La Convergencia de Redes como Oportunidad para Innovar en Modelos de Negocio

1. La Convergencia de Redes como Oportunidad para Innovar en Modelos de Negocio Carlos Otálora Director Comercial

2. AGENDA • Challenges and Trends in Telecom Industry • Expectations about Convergence • China Telecom Business Case • ZTE Solutions for Convergence

3. 900M 2100M 2.6G Challenges on Mobile Industry • ARPU growth becomes slower because competition and reduction in voice revenues. • High investments to improve their network, but the profit hasn’t been increased pro rata. Smooth Evolution High Bandwidth - 3G Bandwidth WCDMA R99/R4 HSDPA R5 HSUPA R6 HSPA+ R7/R8 HD video LTE Online video ALL IP P2P download Online game Web surfing Voice Data Voice Pipe Providers • Multi-standard and multi-frequency bands coexistence 2G 3G LTE GSM/ UMTS CDMA GSM UMTS LTE LTE

4. Challenges on Fixed Network Industry

5. AGENDA • Challenges and Trends in Telecom Industry • Expectations about Convergence • China Telecom Business Case • ZTE Solutions for Convergence

6. Mobile/ Fixed Expectations about Convergence

7. Consumers’ Expectations: Access Anywhere Uniform Number Unified numberfor different service Unified Authentication Voice, Fax, SMS and Email etc. Unified BillUniform bill for all service Users’ Expectation Using all services with one unified terminal Multi-mode Combined Terminal Use services by unified terminal Unified Portal For different mobiles or fixed terminals and services Similar Service Function In fixed or mobile environment Convenience & Convergence

8. Consumers’ Expectations: Better Experience • Simple and Convenient • At anywhere • On anytime • With any terminal • Content • Multimedia • Personalized • Enjoyable User Experience • Quality • Privacy • Security 流媒体

9. Consumers’ Expectations: Unlimited Usage Mobile Data Traffic and Customers Upstream Downstream Web browsing & download VoIP Video telephone or meeting On line game Video surveillance Music and movie on line SDTV HDTV 10M Source: TeliaSonera,2009 • With data service blooming, customer’s bandwidth requirement increases sharply, which brings a big pressure to network expansion. • Operators are looking for an higher capacity technology.

10. VoIP SoftDA / IM Web Call VideoConf MMS E-Auction Consumers’ Expectations: More Services Converged multiple play brings new services Voice IP Centrex E-Entertain Click to Call E-Shopping Web 800 E-Party Click to Call IPTV Data Web Conference Video

11. 2 3 Operators’ Expectations: Full Service Operation 1 Full services operation Broadband and Control • Mainstream operators move to full services provider. • Colorful services ensure ARPU increasing. • Service/Charging bundle strategy attracts users, and restrains from losing user. • Easy for multimedia and customized service development • Usage increase • Agreements with CP/SP. • Resource control mechanism to avoid being a dump pipe Full Service Broadband Low TCO Mobile Low TCO operation Mobile • Reduce cost because sharing resources and platforms • Simplify network structure • Facilitate and optimize management Convergence Convergence Internet Fixed Internet Fixed

12. The Convergence Levels • One seamless experience • One device • 3 Functionality/convenience • Bundling has been the most successful form of convergence so far. • Opportunities in service integration, in which the convergence will satisfy the functionalities the customer actually wants. Deviceconvergence • One number • One voicemail • One application set • 2 Value to customer Service Integration • One service bundle • One bill • One customer service Cost savings • 1 Bundling Source: OVUM High Low Level of Network Convergence

13. Convergence : Transformation of Value Chain • Industry value chain is expanding • Win-Win with flourishing SP/CPs • Carrier business transformation • from “Fixed/Mobile Network Operator” • to “Integrated Information Service Provider” Equipment & Service Vendor Network Operator & Service Provider EndCustomer Migration Software Development, Application & Service Vendor Equipment Vendor Content Provider Service & Application Provider Virtual Operator CoreNetworkOperator AccessNetwork Operator EndCustomer

