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Shanghai Telecom's MAN

Cao Min and Zhou Xiang
(Planning and Development Dept, Shanghai Telecom, Shanghai 200085,China)

　　While building telecom facilities of the world's advanced level, Shanghai Telecom has been making efforts to develop new telecom services. In recent years, it successfully opened new services such as local intelligent service, videoconferencing, distance education and e-commerce. According to the prediction of the USITO, in terms of broadband service, China will have 500 million telephone subscribers and 100 million Internet citizens (20-25 million broadband service users) by the year 2005. As the broadband market affords a splendid business opportunity to operators, competition among China Telecom, Broadcasting Telecom, Netcom and Unicom is becoming increasingly fierce. As an incumbent, China Telecom has played an active role in winning the broadband market, making use of its advantages in operation and resources. Accordingly, this market is undoubtedly one of Shanghai Telecom's important growth point in developing its services.

　　In recent years major telecom operators worldwide have been deploying broadband networks as a step in their strategic plans. Since broadband technology enables high speed Internet access by eliminating the bandwidth bottleneck, the deployment of broadband networks has become one of the hot spots in countries throughout the world in developing their IT industries. The following is a comparison of the number of broadband users among selected countries.

　　According to the CNNIC, as of 2001 China had more than 20 million Internet citizens; however, only 2.3% of them use broadband access. Since there is increasingly urgent potential demand for high-speed data and multimedia services, the deployment of broadband networks is the only way to the development of Internet services.

　　 Overall, at present China is quite close to developed countries in terms of broadband network infrastructure. For domestic operators, broadband and data services are just growing and data service is expected to account for 40% of the total traffic in China by 2005. Driven by the competition in the industry and the growth of data service, China Telecom is developing its MANs to provide IP-based data services of different bandwidths such as Internet access and VPN for government, business and residential users.

　　With the increasing maturity of broadband network technology, the value chain of the broadband industry is taking shape, furnishing a grand business opportunity at various levels such as those of infrastructure, network products and information service. As a result, the size and structure of the telecom industry and the Internet industry will possibly change. The combination of the emerging broadband industry and the traditional industry will bring endless opportunities. Thus the evolution from narrow-band to broadband network is irreversible. The complete structure of the value chain of the broadband network as an organic whole should include at least a value-added content provider, a broadband operator, a basic broadband network provider, a broadband equipment manufacturer and end users.

　　It is an important strategic matter for Shanghai Telecom to consider carefully how to face the grand business opportunity brought by the broadband market and the fierce competition from other operators and maximize its profit.

　　1. The Course of Development of Shanghai Telecom's Broadband MAN

　　 As early as in 1995, Shanghai Telecom built a trial ATM network of the internationally advanced level, with which it followed new technologies and tested applications. In 1997, it took the lead to build the country's largest local ATM network. In 2001, after several large-scale capacity expansions, the ATM network had 18 core nodes and 108 edge nodes. Besides, an IP MAN was built and more information sources were added to attract broadband users by means of service. The 1st phase backbone layer of the IP MAN adopts the 8+40 structure, i.e., 8 core nodes and 40 edge nodes, chiefly providing high speed Internet access and interconnection of private corporate networks (MPLS/VPN), support to various multimedia services, etc. To provide high speed Internet access, video and MPLS/VPN, its 2nd phase expansion will be undertaken in 2002.

　　2. Analysis and Evolution of the Existing Broadband MAN

　　 As of end-2002, Shanghai Telecom had 90,000 broadband users in total. However, while making remarkable achievements, Shanghai Telecom is confronted to some common problems that have occurred in the deployment of broadband networks. Unlike currently mature broadband backbone networks, broadband service is in its infantry. As a next step we should focus on the development of broadband service and expansion of the broadband user base so as to gain return on investment. We should consider how to rationalize the structure of the broadband network to adapt it to the long-term growth of broadband service, how to select appropriate access technologies according to the distribution characteristics of the broadband users, taking into account economic benefits and the need to develop broadband service, how to adopt flexible and diverse charging methods and service combinations so as to increase the number of broadband users, and how to establish rational operational modes to guarantee healthy and prolonged development of the broadband network and services.

　　3. Analysis and Evolution of the Access Layer

　　 From the perspective of the current technology and trend, there are three major types of broadband users: ADSL, FTTX+LAN and HFC (cable modem) users. The first two, including HOMEPNA are the user types that Shanghai Telecom targets. By the end of 2002, it will build a broadband access network serving 270,000 ADSL users and 300,000 FTTX+LAN users. From the perspective of network layers, we consider different access modes to be at the same layer. Future broadband access must provide improved control capability, network safety and flexible charging methods, and introduce the access convergence/management layer between the broadband access layer and the backbone layer.

　　The following is a diagram showing the network layers.

