China Telecom (CHA), the largest Chinese fixed-line operator, has successfully tested Alcatel-Lucent’s (ALU) multi-carrier EV-DO (a 3G technology) wireless network based on the Revision B (Rev B) standard. The Chinese operator’s subsidiary Shanghai Telecom has reportedly installed the multi-carrier EV-DO solution, which significantly enhances network throughput and reduces data latency (using multiple carriers) to meet increasing customer demand for high-bandwidth applications.
 
The multi-carrier EV-DO Rev B network, which represents an upgrade from EV-DO Rev A, has demonstrated highly encouraging throughput levels in the lab test with peak download speeds reaching up to 9.3 megabits per second (Mbps). This will effectively enhance customer experience who subscribe to high-bandwidth wireless services including Voice-over-Internet Protocol (VoIP), high definition video streaming and other multimedia applications. 
 
Leveraging Alcatel-Lucent’s network infrastructure support, Shanghai Telecom became the first Chinese carrier to commercially launch a CDMA EV-DO network in China in March 2009. The company has completed CDMA network coverage in all rural and urban areas of Shanghai at the end of first-half 2009.
 
The newly installed EV-DO Rev B network solution will enable China Telecom to increase its network speed by up to three times (over the existing EV-DO Rev A), which will facilitate the roll out of advanced 3G services. The company is planning to commence field trial of the network in fourth-quarter 2009, which will enable it to offer sophisticated 3G services during the World Expo 2010 in Shanghai.
 
China Telecom remains committed to its 3G wireless venture as the company plans to sign up 35 million new 3G users in 2009 and address 97% of the urban population by the end of the year. The company’s 3G service covered 342 Chinese cities at the end of first-half 2009. China Telecom’s existing CDMA EV-DO based 3G network is 50% faster than China Mobile’s (CHL) home-grown 3G network.
 
While we believe China Telecom is well-positioned to benefit from the rapidly growing Chinese wireless market boosted by the 3G prospect, expenses associated with the ubiquitous deployment of high-speed wireless services will affect profitability and margins through 2009.
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