Tellabs Inspire Magazine: June 2008

reliable networks superior services

Navega.com Looks

to Carry Central

America

IP/MPLS: Consulting

the Experts

Carrier Ethernet’s

Wide Appeal

China Goes for the Gold

in Telecom

in side

J u n e 2 0 0 8

“MRS will place its bet on IT.”

2

D E C I o T o M A z , M R S L o G I S T I C A

with MRS Logistica Riding the Rails

2 Tellabs inspire • june 2008

These are certainly exciting times for Tellabs. As Vice President and General Manager for Tellabs Latin America and Caribbean, I am in the enviable position of overseeing a growing region, ripe with opportunities for change.

Latin America is experiencing both financial growth and an explosion of both business and consumer uptake in telecom-munications spending. Mobile penetration is on the rise and will likely surpass Asia Pacific this year, with steady double-digit growth anticipated for at least the next five years. In addition, broadband penetration, although somewhat saturated in other parts of the world, will likely continue to grow upwards of 30 percent per year over the next four to five years.

Governments have begun opening up airwaves for wireless spectrum, and have invested in infrastructure to handle ad-vanced applications ranging from business Ethernet to expanded triple-play services.

But these opportunities and knowledge of the region are not new for us. Tellabs views this as a time when innovation and cus-tomer relationships make the difference. We have had signifi-cant presence in the region for the past two decades. As in other parts of the world, we’ve developed well-entrenched customer relationships and our solutions are well suited to meet or exceed nearly any communication or services need our customers have. We have expanded our efforts to bring innovation to this region and continue to adapt and expand to address both broad market-places and changing customer applications.

Tellabs is engaged in myriad opportunities for consumer tri-ple play, mobile, IP/Ethernet and optical applications. For Latin America, these opportunities span the breadth of the region, from Mexico to the Caribbean to Brazil.

A Note from Tarcisio Ribeiro, VP and GM, Tellabs LAC

Tarcisio RibeiroVICE PRESIDENT AND GENERAL MANAGER,LATIN AMERICA AND CARIbbEAN

le a di n g ed g e e XPa n di n g B O U n daR i e S

This issue of Tellabs Inspire highlights two customers, MRS Logistica and Navega.com. Both have worked with Tellabs for years and have our equipment embedded in their networks. But both are embarking on migrations toward newer platforms and have turned to Tellabs to help them move forward and offer advanced IP and Ethernet-oriented services.

MRS represents a non-traditional customer base in that they are a railroad, not a service provider or mobile operator. MRS is looking to Information Technology (IT) as a cornerstone for advancing its communications network and rail transport capabilities, while providing a critical service in moving mining products, such as iron ore and steel, from the core of Brazil to export cities.

Navega.com is a Central American company often called a “carrier’s carrier,” meaning it provides a reliable and flexible back-bone on which other carriers can ride. Navega.com is expanding based on its new MPLS-based network and represents an expan-sion in the need for Ethernet services in Central America.

Both companies, like others in the region, have come to ap-preciate the carrier-class capabilities inherent in Tellabs solutions and look to leverage those solution strengths in next-generation data networks. On top of our product solutions, Tellabs has provided the professional services to complement our equip-ment offerings and ensure that these transitions are smooth and acceptable to our customers.

Going forward, we’ll update the Inspire audience on additional opportunities in Latin America, and we encourage you to keep an eye on news coming out of the region. You’ll see that, like many other regions globally, there is significant change and growth occurring and communication needs will be at the core of nearly all of this growth.

As our CEO and President Rob Pullen stated in the last edi-tion of Inspire, we are focused on both enhancing the relation-ships we’ve built over the past decades and in creating new ones, and Tellabs will be there at every turn with innovative solutions to meet our customers’ needs.

View Tarcisio’s video on Latin America Communication Markets at:

www.inspirethenewlife.com/podcasts > get Schooled

june 2008 • Tellabs inspire 3

statements herein may contain projections or other forward-looking statements regarding future events, products, features, technology and resulting commercial or technological benefits and advantages. These statements are for discussion purposes only, are subject to change and are not to be construed as instructions, product specifications, guarantees or warranties. Actual results may differ materially.

The following trademarks and service marks are owned by Tellabs Operations, inc., or its affiliates in the united states and/or other countries: TeLLABs®, TeLLABs and T symbol®, and T symbol®. Any other company or product names may be trademarks of their respective companies. Copyright © 2008 Tellabs. All rights reserved.74.1962e – ReV A – 5/23/2008

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PubLIShED byTelephony Custom Media 330 north Wabash Avenue, suite 2300Chicago, iL 60611Phone: +1.312.595.1080Fax: +1.312.595.0296www.telephonyonline.com

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EDIToRIAL CoNTRIbuToRSRobert Clark, Raymond Conway, Joan engebretson, Karen Lien Miller, M.J. Richter, erasmo Rojas, Patty Wetli

ART DIRECTIoNCavedweller studio

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InspireGetSchooledAD_Cherub.indd 1 5/13/08 1:40:35 PM

4 uPLoAD White spaces. Portable big screens.

speed racers. And more.

9 INNoVATIoN oN ThE ISThMuS navega.com plays carrier’s carrier

in Central America. By M.J. Richter

12 MRS GETS oN TRACk Trains, TdM and transformation.

By Raymond Conway

16 CARRIER EThERNET GETS ENTERPRISING LAns, MAns and now WAns.

By M.J. Richter

18 hELP NEEDED iP/MPLs: P stands for partner.

By Joan Engebretson

20 oLyMPIC SPoTLIGhT SPuRS TELECoM GRoWTh How the Games are changing China’s telecom landscape. By Robert Clark

23 INSIGhT 3G comes to Latin America. By Erasmo Rojas


uPLOAd

Tech companies and television broad-casters are fighting…over nothing. nothing being the unoccupied u.s. air-waves soon to become available when broadcasters flip the digital switch next February.

in the digital age, TV stations will occupy channels 2 through 51. But in numerous locations across the country, particularly rural areas, there are too few broadcasters to fill that many channels. The resulting “white spaces,” which can travel long distances and go through walls because of their frequency, could be used to provide high-speed internet service.

At least that’s what Google and Microsoft have in mind. They, along with the Wireless innovation Alliance, are taking their case to lawmakers and the FCC, arguing that low-powered, unlicensed devices — cell phones, lap-tops, PdAs, etc. — could operate in this empty spectrum.

except the spectrum isn’t entirely empty. Licensed wireless microphone signals — from venues including sports arenas, theaters and churches — already occupy some of this space. The microphone industry’s worry — that turning white space into a free-for-all

will interfere with their signals — is echoed by the broadcasters.

Although microphone operators and broadcasters have peacefully co-existed for years, tech companies have yet to prove their devices will do the same. Broadcasters’ biggest fear is that encroachment into white space will disrupt their programming, either by interrupting or freezing television pictures. Their solution, also supported by CTiA: Auction off the spectrum for license — and hold the licensee respon-sible for any interference.

The tech alliance, naturally, has a counter proposal: Leave the spectrum free and open and they’ll figure out a way to keep their transmissions from bumping into “dancing with the stars.” Yet, to date, tests of equipment aimed at remedying the interference issue have failed. Adaptrum, Microsoft, Motorola and Philips electronics north America have all submitted devices to the FCC for further review.

For now, both sides of the debate con-tinue to lobby their case, sounding the same chords presidential candidates are presenting to America’s voters: experi-ence versus. change.

The battle for White Space

ACCORdING TO TELECOM pro-fessionals, which country falls behind in its definition of broadband? Survey says…the United States.

