

help reduce OPEX. Moreover, the unified CN 

minimizes the overlapping duties of the 2G MSCs 

and 3G MSCs and thus enhances the efficiency 

and quality of the network transmission. 

With All-IP based mobile softswitches, 

Vodafone Romania succeeded in transforming its 

traditional TDM network into an All-IP network. 

As a result, the transmission efficiency increased 

and the network met the requirement of being able 

to support FMC services. Recently, based on this 

set of CN systems, Huawei has provided Vodafone 

with the innovative MediaX system, a multi-party 

multimedia conference system for the fixed-mobile 

converged network that can provide new services to 

enterprise users. 

The network transformation not only helped 

Vodafone Romania complete the evolution to 

an All-IP network but also paved the way for the 

operator’s migration to IMS in the future. By virtue 

of the advanced network architecture and clear 

evolution plans, the mobile softswitches of Huawei 

can support the 3rd Generation Partnership Project 

(3GPP) R5/R6 and interconnect with an IMS 

network, which protects the operator’s investment. 

Focus on new services, not 

operations 

In April 2008, Huawei helped Vodafone 

Romania complete all cutovers for the project. 

Thanks to Huawei’s advanced technologies and 

extensive engineering experience, Vodafone 

Romania presented an “Excellence Diploma” to 

Huawei for its performance during the project 

“Evolve CS Core Network to IP based R4”. A 

senior manager of Vodafone Romania noted that: 

“We are very pleased with the responsiveness 

and professionalism of the Huawei team. The 

outstanding result for this project is why we 

awarded them the Excellence Diploma.” 

The new Huawei solution has helped Vodafone 

Romania achieve a significant transformation to an 

All-IP network, and greatly reduced OPEX while 

allowing it to add new services and protect its longterm 

investment. 

47 

Win-Win / FEB 2009

Reach for the sky and 

transform your vision into reality. 

Realize Your Potential 

48

EMOBILE: the mobile broadband revolutionist - Huawei

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