...country's voice market has been whittled down from 100 percent in the mid-1990s to worryingly low 30 percent. A strategic response is now required.

"The fixed telephone service is moving to mobile and IP and so we are faced with a severe situation," says Zhao Huiling, vice president of the China Telecom Beijing Research Institute. "Network and business transformation is the only way out."

To achieve this "transformation," China Telecom has been setting its sights on a next-generation network (NGN) since the start of the decade. This, it believes, will provide it with the tools to move from "traditional network carrier" to "comprehensive information provider." In practical terms, that means consumers will be offered a lot more than basic telecom services; entertainment and information services, including IPTV, are all now seen by China Telecom as key applications that can drive revenue growth. As for the enterprise customer, China Telecom's intention is to use the NGN as a basis for making a stronger push into the ICT outsourcing space with a view to generating higher-margin revenue.

But making this strategic change, as Huiling concedes, will not be without danger. "The telecom industry is moving from a low-risk and high-profit business model [before the advent of IP and deregulation] to a high-risk and low-profit model," she says. However, to remain a traditional network carrier--with the prospect of ever-decreasing revenue--is not, understandably, seen...

NOTE: All illustrations and photos have been removed from this article.



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