A recent Tellabs-commissioned survey asked readers of leading U.S. telecom publications to sound off on the defini-tion and availability of broadband in America. Respondents overwhelmingly expressed dissatisfaction with both access to broadband as well as what data rates qualify a service as “broadband.”

A whopping 94 percent of respon-dents said the current FCC definition of broadband (200 Kbps) fails to deliver a true broadband experience. A vast major-ity of respondents feel a better definition of broadband is a service that delivers high-quality streaming video. (Since the survey was fielded, the FCC definition has changed.)

Respondents also strongly support expanding broadband availability in the U.S., especially in underserved rural areas, noting that the lack of broadband availability, whether due to geographic or economic reasons, hurts productivity and employment potential.

“This survey highlights the urgency that led to the founding of my organiza-tion,” said drew Clark, executive direc-tor of BroadbandCensus.com. “A large majority of respondents believe that this country needs better information about the speed, price, availability and com-petition of high-speed Internet services. Good data is imperative to understand-ing rural broadband if we want to fill this important gap.”

SuRVEy FINDS bRoADbAND GAP Too WIDE

For more detailed survey results, visit:

www.tellabs.com/news/2008/ nr032008.shtml

w R I T T e n A n D e D I T e D b y k A R e n L I e n M I L L e R & pAT T y w e T L I

aFcea landWaRnetAugust 19 - 21Ft. Lauderdale

BROadBand WORld FORUm aSiajuly 15 - 18hong kong

iiR’S Wdm & neXt geneRatiOn OPtical netWORkingjune 23 - 27Cannes, France

This news will come as no surprise to anyone who owns an iPod: The tradi-tional model of record sales is dead. Or struggling on life support. Gone are the days when a consumer would hear a new song on the radio and then head straight to the nearest retail outlet to purchase an entire Cd. downloads are where it’s at, and although the music industry has re-sisted this reality, it’s now showing signs of a willingness to adapt.

Recent proposals — one suggested by Canadian

songwriters, another by an industry con-sultant — recommend charging a tax or bundling a fee with users’ monthly Internet bills, allowing consumers to download and share music files at will.

Although these suggestions are ad-mittedly in the “trial balloon” phase, they indicate recognition on the part of the music industry that it needs to adjust to a world in which broadband plays an increasingly vital role. Although Cd sales continue to free fall, more than 4 billion songs have been sold on iTunes

in the past five years, a drop in the bucket compared with the 1 billion

music files traded each month on peer-to-peer networks.

Fees, perhaps as low as $5 per month, could help the record

industry recoup some of that lost revenue. And that’s

music to a beleaguered industry’s ears.


FILE ShARERS hAVE RIGhTS, Too

If you Can’t beat ’em, Charge ’em

Athletes aren’t the only ones gearing up for the upcoming Summer Olympics in Beijing. Verizon Business is nearing completion of the first multi-terabit submarine cable directly linking the U.S. and mainland China. The $500 million system is expected to be operational by the Games’ August 8 opening ceremony.

Announced in late 2006, the Trans-Pacific Express (TPE) will initially pro-vide capacity of up to 1.28 Tbps to accom-modate the Asia Pacific’s rising demand for IP, data and voice communications, with the ability to increase to 5.12 Tbps to support future traffic growth. In addition, the TPE will reduce trans-Pacific latency by 10 percent to 15 percent.

Where most links to China are routed through a hub in Japan, with access speeds maxing out at 155 Mbps, TPE will be the first cable system to provide customers with direct wavelength access to China at 10 Gbps.

Construction of the 20,000-kilometer TPE has been a joint venture among a consortium of carriers, Verizon Business being the sole U.S.-based member. Partners include China Telecom, China Netcom, China Unicom, Korea Telecom and Taiwan’s Chunghwa Telecom. Once completed, the cable will also open up paths through China for Verizon Business to construct new networks in countries such as India and Vietnam.

Once the domain of online pirates, peer-to-peer file sharing is going legit. Today P2P transfers frequently consist of home videos swapped between friends and family as opposed to illegal movie downloads. As a result, internet service providers are changing the way they handle this traffic.

File sharing is bandwidth inten-sive and can clog even the most sophisticated high-speed networks. Those operated by cable isPs are par-ticularly vulnerable, as neighboring subscribers share data capacity. in the past, service providers (including Comcast) have blocked or slowed the typically illicit P2P transfers in order

to keep legal traffic moving smoothly.now Comcast has announced that

it will treat all files equally — videos, songs, e-mail, etc. — and has proposed a “Bill of Rights and Responsibilities” for file sharing. To date, the company has agreed to work with BitTorrent and Pando networks, which manage P2P software, to find a middle ground where P2P and isPs can coexist.

The FCC, which has been investi-gating consumer complaints related to file sharing, expressed its pleasure with these latest developments. ultimately the isPs hope to avoid gov-ernment regulation of P2P traffic by devising their own solution.

EuRoPEANS FEEL ThE NEED FoR SPEEDeuropeans love their broadband. Really they do.

19Mbroadband lines added across europe in 2007

88Mmobile 3G users

$98bin revenue

CARRIERS CoMPETE FoR uNDERWATER GoLD


u p l oa d

What do food stamps and ethanol subsidies have to do with broadband access? All are part of the omnibus Farm Bill, a nearly $300 billion piece of legislation — renewed roughly every five years — that contains not only aid for farmers but also encompasses policy for rural development. Which brings us back to broadband.

if adopted, the Farm Bill includes funding for states to implement pro-grams that would accelerate broadband access in underserved, typically rural, areas. Backers of the broadband build-out have likened the need and urgency to the electrification of the u.s. back in the 1930s.

Connected nation, a non-profit organization, estimates that a modest increase in broadband adoption could

stimulate u.s. economic development by nearly $134 billion per year. A model program, ConnectKentucky, married public spending with private-sector isPs to invest in network upgrades. The result: Broadband adoption in Kentucky grew 83 percent, compared with 57 percent nationally; 44 percent of the state’s population now subscribes to broadband service, up from 22 percent three years ago. West Virginia and Tennessee have begun similar pro-grams. should funds provided through the Farm Bill become available, more states would likely follow suit. (As of press time, the bill had been vetoed by President Bush, which Congress was working to override.)

Farm Bill legislation follows close on the heels of the Community Broadband

Act of 2007, which Congress passed late last year in another effort to spur broadband development in the u.s. The Act overturned existing state bans on municipal broadband deployments, paving the way for local governments to install and operate their own broadband networks — either in competition with incumbent providers or as a way to reach previ-ously underserved consumers and businesses. The Act is a tangible response to surveys that indicate the u.s. is lagging other developed coun-tries in terms of broadband access and demonstrates a view among lawmakers that broadband networks are fast becoming an essential, as opposed to optional, component of the nation’s infrastructure.

WAShINGToN WATCh

This just In…This just In…This just In…This just In…Qwest Communications announced plans to introduce 20 Mbps dSl service. Comcast and Verizon, through their respective fiber

internet services, are also adding horsepower to their offerings — up to 50 Mbps. service on these virtual Autobahns is typically

only available in select markets, for a premium fee…. NextWave Wireless has put its spectrum up for sale. The licenses cover 85

percent of the u.s. population, though prospective buyers should be advised that the holdings are split among three different bands….

adobe Systems will license its video-enabling Flash software for free for mobile devices in an attempt to improve the mobile internet

experience…. Qualcomm’s MediaFlo has a new subscriber — aT&T Mobile TV. MediaFLO also operates Verizon Wireless’ V Cast

Mobile TV. AT&T will share eight channels with Verizon and offer two exclusively. The service will be available in 58 markets but only

on specific handsets…. Clearwire and Sprint Nextel have combined their broadband units. The new company, Clearwire, will focus on

rolling out a mobile network based on the WiMax standard.