14. AGENDA • Challenges and Trends in Telecom Industry • Expectations about Convergence • China Telecom Business Case • ZTE Solutions for Convergence

15. China Telecom Overview • It was co-listed at New York and Hong Kong stock exchanges in November 2002 and in December 2006. • China Telecom is an extra-large State-owned telecom operator 1 2 • It was awarded as the “CDMA Global Operator Leadership” by CDG, also rated as the “World Most Admired Enterprise”, “Best Telecom Company in China”, “Most Potential Company in China”, among others by international magazines. 3 China Telecom 4 • It has subsidiary companies in 31 provinces and branches in the Americas, Europe and Hong Kong.

16. China Telecom Overview • Provides the integrated information services including the fixed-line telephone, mobile service, Internet connection and applications services. • China Telecom owns 181 million fixed-line telephone subscribers, 74,52 million mobile (CDMA) subscribers and 58.33 million broadband subscribers

17. China Telecom Transformation Path • China Telecom set out in 2004 on a path of transformation in order to better serve its customers, the global market and its shareholders. • Based on the company’s advantages and resources.

18. Strong and Rapid Mobile Expansion • Mobile Deployment • In June 2008, purchased China Unicom’s nationwide CDMA business and assets. • In January 2009, acquired the 3G license for CDMA 2000 • On April 2009, launched the 3G service in 122 cities, and in May their 3G’s network covered 342 cities. Services Revenue (RMB Mil) • Key Facts • Coverage and network optimization measures. • Rapid expansion of subscriber base. • Cross-sell to existing customers. • Revenue growing with stable ARPU. • 58.1 RMB (2010) Vs 59,5 RMB (2009). • Mobile data growing: • Mobile Data/Mobile Revenue 34.5%. • Focus on terminal supply chain: ~700 models of handsets in supply. >100 3G handset models. • Open distribution channel: POS reached 560k (4x Vs 2009.1) Subscribers (Mil)

19. Intensive Wireline Broadband Deployment Subscribers and Revenues Highlights

20. Integrated Information Services Revenues (RMB Mil)

21. Optimized Revenue Structure Changes • Overall revenue increased +4.9% • Revenue growth driver: • Mobile revenue/Total : 23.3% ( 7.7pp yoy) • Mobile revenue 56.8% yoy • Further optimized mobile revenue mix: Mobile data/Total mobile : 34.5% ( 11pp yoy) • Reduced wireline operating risk: • Wireline Non Voice / Total Wireline (7.6pp yoy)

22. Service Development Strategy: Customer Centered • Government and Enterprise Customer Lead corporate information market and attract to the high value customers by specific applications • Household Customer Increasing customer contribution using services that integrate the fixed and mobile. • Personal Customer Promote the increase in data usage and the partnership with CP/SP able to introduce new applications

23. Service Development Strategy: Branding and Bundling

24. Customer Brands: One Home

25. Customer Brands: BizNavigator • Enterprise customer • Reduce operation costs, increase work efficiency, find more business opportunities and promote the business development. • Integrated information and communication services. • Industrial IT applications support for processes like sales, logistics management, supply and demand management, travel services, etc • Communication services such us integrated office service, videoconference, data and connectivity solution, etc. • Adopted by more than 4 million subscribers. • SME penetration: 48% ( 5pp vs 2009)

26. Operation Brands

27. Wireless Broadband Product • CDMA number as unified account name for both CDMA & WiFi. • CDMA and WiFi share time. Seamless coverage. • Integrated applications available anywhere and anytime. • Accelerated construction of hotspots

28. 189 Email Product • Email service provided to eSurfing (CDMA) and fixed broadband customers • Integrates mobile and internet services. • Customers can send and receive emails at anytime and everywhere, through PC, SMS, MMS and WAP.