　　At the access convergence/management layer, the equipment is required to provide practicability, reliability and safety as well as high efficiency, expandability and manageability. This layer is designed to deal with user management and charging, and to provide network control means and various IP-based value-added services in conjunction with the broadband access layer, the backbone layer and information sources.

　　The evolution of the broadband access layer

　　For equipment for universal service, ADSL is selected as the main access mode.

　　For equipment for business customer service, FTTX+LAN (VDSL) is selected as the main access mode.

　　The user's existing and potential demand is the criterion for the selection of FTTX+LAN or xDSL. Refer to the following list.

　　The evolution of the access convergence/management layer involves the integration of BAS; corresponding management of, charging of and service support to FTTX+LAN; unified packing of services and development of various broadband access services throughout the network.

　　4. Analysis and Evolution of the Backbone Network

　　 After several years of broadband network construction, Shanghai Telecom has the country's largest ATM network and the IP network built in 2001. Both networks are the cores of the operator's data network.

　　Present status of the IP MAN

　　 The 1st phase network of Shanghai Telecom's IP MAN consists of two layers: the core layer and the edge layer. The former is made up of eight nodes and the latter forty nodes. The forty edge nodes provide businesses with Internet access and VPN service, and residential customers with Internet access. The IP MAN can provide a wide range of new value-added services.

　　The evolution of the IP MAN involves expansion of bandwidth and coverage of services, and capacity expansion of the nodes.

　　Present Status of the ATM Network

　　 To support the implementation of the ADSL broadband access project, a third capacity expansion was undertaken in the ATM network in 2001. As a result, Shanghai's local ATM network has 18 pieces of PP15K core layer equipment and 108 pieces of PP7480 edge layer equipment. This broadband ATM network is playing a positive role in the development of broadband services, acting as a multi-service transmission platform with wide coverage, safety and high QoS performance.

　　The evolution strategy of the ATM network is to alleviate the pressure of the access layer on the network by readjusting the network structure for broadband access and access convergence and leading most of the data flow to the IP MAN, and leave slot positions, ports and bandwidth of the ATM network for use by other services.

　　5. Establishment of the Service Layer

　　 With the broadband network, it is possible to replace the free of charge operational mode of the conventional narrow-band Internet services with the charged mode. Shanghai telecom has invested heavily in the establishment of the service layer. Apart from the 1,500,000-user Internet access project completed in 2001, it has made a considerable investment in the establishment of the IDC and the information source platform. As regards the development of the service layer, Shanghai Telecom's objective is to transit gradually from providing narrow-band data service as the dominant service to providing broadband data service as the dominant service.

　　6. Development Strategy of the Broadband Market

　　 In the operation of broadband services, the value chain is more complex than that in the traditional services due to more detailed division of work. However, since operators can control and identify the customers' identity and behavior, they can play a pre-dominant role in the development of broadband service.

　　6.1 Value Chain of Broadband Services

　　 The value chain of broadband services includes three players: the user, the ISP/NSP and the ICP/ASP.

　　 A. User: The user refers to the end user who uses the broadband network and service.

　　 B. ISP/NSP: ISP is the Internet access service provider and the NSP the network service provider who provides the basic network.

　　 C. ICP/ASP: The ICP/ASP provides games, educational content, etc. They collect charges for advertisements and content usage.

　　6.2 Complementary Relationship between ISP/NSP and ICP/ASP

　　 The establishment of the value chain of broadband services can effectively solve the lack of broadband content, help increase the number of users and the amount of consumption, and enable users to enjoy diversified broadband services
.
　　6.3 Detailed Strategy

　　 A. To provide personified services for different customer groups

　　For individual users, different personified services are provided. For business users, various safe and reliable interconnections and complete service support are provided.

　　B. To provide unified management for different broadband accesses

　　 To provide flexible, reliable and safe charging and user management.

　　C. To establish a unified application platform for different broadband applications

　　 To establish a unified application platform for broadband services and to develop broadband services together with ICPs, ASPs and other ISPs through operational modes such as cooperation and alliance.

　　In a word, facing increasing demand for broadband access and acute market competition, Shanghai Telecom's development strategy is to energetically promote the construction of an all optical network, develop ASDL access to cover more than 4 million households and businesses, facilitate Ethernet access in residential areas and to actively develop various broadband services.

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Cao Min graduated from the No. 2 Workers' University, majoring in computer application and management. He started his career in Shanghai Telephone Exchange Office in 1987 and works now with the planning department, Shanghai Telecom as an engineer, engaged in the planning and installation of data networks and broadband information networks.

Zhou Xiang graduated from Shanghai Jiaotong University, majoring in information and cybernetics. He started his career in Shanghai Telephone Exchange Office in 1999 and works now with the planning department, Shanghai Telecom as an engineer, engaged in the planning and installation of broadband information networks.