Mobile news

n n n

n

SoMEThING oLD Jumble® word puzzles, launched in 1954, are

available for download to mobile phones at www.jumble.com.

n

SoMEThING NEW “Fragrance playlists” from nTT

Communications. Aromas are downloaded to a mobile

device and activated by a trigger, such as a ringtone.

n

SoMEThING oLD IS NEW

nokia hopes the second time’s the charm with the re-launch of its n-Gage mobile games service.


ThE PROLIFERATION of mobile devices has been a boon to an unexpected industry: etiquette experts.

Cell phone users are often cited as the worst offenders. (If you’ve placed a call from the restroom, we’re talking to you.) Recent trends aren’t likely to improve that reputation.

Both the U.K. and the European Union have approved cell phone use on aircraft, previously off-limits due to concerns over interference with onboard communication and navigation systems. The plans allow passengers to place and receive calls once the plane reaches 10,000 feet and only after being given clearance from the captain or crew.

Air France-KLM, among others, has already trialed the service on some of its European routes. Germany’s Lufthansa, however, is opposed to the agreement, pointing to surveys that indicate custom-ers are cool, at best, to the idea.

hot under the collar is more like it. Responses to a BBC News report on the announcement were near unanimous outrage from passengers, many of whom view air travel as the last bastion of tran-quility in a too-chatty world. Texting was promoted as an alternative. “No!!” wrote one respondent. “It’s the only place we get any peace now.”

Comments highlighted what many consider cell phone users’ most egregious crimes: the “blah, blah, blah” inanity of most conversations; the excessive volume at which most users communicate; and the airing of private laundry in confined public spaces, turning listeners into unwilling eavesdroppers. “Imagine being sat next to someone for three hours who are having a domestic row with their husband/wife on their mobile phone. I think I’d ask for a parachute,” noted one U.K. resident.

It remains to be seen whether the pro- and anti-mobile factions will find a happy

medium in the now not-so-friendly-but-definitely-noisier skies. One passenger proposed the following compromise:

“Only if they take their calls outside.”

OMG, Myspace has invaded the classroom.

Accustomed to communicating via texting, blogs and social networking sites, teens are increasingly peppering school assignments with internet shortcuts.

The Pew internet and Life Project found that nearly two-thirds of the teens it surveyed are guilty of breaking capitalization and punctuation rules in their formal writing, as well as of insert-ing emoticons or abbreviated language such as LOL (“laughing out loud,” which is what english teachers are not doing). The trend is most prevalent among teens who keep blogs or are heavy users of sites such as Facebook.

Although one school of thought views this as an opportunity to teach students the difference between formal and infor-mal writing, others believe the language itself will have to adapt.

Which has some folks feeling a little :(

Just because you Can Doesn’t Mean you Should

bIG SCREEN TV To GoIf King Kong were only two inches tall, would he still be King Kong?

That’s the question consumers are asking as movies are streamed or downloaded to cell phones and other hand-held devices. The convenience is great, the squint-ing, not so much. What they’d really like is a portable big-screen TV.

Enter “pico projectors,” pocket-sized gadgets that beam sharp, crisp and, most importantly, large images — 60 inches, in some cases — onto walls or any other available surface. The projectors are expected to hit the market in late 2008; eventually the technology will shrink to fit inside phones and portable media players, possibly by the second half of 2009. Current prototypes employ lasers to create the image, though the specifics of the technology vary by vendor.

Although teens are a logical target for marketing, manufacturers would do well to consider another demographic: the bifocal crowd.

why johnny Can’t punctuate


u p l oa d

you Can be Too Smart

LoCATIoN bASED SERVICES: ThE WINNING TouCh

ALThOUGh NOT qUITE up there with a manned space flight to Mars, telemedicine is one of those promising applications of the broadband revolution that still seems slightly futuristic. Thanks to a grant from the FCC, the future is now as close as New Mexico.

With $15.5 million in funding from the FCC, the Center for Telehealth at the University of New Mexico’s health Sciences Center will design, build and operate the Southwest Telehealth Access Grid. This broadband network will serve largely rural areas and connect more than 500 sites in New Mexico, Arizona,

Colorado, California, Nevada, Texas and Utah. Ultimately, similar grids across the country could connect in a national telehealth network.

The expanded network will allow sites along the grid to provide additional tele-medicine services such as teleradiology, teleophthalmology and telepsychology. Clinics, hospitals and private practices can hook into the computerized network for screenings, to review records or con-sult with faraway experts.

It’s the next best thing to a house call, which doesn’t sound so futuristic after all.

LOCATION, location, location…that’s what NAVTEq rewarded in its global LBS challenge. The U.S. winner was Ten 23 for its SpotJots offering, a social blogging application that allows users to upload stories, reviews, pictures, video, audio and documents to personal SpotJots blogs, where the content can be associated with relevant location infor-mation and shared with others.

Runners-up included:● The WildLab, a mobile service for

birdwatchers that transmits real-time information such as location, time and the species sighted.

● heyWhatsThat—now the name of that mountain you’re staring at is avail-able on your mobile phone.

● AEN Mobile, which provides alerts about natural or manmade disasters within range of a mobile device.

Most deserving of honorable mention: MizPee (mizpee.com), developed by Yojo Mobile, the LBS that pinpoints the locations of the cleanest, closest public restrooms in 20 U.S. cities.

The Future of Medicine Is here

if cell phone users are a bit thoughtless, iPhone users are, if anything, a bit too thoughtful. The device, which gives users the ability to access vast storehouses of knowledge on the go, is turning acolytes into know-it-alls.

The number of u.s. mobile phone users surfing the internet has held steady at 13 percent, accord-ing to M:Metrics. Although iPhones represent only

1 percent of that market, their owners are more likely than their counterparts to access the Web from their

handsets. According to a report in the Los Angeles Times, the result makes for less-than-positive social interactions.

Conversations grind to screeching halts while iPhoners look up obscure information, typically to win a point in a debate. ice cream becomes less enjoyable once the iPhoner has Googled calorie counts. “Let’s go to the movies” turns into “Let’s watch the iPhoner download all of the reviews.”

information is power. Too much information is annoying.


N aV e g a . C o M

Innovation on the IsthmusNavega.com finds opportunity in Central America’s enterprise and carrier’s carrier markets.BY M.J. R IChTER

Competition to provide telecom services has been heating up in the tropics of Central America. With a historically low penetra-

tion of landline service throughout the region, wireless competitors have been battling one another for years in an effort to satisfy pent-up demand. In addition, as most of the nations in the region begin

to open their fixed-line markets, albeit to varying degrees, providers from outside of Central America are moving in to offer voice and Internet-access services.

Yet in both the wireless and wireline sectors, competitors have focused largely on wooing consumers, leaving the enter-prise and “carrier’s carrier” markets open for the taking. Navega.com sees that void as an opportunity.

Established specifically to tap the busi-ness and carrier sectors of the Central American telecom market, Navega.com launched operations in 2000 in its home country of Guatemala, and has gradu-ally extended its reach throughout the region. In addition to Guatemala, the company has now built out its fiber-based network to serve El Salvador, Nicaragua, honduras, Panama and, to a limited extent, Costa Rica, which has not yet deregulated its telecom market. The network provides fixed and mobile ser-vices to corporate customers. Operating as the only carrier’s carrier in the Central American isthmus, Navega.com also of-fers transport services for cable TV com-panies, paging operators and Internet service providers. The company also terminates international services of-fered by North America-based carriers, and Navega.com has begun supporting

LoCATIoN bASED SERVICES: ThE WINNING TouCh


corporate markets such as banking, heavy industry, manufacturing and other commerce-oriented enterprises.