29. Mega-Eye Video Monitoring Product

30. Strategies for the Converged Network

31. Strategies for the Converged Network Unified Terminal

32. Key Strategies of China Telecom

33. AGENDA • Challenges and Trends in Telecom Industry • Expectations about Convergence • China Telecom Business Case • ZTE Solutions for Convergence

34. ZTE Solutions for Convergence UNI-RAN UNI-CORE CONVERGENCE UNI-ACCESS UNI-BACKHAUL ANYSERVICE

35. GSM TD-SCDMA Text LTE WiMAX Uni-RAN Protects Your Investment Lower TCO = Profit ! UMTS CDMA Uni-RANsolution assists operators to handle the following problems: Different wireless systems through software load Network and spectrum resources to be optimized & integrated Wireless network to evolve smoothly TCO optimization network Solution

36. ZTE Fixed Network Product ZXJ10 MSAN/MSAG DSL xPON ZXMSG 5600 C200 C220 C300 ZXA10 OLT ZXA10 T600 FSAP 9800 ZXDSL 9210 ZXDSL 8220 9806H/9816/9812 ZXA10 ONU ZXA10 U300 ZXMSG5200 8210 6000/6020 TG Outdoor Cabinet CPE

37. Future-Proof Network: Broadband & Convergence FTTx Based on xPON Technology 10Gbandwidth Broadband Convergence • “Triple play" integration • Full scenarios coverage • Unified service bearing • Multi Access: Legacy and new technologies.

38. Uni-Backhaul Solution Features • Flatstructure: Simplified network hierarchyreducing TCO. • Convergence: Converged IP and optical transport layer technology. • Broadband: Bearer networks with higher bandwidth and QoSsupport. • Packet Transport: The packet interfaces must support not only traditional E1/STM-N interfaces but also FE/GE/10GE/40GE/ 100G interfaces and the network core must utilize bandwidth efficiently and to better support various services characteristics. • Optimized operation and intelligent management. • Evolution towards IPv6 • Energy conservation, emissions reduction, and environmental protection

39. Uni-Backhaul Solution IPTN 2900/3900/5900 MW ZSR Switch & Router S150/200 S330 NG-SDH/MSTP 5800 S325 WDM/OTN Access Aggregation Edge Core AAA, BOSS BSC, RNC CS: MSC-S, MGW PS: SGSN, GGSN IMS: CSCF,AS,SBC SS IPTN 9000 IPTV 6000 8900 Switch Router IP/MPLS T8000 T600/T1200 M6000 NG-SDH MSTP S385 WDM OTN M720 M820 M600 8600 M920

40. IMS FMC & ICT CS Circuit Switch UDC NG-HLR/USPP PS Packet Switch Uni-Core Product Portfolio UNI-CORE • PSTN & PLMN Soft Switch • 3GPP G/U/WCDMA – WCN • MSCserver • MGW • 3GPP2 CDMA2000 – 3GCN • MSCe • MGW • TISPAN - Fixed Network • SS10 • MSG9000 • ZIMS – Fix Mobile Convergence • VOIP Controller • P/I/S-CSCF • MGCF, IM-MGW • MRFP, MRFC • AGCF, BGCF • QoS For IP Services • UBAS • PCRF • Rich Applications • VoLTE • IPTV • … Unified Database for: • HLR/AuC • HLRe • HSS • AAA • EIR • MNP • SPR • ... • ZEPS - LTE EPC • xGW, SGW, PGW, MME • GSM/UMTS PS • SGSN, GGSN, DPI, PCC • CDMA & WiMAX PS • PDSN, AGW, HA, AAA

41. ZXUN USPP: Renovation of Subscriber Data Management Sub. 1 Sub. 1 Sub. 1 Sub. 2 Sub. 2 Sub. 3 Sub. 6 Sub. 3 Sub. 5 Sub. 3 Sub. 4 Sub. 4 Sub.3 Sub.1 Sub.4 MNP/EIR/… Subscriber centric core network based on unified data model Provide subscriber data access service for new fields, such as IT, internet. Terminal layer Terminal data Access layer Sub.2 Access data Service data Service layer BOSS data O&M layer 2/3G core network CS domain HLR/Auc 2/3G core network PS domain Network convergence and full service operating AAA BOSS Domain Boss DB PSTN/SS Domain SHLR SLF/HSS/ENUM IMS Domain Centralized Database Application/Service Reduce TCO SIP AS/OSA -SCS AAA/DB Internet Domain Database User Equipment Guarantees the reliability and ownership of subscriber data Centralized database with Multi-NE subscriber data.