A (NET)WoRk IN PRoGRESSThe Navega.com backbone network consists of approximately 7,000 km of

terrestrial fiber throughout Central America, including last-mile fiber de-ployments to customer premises in major cities. Yet vast portions of the region are highly rural, which makes fiber a difficult and expensive proposition. To serve customers in these less urbanized areas, Navega.com provides network access via WiMAX-based wireless local-loop technology connected to a terrestrial fiber-optic backbone.

Ownership stakes in the undersea cables enable the carrier to link its Central American business and govern-ment customers with the rest of the world. Via its primary data center and disaster-recovery facilities at Terremark Worldwide’s NAP of the Americas in Miami, Navega.com ensures the reli-ability and security of its domestic and international offerings.

The carrier started out with a TdM-based network and, as bandwidth and ser-

vice demands increased, eventually turned to the Tellabs® 6300 Managed Transport System for relief. With its support for carrier Ethernet services and transport over Sdh networks, the Tellabs 6300 system enables Navega.com to:

● Add data capabilities to its existing network in order to deliver carrier-class Ethernet services.

● Boost overall transport capacity.● Reduce costs and complexity by

consolidating its transport networks on a single platform.

Navega.com also uses the Tellabs 6300 system to interconnect, through the NAP of the Americas, its local, regional and international dedicated links. As a result, customers have ac-cess to global communications services. Navega.com also relies on the Tellabs® 8100 Managed Access System to provide international interconnection services to regional corporations.

N aV e g a . C o M

“We are WorkiNg WiTh TellabS To deTerMiNeWhaT oTher SerViCeS We CaN oFFer our CuSToMerS WiTh ThiS NeW plaTForM,”—roberTo rodriguez, NaVega.CoM

since launching service in 2000 in its home country of Guatemala, navega.com has expanded its fiber-based network to serve Costa Rica, el salvador, Honduras, nicaragua and Panama. its fiber backbone spans about 7,000 km and includes last-mile fiber deployments to customer premises.


MoVING FoRWARD WITh MPLSAfter only a few years of operation, Navega.com, like most service providers around the world, realized that TdM-based technology was ill-equipped to handle the insatiable customer appetite for bandwidth and services. Roberto Rodriguez, vice president of market-ing and sales for Navega.com, said the company found itself squeezed between the need to transport more bandwidth and advanced services and the reality of shrinking margins on transmission ser-vices. The carrier began searching for a technology that could boost network capacity, accommodate new customers and reduce CapEx and OpEx.

“We studied different options: IP, a pure Ethernet network, packet over Sdh, several different platforms,” Rodriguez said. “We chose MPLS be-cause we saw the opportunity to bring to our markets a new technology and new services on a less-expensive platform.”

The carrier began the migration from TdM- to MPLS-based technology in 2004, when it deployed its first metro Ethernet links, in Guatemala. As the com-pany continues to expand its local coverage in each of its Central American markets, Navega.com now has implemented the Tellabs® 8600 Managed Edge System as the cornerstone of its ongoing TdM-to-MPLS migration strategy.

By the end of 2005, Navega.com had its Central American MPLS backbone running and, in 2006, interconnected with U.S. carriers via a connection point in Florida to enable the expanded MPLS service portfolio.

“The Tellabs 8600 system supports 2G and 3G transport, delivers Ethernet and IP VPN services and is able to aggregate broadband services, which means that Navega.com can converge all of its services on a single platform,” said Tse Fu Wong, Tellabs executive account manager. “That translates into reduced CapEx and the ability to scale the network flexibly and affordably as Navega.com covers more geographic territory and adds more customers.”

ExPANDING ThE SERVICE PoRTFoLIoToday, Navega.com offers a growing portfolio of services to its corporate, governmental and carrier customers. Transporting data, video and voice traf-fic, the carrier provides private-line services based on legacy TdM/Sdh technology, metro Ethernet services, IP VPN services and ATM/Frame Relay interconnections.

In addition to relying on its MPLS-based network to expand and solidify its operations in Central America, Navega.com plans to use the platform to help mobile operators implement next-generation technologies, such as 3G, that require more network band-width and flexibility.

Rodriguez said, “We are installing a huge MPLS network, and they [mobile operators] are moving to 3G mobile tech-nology, so the idea is to take advantage of our IP/MPLS platform to help mobile operators in the region move faster into broadband services. With this platform, Navega.com is able to transport other types of services, such as bandwidth on demand and videoconferencing.”

STAyING AhEAD oF ThE CoMPETITIoNNearly a decade after first entering the

Central American markets, Navega.com is still the only carrier’s carrier in town, and faces limited competition for enter-prise customers. As Rodriguez pointed out, Navega.com is evolving rapidly into a full-scale telecommunications service provider in Guatemala, Nicaragua, El Salvador and honduras.

Although Costa Rica remains the only monopolistic telecom market in the region, the country recently signed the Central American Free Trade Agreement (CAFTA), thus agreeing to deregulate its market — eventually. Navega.com already is positioning itself for that day. The carrier has a private-line deal with the two state-owned companies in Costa Rica: Instituto Costarricense de Electricidad (ICE) and with ICE’s subsidiary, RACSA, enabling Costa Rican customers to connect, via Navega.com’s MPLS cloud, to their Central American neighbors.

“We are working with Tellabs to de-termine what other services we can offer our customers with this new platform,” Rodriguez said. “That is the most im-portant thing at this point: to offer new ways to interconnect, because our cus-tomers also are always looking for ways to operate more cost-effectively.” n

ATM: Asynchronous Transfer Mode MPLS: Multiprotocol Label switching NAP: network Access Point NNI: network-to-network interconnection SDH: synchronous digital Hierarchy TDM: Time division Multiplexing 3G: Third-Generation VPN: Virtual Private network WiMAX: Worldwide interoperability for Microwave Access

A carrier’s carrier at work.


C o V e r S T o r y: M r S

Telecom network upgrades are often described as “challeng-ing.” Now add to the mix the overhaul and modernization of a railroad system, coupled

with the demanding and strict regula-tion of safety and business practices, and “daunting” would be more accurate.

That’s precisely the uphill battle that faced Brazilian company MRS Logistica when it privatized the South American nation’s government-run railroad system in the mid-1990s. MRS inherited a busi-ness operation and infrastructure — in-cluding a TdM-based network — that was in near total disrepair following years of neglect and lack of investment. The company initiated a massive recon-struction effort that remains a work in progress today. Already there are radical improvements in the physical condition, safety, efficiency and overall vitality of much of the railroad system.

during the restoration project, tracks were rerouted or completely rebuilt in areas where environmental forces such as landslides had rendered them unsafe or completely useless. In some cases, people living along the tracks had to be relocat-ed to allow for rebuilding and expansion. Old, junk-filled train yards were cleaned up and modernized.

Now MRS, which began its new life as a private company in 1996, is on track for growth. About 75 percent of its business is derived from the transportation of iron ore from mining sites to steel mills and to coastal ports for export. The other 25 percent of the system’s traffic hauls other products such as cement, grains, contain-ers, etc. In the future, MRS plans to add more locomotives and rail cars and de-

H-VPLS: Hierarchical Virtual Private LAn services NOC: network Operations Center TDM: Time division Multiplexing

By Raymond Conway

MRSGets on Track

decio Tomaz, chief information officer, MRs Logistica


FOR One BRAziLiAn RAiLROAd, TeLeCOM MeAns MORe THAn JusT FiBeR And COPPeR BuRied ALOnGside THe TRACKs.MRS

Gets on Track


crease the distance between trains. The latter is where telecom comes into play

For years, a TdM-based network that runs alongside the railroad’s rights-of-way has connected train drivers to a central op-erations location. That network, managed by a large incumbent telephone company, also controls the signaling for gates and lights at every railroad crossing.

Traditionally, train engineers have determined the spacing between trains. But MRS is migrating toward a central-ized management system for much the same reason that telecom networks have NOCs.

“If I can fully control communications, I can stop trains if there is a problem and send information to other trains,” said decio Tomaz, chief information officer for MRS Logistica, during a recent visit to the United States. “This is a big proj-ect, but IT will be the thing that makes the difference.”

FRoM TRAINS To TELECoMTo increase the railroad’s volume and efficiency — and increase revenue and profit potential in the process — MRS requires a modern, reliable and equally efficient communications network. The goal is to deliver a clear and depend-able exchange of information between trains and operations centers, as well as between the trains themselves.

MRS also intends to use the network to upgrade its overall voice, data and video

communications platforms in order to increase the use of applications such as videoconferencing between MRS offices in different cities, Tomaz said. For VoIP and videoconferencing, new technology reduces the current delivery delay from about 400 milliseconds using TdM network facilities to less than 100 milli-seconds. With so many offices, trains and train yards spread all over the country, MRS is looking toward a network archi-tecture that leverages IP-based h-VPLS.

“With IP technology, you can do a lot of things that TdM doesn’t support,” Tomaz said. “It’s far more flexible, scal-able and now provides the reliability we’re used to with TdM.”

For MRS, the telecom network up-grade is the equivalent of the wholesale railroad makeover that MRS has been tackling for the past several years, but on a tighter schedule; much of the new telecom network should be in place by late next year. The undertaking is all the more ambitious considering that telecom is not MRS’ core business. Early on, the company recognized the need for a capable, knowledgeable and trustworthy telecom technology partner. It chose Tellabs from among a number of pos-sible vendors. Although Tellabs typically works with service providers and other traditional network operators, the rail-road company’s size and the scope of its mission made for a good fit.

c o v e r s t o r y: M r S

safety concerns prompted MRs to relocate people living near existing train tracks.

Most of MRs’ business is transporting iron ore from mining sites around Brazil.


“They really are building the first converged network of its kind in Brazil,” said Armando Camargo, sales director at Tellabs. “MRS is like a huge enterprise network in a way.”

Tarcisio Ribeiro, vice president of Latin America operations for Tellabs, added: “When a company like MRS introduces new technology into its network, it is not just technology for technology’s sake. There is a new business case behind it, and new ways they want to use it.”

MRS selected the Tellabs® 8100 Managed Access System and has de-ployed several elements of the Tellabs® 8600 Managed Edge System (MES), in-cluding the Tellabs® 8660 Edge Switches, Tellabs® 8630 Access Switches and Tellabs® 8620 Access Switches.

“It’s well known that the Tellabs 8600 MES is the best you can get for its man-agement and usage capabilities,” said Tomaz, referring to the Tellabs 8600 MES’ flexibility in managing multiple network elements.

Tellabs’ Camargo added: “The equip-ment is reliable in facing all of the en-vironmental conditions of Brazil, and the management system puts MRS in control of the network. The flexibility of offering various interfaces for legacy and new services is another key advantage.”

MRS will also use the Tellabs® 8830 Multiservice Router to support h-VPLS services.

“These systems allow me to put legacy traffic and new traffic on a converged network, while being able to introduce new services over it,” Tomaz said.

NEW MARkET oPPoRTuNITIESBoth Tellabs and MRS were entering somewhat uncharted territory. For Tellabs, the MRS contract represented

a step forward in terms of diversifying both the geography and type of cus-tomer it serves. The MRS project en-hances Tellabs’ profile in Brazil (where the company has maintained offices for the past 10 years) by demonstrating an ability to work with clients outside the carrier industry.

“Because MRS is not a traditional telecom customer, there were some dif-ferences in the approach we took,” said Fernando Capella, executive account manager at Tellabs. “Carriers know ex-actly what they want, but MRS required additional consultative support from our side.”

It was that support, as much as Tellabs’ product suite, that enabled MRS to pull off its expensive bet on telecom.

“When I buy something and make a big change in the technology, I am looking to support our business. I am not investing money, energy and devel-opment resources just for technology; I need to know that we are increasing the business and strengthening the com-pany,” Tomaz said of his role at MRS. “I feel, very personally, that Tellabs supports me with the technology and systems knowledge needed to succeed, and I trust their people.”

For companies in a position similar to MRS’, choosing the right partner often instills the confidence necessary to de-liver on ambitious technology initiatives.

“MRS will place its bet on IT,” Tomaz said. “We have always planned on that, and now we are making that plan happen.” n

i Need To kNoW ThaT We are iNCreaSiNg The buSiNeSS aNd STreNgTheNiNg The CoMpaNy.decio Tomaz, Cio for MrS logistica

Previously unusable stretches of rail have been overhauled.


V p l S b r i N g S e T h e r N e T T o T h e Wa N

Carrier Ethernet Offers an Enterprising SolutionService providers extend carrier Ethernet to the WAN to meet demand.BY M.J. R IChTER

Ethernet is familiar territory: The technology has long been entrenched in LANs and expanded quickly across MANs. Now service provid-

ers and their enterprise customers want to send Ethernet on a mission to explore a new frontier: WANs. But how best to chart the course toward cost-effective, scalable, easy-to-manage bandwidth? The answer lies in Virtual Private LAN Service (VPLS).

Under certain circumstances, IP VPN, which provides reliable and secure point-to-point links between sites, remains a viable option for enterprise customers. Yet VPLS is often more suited to an enterprise’s particular connectivity re-quirements. Given that VPLS is a relative newcomer to the marketplace, here’s a closer look at what it is and how it works.

VPLS basically expands the concept of Ethernet service from a simple two-point circuit to a multi-port, bridged service.

With its Layer-2 VPN architecture, VPLS connects multiple sites in a single bridged Ethernet domain running over an MPLS network.

Service providers create this single Ethernet domain by building point-to-point virtual circuits, or Pseudowires, across MPLS LSPs. Pseudowires can function either as point-to-point links, such as VPWS, or, with VPLS, in a full mesh. Approved by the IETF in January 2007 (RFC 4762, Virtual Private LAN Service over LdP) as the latest and most advanced IETF standard supporting Carrier Ethernet service, VPLS now of-fers a scalable, WAN-oriented Ethernet service that connects multiple, remote locations across enterprise customers’ regional, national or global networks.

PLuG-AND-PLAy MAC LEARNINGCompared with VPLS, IP VPN requires an enterprise router to coordinate closely with the PE router inside the service pro-

vider to share routing information and IP addresses. For some enterprise custom-ers, sharing that information with the service provider raises security concerns. Furthermore, IP-router peering obvi-ously means the device at the enterprise location must be a router.

VPLS, on the other hand, performs Ethernet MAC learning at the PE router, thus eliminating the need to share IP-routing information. For example, say an enterprise uses VPLS to link four loca-tions. An employee at one location plugs in a laptop, and the enterprise router or switch learns that laptop’s MAC address. It then shares that MAC address with the PE router, which then shares it with the other three PE routers in the VPLS, enabling the network to know where to forward traffic, be it inside an MPLS LSP or Pseudowire.