42. ZOOMs ZOOMs: Cost Effective Operation to Enhance Efficiency GW/DPI PCRF/SPR OCS/OFCS UBAS Identifying Analysis Control Charging PS Core Internet/ISP Effective multi-protocol identification Service Identification No impact on service with DPI/DFI Flexible deployment mode Dynamic service control and configuration Policy/Charging Control Policy control based on user or service Dedicated Policy Server Network flow Analysis Data Metering & Mining User behavior Analysis Refined Operation to Save Cost Service development Analysis

43. Collabo-ration IM PoC … Presence VCC WiMAX/ WiFi IMS: The Best Choice for Carriers • All IP, flat network architecture • Fixed mobile convergence enabling new service scenario • Open, standard system allowing for healthy ecosystem Unified call control Unified subscriber profile • Resource control mechanism to avoid being a dump pipe • Easy for multimedia service development GGSN AC BRAS PDSN GSM/ WCDMA xDSL/ LAN CDMA • Ideal service control platform for mobile broadband, e.g. LTE No alternative technology possess all the features above

44. ZTE Anyservice Portfolio Convergent Billing Solution Messaging Solution Data & Multimedia • OCS (Convergent Billing Solution) • Integrated Intelligent Network Solution • Prepaid Service • Calling Card • VPN • Pay for Me • Mobile Payment • Messaging Solutions • SMS/ • MMS • IM • VMS • UMS • Messaging Applications • Mobile Newspaper • Location Based Service • Mobile Video Streaming • Content Delivery • WAP GW • Multimedia Conference Open Service Platform Enterprise Solution Music & Entertainment • VPBX • NG Contact Center • SoftDA - Soft Digital Assistant • Push Mail • CRBT • MRBT • Digital Music Solution • Mobile TV • Mobile AD • Service Delivery Platform • Provide standard and unified interfaces across multiple carriers for invoking network capabilities • Quick development of new services

45. Think VAS Think ZTE Anyservice Promote Revenue Reduce Cost • Realize OPEX Reduction Realize ALL-IP VAS • One point control & multi-point access • Unified service deployment • Integrated/Remote management • Boost ARPU Boost Consumer Services • Mature services promotion • Rapid and flexible tariff, package • Service, charging & portal convergence OCS ASP MNS SDP MTV LBS NGVMS NGCC NGCRBT • Explore Profit Explore Enterprises • Enterprise internal resource convergence • Powerful management • Think CAPEX Reduction Think Carrier Grade • Large Capacity • High Reliability • Open Architecture • Smooth Expansion VPBX MMC UC LBS SMS MMS VMS OCS

46. Abundant Eyewill-IPTV Services • Remote Education • TV Stock • TV Shopping • TV Payment • Online/Offline Ad • Video Surveillance • Video Conference • Mobile TV • LiveTV • Radio/Music • TSTV • TVOD • nVOD A/V services A IPTV Interactive information D B Life applications • Interactive TV • Polling • Information Browsing • TV Yellow Page • Interactive games • Karaoke • Personal Video Blog C Entertainment • Colorful life, All in IPTV

47. Smooth migration to new technologies • Avoid full replacement of existing investment • QoS, QoE • Colorful Services • Third party agreements • Customized • Energy conservation, emissions reduction, and environmental protection • Reduction in size and weight A New Converged Future-proof Platform is Needed Now • ZTE a partner for convergence at all layers • Leverage experience Conclusion • Simplified architecture • Flexible solution • Cost effective solution Future-proof Suitable Mode Services Green Convergence