The enterprise device can be a router or a switch and still create the bridge to the Ethernet domain. Thus, VPLS not

hoW VPLS WoRkS

ethernetswitch

Router

Customer 1

Customer 2

Customer 2 Customer 1

Customer 1

Pe

Pe

PeCustomer 1Pseudowire

Customer 2Pseudowire

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Customer 1Customer 2

8800

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only eliminates the security concern for enterprises but also the need to coordi-nate IP-routing information with service providers, which can be cumbersome for enterprises that employ a small IT staff.

QoS IN ThE WAN Enterprise customers frequently demand guaranteed qoS levels for their various applications. When traffic runs over a WAN, where bandwidth is at a premium and latency a major concern, qoS is a crucial requirement, especially when per-formance-sensitive traffic such as voice and video travel over the data path.

Although the original Ethernet stan-dard was not designed to support qoS for traffic prioritization, IEEE 802.1p now provides a mechanism for imple-menting qoS at the MAC level. Running over an MPLS core network, VPLS takes advantage of IEEE 802.1p to de-liver guaranteed qoS.

In essence, MPLS supports qoS with traffic prioritization marked in the MPLS header’s EXP bits. In a VPLS-based Ethernet VPN, a multiservice router such as the Tellabs® 8800 Multi-service Router (MSR) Series translates the 802.1p bits from the VLAN header to the MPLS EXP bits to provide end-to-end qoS for Ethernet connections. As a result, VPLS can support different levels of qoS depending on the type of traffic, customer or SLA, all while

presenting the simple, familiar Ethernet interface to the enterprise user.

VPLS ENhANCES CARRIER EThERNET SCALAbILITy Nearly all corporate LANs today are based on Ethernet, which means enter-prise users can simply plug into a net-work that scales easily from 100 Mbps to 1 Gbps. By extending Ethernet into the WAN, VPLS now provides that same easy, affordable scalability when and where enterprises need it.

For example, a large financial com-pany may operate out of a few main offices, with hundreds of smaller of-fices scattered throughout the nation or around the world. Such an enterprise probably would opt for an IP VPN or even a Frame Relay network to link those small offices. however, to connect larger sites that need scalable bandwidth, VPLS offers a better solution.

To move from a 50-Mbps to a 70-Mbps service, for example, the service provider only needs to provision the in-cremental bandwidth at all relevant loca-tions to obtain the required scalability. In opting for the VPLS solution, customers with 10/100/1000 Mbps Ethernet inter-faces are able to protect existing equip-ment investments and avoid purchasing additional dS3 or OC-3/OC-12 circuits — at significant cost — whenever addi-tional bandwidth is necessary.

CoNNECT ALL ThoSE METRo EThERNET CLouDSBy extending carrier Ethernet to the WAN, VPLS also enables enterprise customers to interconnect their metro Ethernet clouds. A large enterprise today likely uses metro Ethernet to intercon-nect multiple offices within the same metropolitan area, repeating this scenar-io in numerous cities across the United States and around the world.

Prior to the emergence of VPLS, IP VPN or some type of private-line ser-vice was the only means by which the

enterprise could weave together all of its metro-Ethernet “islands.” With VPLS, that same large enterprise can now take advantage of end-to-end carrier Ethernet to weave all of its operations into a single WAN in a way that’s seamless, scalable and affordable.

VPLS also brings the benefits of carrier Ethernet to enterprise custom-ers that still lack fiber-based network access. If a customer’s service provider deploys PE router devices that support multiple interfaces, such as the Tellabs 8800 MSR series, the VPLS attachment circuits (enterprise-to-PE connections) don’t have to be physical Ethernet con-nections. They can be Ethernet over SONET, bonded T1s or Pseudowires — to name just a few choices—with the PE router device handling the Ethernet MAC-learning chores.

VPLS ENhANCES AND ExTENDS ThE MPLS CoREFor service providers, VPLS not only enables them to satisfy enterprise cus-tomers’ demands for scalable, affordable, end-to-end Ethernet with requisite levels of qoS, it also enables them to maximize their investments in their core MPLS-based networks. To date, service providers have used this core networking technol-ogy for one application: Layer-3 VPNs. Now they can extend MPLS with a new, revenue-generating service, one based on Ethernet, not IP. After all, the “M” in “MPLS” stands for “multiprotocol.”

By combining the now-mature car-rier Ethernet with an extended MPLS, service providers can deliver an entirely new solution: VPLS. A Layer-2, global, reliable, qoS-enabled VPN technology that complements existing technologies, VPLS interconnects various Ethernet clouds with scalable, affordable band-width. In sum, VPLS, working with MPLS, enables carrier Ethernet to deliver the same end-to-end benefits to the WAN that traditional Ethernet has always delivered to the LAN. n

Carrier Ethernet Offers an Enterprising SolutionService providers extend carrier Ethernet to the WAN to meet demand.BY M.J. R IChTER

EXP: experimental GIGE: Gigabit ethernet IEEE: institute of electrical and electronics engineers IETF: internet engineering Task Force LAN: Local Area network MAC: Media Access Control MAN: Metro Area network MPLS: Multiprotocol Label switching MPLS LPS: MPLs Label switched Path PE: Provider edge QoS: Quality of service SLA: service-Level Agreement SONET: synchronous Optical networking VPLS: Virtual Private LAn service VPN: Virtual Private network VPWS: Virtual Private Wire service WAN: Wide Area network

Customer 2

Customer 1

Pe

Tunnel(LsP)

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i p/ M p l S : l e N d i N g a h a N d

W hen a service pro-vider decides to migrate traffic to IP/MPLS, select-ing the appropri-

ate equipment is just one of the choices that must be made. Equally crucial to the process: Picking the right partner to help with the implementation process.

The pool of telecom professionals

with experience in implementing carrier-grade IP/MPLS solutions is limited. That’s one major reason why operators often find that it’s easier and more effec-tive to tap into an infrastructure vendor’s embedded expertise than to hire or de-velop that expertise in-house.

Tellabs® Global Services has this ex-pertise and has helped some of the largest network operators in the world transition

from legacy technologies, such as ATM, to IP/MPLS. The clients are diverse: wireless carriers seeking to use IP/MPLS for mobile backhaul, incumbent landline operators wanting to move Frame Relay and ATM traffic to a more cost-effective backbone, cable companies seeking to offer Layer 2 VPN services and com-petitive service providers looking to offer Layer 3 VPNs.

ATM: Asynchronous Transfer Mode BGP: Border Gateway Protocol IEC: international engineering Consortium LDP: Label distribution Protocol MPLS: Multiprotocol Label switching SLA: service Level Agreement VPN: Virtual Private network QOS: Quality of service

help Wanted Needed As service providers migrate to IP/MPLS, they don’t have to go it alone.BY JOA N ENGEBR ETSON


“People choose us for our strengths at the core,” said Raianne Reiss, Tellabs se-nior manager of global services marketing and strategy. With Tellabs’ strong track record of developing carrier-grade solu-tions, she added, “we’re going to send you a service provider network expert.”

MANy oPERAToRS, MANy REASoNSThe value Tellabs brings to an operator includes insights into best practices for solving key issues, Reiss said. In addition,

Tellabs Global Services has deep knowl-edge of other manufacturers’ core and edge network products, which is essential to ensuring optimal deployment archi-tectures and delivering smooth rollouts, said Leo Lee, Tellabs senior consultant.

One example is a competitive car-rier that is using the Tellabs 8800 Multiservice Router (MSR) Series to deliver Layer 3 VPNs which can economically support a wide range of services. The company chose Tellabs partly because of Tellabs strong qoS offerings and proven interoperability with third-party router devices. Tellabs Global Services has assisted by test-ing Layer 3 functionality such as BGP dampening, LdP graceful restart, and by keeping up with technologies defined in new requests for comments from the International Engineering Consortium.

Wireless carriers, meanwhile, are focused on moving what is now mostly TdM and ATM backhaul traffic to an IP/MPLS solution. The technical staff at a wireless carrier typically understands ATM but isn’t as familiar with Ethernet as a transport medium. Such an operator might look to Tellabs for help in how to implement qoS over Ethernet — and many have done just that.

For more than a year, Tellabs’ Global Services has had a team of people en-gaged with two wireless carriers that have deployed the Tellabs 8800 MSR series. Tellabs team members — including se-nior consultants, program managers and planning, engineering and operations personnel — are on site every day at the carriers’ facilities. These individuals have been involved in creating an engineering design package that includes a compre-hensive and detailed view of all physical and logical connections/topology, pro-viding key insights into the architecture and design criteria necessary to guaran-tee end-to-end qoS.

here, too, knowledge of other manu-facturers’ equipment — in this case, legacy ATM equipment — was critical.

“We needed to know how the previ-ous services were architected so we could maintain ATM functionality across the core and keep service level agreements,” Lee said. “The client had stringent band-width requirements they had to accom-modate and needed to maintain failover mechanisms that work within the span

of milliseconds. They needed someone who could architect a network to meet these SLAs.”

WoRkS WELL WITh oThERSAlthough some Tellabs IP/MPLS con-sulting services engagements are with operators deploying the Tellabs 8800 MSR series, Lee said that the company is well-positioned to offer IP/MPLS migration consulting services even when Tellabs equipment isn’t involved.

“People don’t always think of Tellabs for projects involving other manufactur-ers’ equipment, but our consulting team is just as effective when equipment from other vendors is being deployed,” Lee said. “We have a staff of engineers who are capable of configuring myriad net-work devices.”

Tellabs delivered services for several network operators on IP/MPLS network architecture before the customers even selected a platform, Reiss said.

“In several other cases, we provided consulting on IP/MPLS business case development: helping the customer fig-ure out where, when and what services to launch, and the necessary architecture to support them in order to deliver a go-to-market business case/return on invest-ment analysis,” Reiss said.

Reiss encourages network opera-tors to consider Tellabs consulting services for virtually any aspect of their IP/MPLS migration plans. “We’ve demonstrated that we can assist any type of network operator to plan and execute a smooth IP/MPLS migration path that meets their organizational objectives from the start and on an ongoing basis,” she said. n

“The ClieNT had STriNgeNT baNdWidTh reQuireMeNTS. They Needed SoMeoNe Who Could arChiTeCT a NeTWork To MeeT TheSe SlaS.” — leo lee, TellabS SeNior CoNSulTaNT


o ly M p i C S

For China, the upcoming 2008 Summer Olympics in Beijing is more than a sporting event. It’s a coming-out party of sorts for the entire nation, an

announcement that this country of 1.3 billion people is ready to take its place as a major power on the world stage.

In anticipation of intense international scrutiny, the preparations have been ex-haustive. Factories have been re-located to improve the air quality for athletes in Beijing, cab drivers have been issued a 300-plus page handbook full of English phrases and cultural do’s and don’t’s (sample: Frenchmen like their hand-shakes brief and light).

The government has poured some $40 billion into new stadiums, beautification projects and infrastructure upgrades, in-

cluding a new airport terminal. Also receiv-ing an overhaul: China’s telecom network.

Olympics are, by their nature, heav-ily reliant on communications facilities and technologies. Events are broadcast to hundreds of countries around the globe via television and the Internet; nearly 25,000 members of the interna-tional media are expected to descend on Beijing to cover the Games for audiences back home.

To meet this challenge, China Netcom assembled a 2,000-person team solely dedi-cated to Olympics projects, which included the installation of nearly 200 km of fiber optic cable in Olympics venues in Beijing, as well as nearly 20,000 voice lines.

According to Yu Xijian, China Netcom’s network division chief, the carrier made massive increases to its sub-

marine cable capacity in order to carry broadcast signals to the United States and Europe. It also deployed an IPv6-based next-gen network pilot around the Olympic cities to provide real-time video surveillance.

In addition to the network enhance-ments, new communications facilities include a command-and-control center, a 2,000-seat call center to handle calls into the Beijing Organizing Committee and a smartcard-based authentication system for broadband access.

bEyoND bEIJINGThe seaside city of qingdao, located 690 km southeast of Beijing, will host the Games’ sailing competitions. A wireless network known as McWiLL has been in-stalled to support video coverage of these

A Gold Medal in TelecomIn the Olympic spotlight, China upgrades its telecom infrastructure.BY ROBERT CLA R K


events. McWiLL is based on SCdMA technology, a wireless standard related to Td-SCdMA and manufactured by Beijing Xinwei, a member of the datang Telecom Group.

China Mobile will also operate a public Wi-Fi network in qingdao that boasts coverage in every corner of the city. The carrier has been aggressively

deploying Wi-Fi networks throughout China’s Olympic cities in anticipation of huge demand from media and visitors, according to Ma Benteng from China Mobile’s Office of Olympic Affairs. he declined to provide details of the Wi-Fi rollout but says the competition with China Netcom to deploy Olympic Wi-Fi “was intense.”

IS TD-SCDMA READy FoR ITS CLoSE-uP?The Olympics comes at a particularly critical period for China’s domestic tele-com industry. The carrier market is un-balanced and overdue for reform. More than three-quarters of the profit and growth goes to China Mobile, while the fixed-line operators are bleeding custom-ers. China Netcom, the host fixed-line telco for the Olympics, last year lost near-ly three percent of its voice lines, thanks to aggressive mobile price-cutting.

CDMA: Code division Multiple Access EDGE: enhanced data Rates for GsM evolution GSM: Global system for Mobile Communications TD-SCDMA: Time division-synchronous Code division Multiple Access UMTS: universal Mobile Telecommunications system

The internet in China is huge. not just numerically — although its internet pop-ulation is now the world’s largest — but also in terms of the powerful role it plays in daily and social life.

“it’s the first real public sphere in China’s history,” said Kaiser Kuo, group director of digital strategy for Ogilvy China.

That’s because unlike the country’s free-wheeling economy, China’s mass media is still tightly controlled by the Communist Party. Citizens turn to the online world to play and exchange infor-mation. surveys show that since 2006, the Chinese have spent more time online than watching programming on state-run TV: an average of 16.2 hours a week.

“Traditional media just can’t hold a candle to the internet,” Kuo said. “it’s a place where individuals can express themselves — within certain limits.”

“CRuCIbLE oF CoNTEMPoRARy CuLTuRE”According to the China internet information Center (CnniC), China now boasts 221 million internet users, which places the country in a tie with the united states for the largest online popu-lation. (in a report due later this summer, China is likely to overtake the u.s.) The boom shows no signs of slowing anytime soon. China’s internet penetration stands at a mere 16 percent, compared with 75 percent for u.s. adults and an even higher rate for teens.

China’s Web surfers tend to be young: Half are under 25, says a March CnniC survey, while the average age of a reg-

istered broadband subscriber (the head of the household) is 32, a full 10 years younger than in the u.s.

Growth in usage, as well as broad-band adoption, has been spurred in part by the country’s major telcos. Barred from offering mobile services, the fixed-line providers have turned to broadband internet access as a means of growing revenues and their customer base. statistics indicate their efforts have met with great success: usage grew 53 percent last year, and 78 percent of all users access the Web via broadband.

But Chinese patterns of usage differ sharply from those of Western consum-ers. For example, instant messaging trumps e-mail: Just 56.5 percent of China’s online community uses e-mail. The most popular online activities include listening to and downloading music (86.6 percent), iM (81 percent), video (76.7 percent) and news (76.9 per-cent). some video sites draw as many as 100 million visitors per day.

despite the predominance of the young, the internet is also popular with older Chinese. some 40 percent of people over 50 use iM, and 32 percent regularly play online games.

The online game culture is deeply entrenched, thanks to the spread of broadband and in particular the prolifera-tion of internet cafés. A typical café has 100 or more state-of-the-art PCs, mostly used for gaming and watching video.

The internet has also become a “crucible of contemporary culture,” Kuo believes.

it’s a major new source of words and phrases, such as PK, short for “player kill,”

a term from the gaming world that’s now employed in daily speech. The internet novel has become a genre of its own, with many of today’s popular novels published online before hitting bookstores.

SouNDING oFF oNLINEThe Chinese are among the world’s most active bloggers: Forty-eight percent of internet users have blogged, compared with 15 percent in Australia, 18 percent in singapore and 38 percent in Korea.

Bulletin boards are tremendously popular. eighty percent of Web sites offer them, and some 10 million posts are made daily. used by 35.5 percent of China’s online community, BBss offer the chance to sound off — anonymously — on the issues of the day.

One recent example: As the Olympic torch relay met with protests around the world, the Chinese responded with demonstrations against foreign media bias. sina.com, China’s biggest internet portal, set up a Web page dedicated to the campaign, featuring a graphic of the Cnn logo punctured by bullet holes and the slogan “Chinese netizens open fire against Cnn and other Western media.”

Charles Frith, a Beijing-based media buyer and blogger, says the online discussion takes place in a completely different context and style from europe and north America.

“it’s much more topic-driven, whereas in the West it is profile-driven,” he said. “in the West, we express our characters through our profiles. no one would think of exposing their true identity online in China.” — R O B e R T C L A R K

221 MILLIoN SERVED…AND GRoWING


o ly M p i C S

In the midst of this environment, China has struggled to launch 3G high-speed mobile services, the marquee telecom project for the 2008 Olympics — and the biggest question mark. Part of the challenge has been the choice of technol-ogy, with China pursuing its own Td-SCdMA standard as opposed to the more dominant CdMA2000 and UMTS.

Although these rival standards have gained favor in progressive deployments over the past five years, the Ministry of Information Industry has delayed the issue of China’s 3G licenses while the Td technology remains under development.

Initial results have not been encour-aging. China Mobile launched the first “pre-commercial” Td-SCdMA service in eight cities on April 1, ordering just 60,000 Td-SCdMA handsets for the initial phase of the deployment. For the operator, which adds 3 million custom-ers a month to its GSM networks, such a small order sent a message indicating lack of confidence in the network’s com-mercial readiness.

These doubts were borne out: In the first 10 days, China Mobile signed up

just 2,000 subscribers and sold roughly the same number of handsets. Some customers complained about the patchy coverage, limited handset choice and short battery life. These are issues that challenge all new mobile networks, but they suggest that a quality 3G experience will be beyond the reach of spectators at the August games.

“There is no concrete [forecast] as to how many subscribers these networks will take up by the time of the Olympics, and there is also no timetable for a formal commercial launch,” said Allan Ng, an

analyst at BOCI Research. “I’m not sure the games are regarded as a crucial test for the Td technology. After all, adopt-ing Td is a political decision that the Chinese government has made, and it will not change its mind until the market has made a clear choice.”

Foreign guests, who are unlikely to hand over 3600 Yuan (US$516) for a Td-SCdMA phone, will have to bring their EdGE or CdMA2000 1X hand-sets. At this stage, China Mobile has no plans to lease Td phones to visitors, al-though it has promised to supply 15,000 handsets to Olympics organizers.

But they may be reluctant to use them. Td-SdCMA deployment in Beijing has been extremely slow due to difficulties in site acquisition, which has resulted in coverage gaps. Li Jinliang, a Chinese mo-bile consultant, said that China Mobile will need to install another 1,000 base stations in the run-up to the Olympics to provide full coverage. That’s 50 percent more than the operator commissioned in the past year.

Yet all is not lost. “I think the fixed-line broadband network and the second-gen-eration [GSM and CdMA] networks can cope with the Olympics demand,” said Ng.

Which means that despite its best Olympian efforts, when it comes to mobile communications, China may find itself relying on something old, rather than something new. n

ChiNa Mobile lauNChed The FirST “pre-CoMMerCial” Td-SCdMa SerViCe iN eighT CiTieS oN april 1


i N S i g h T

In 2001, Japan’s NTT doCoMo was the first operator worldwide to launch 3G GSM technology. Branded as “FOMA” and de-ployed in the 2100 Mhz band,

the service achieved incredible market success. The next milestone in the 3G evolution occurred in december 2005, when Cingular (today AT&T Mobility) became the first operator worldwide to launch hSdPA. Both service providers continue to evolve their networks to even more advanced levels.

Now the 3G revolution is pushing into Latin America and the Caribbean, which is a unique wireless region for sev-eral reasons. The area has a relatively low ARPU of approximately US$15, with voice as the predominant revenue source. Prepaid makes up about 80 percent of the market, and there is a high wireless pen-etration rate, expected to reach nearly 70 percent by the end of 2008. These factors, plus the high investment costs required for both wireless infrastructure and devices, make it necessary for op-erators to build economies of scale for a profitable business.

The operators in Latin America and the Caribbean determined that the time was right in 2006 to deploy 3G services to deliver greater network capacity (rath-er than spending money to expand their 2G networks) and to boost the value-added services’ contribution to ARPU enabled by 3G services. Once 3G hSPA was technically and economically proven in the United States, it was time for Latin America to consider adopting the technology in existing spectrum, as there were more 3G devices of all types avail-able at affordable prices for end users.

Throughout most of the Americas region, UMTS/hSPA networks are

deployed in the spectrum bands of 850/1900 Mhz. T-Mobile USA recently launched UMTS in the 1700/2100 Ghz bands, and there are plans to auction this spectrum this year for 3G networks in countries such as Chile and Mexico.

25 oPERAToRS, 14 CouNTRIES, 211,000 CuSToMERSduring the last quarter of 2006, AT&T (Puerto Rico) and Entel PCS (Chile) became the first two operators in the region to launch hSdPA commer-cially. Following on their heels, Telecom Personal (Argentina) launched UMTS/hSdPA in the first half of 2007.

The pace of deployment picked up sig-nificantly during the second half of 2007, when a flurry of 10 new UMTS/hSdPA

networks were launched in different parts of the region: two in Argentina, one in Aruba, two in Brazil, one in Chile, one in Paraguay and three in Uruguay. The speed of UMTS/hSdPA launches has not slowed during 2008. By the end of April, an additional 12 3G UMTS/hSdPA networks were deployed, for a total of 25 operators in 14 countries.

With the exception of Ancel in Uruguay, all of these networks were launched using existing “in-band” spec-trum at 850 Mhz and 1900 Mhz. Only in the second half of 2008 and into 2009 will we start seeing 3G hSdPA networks deployed in the new spectrum of 1900/2100 Mhz in Brazil. Although the adoption rate of 3G services will be slow at first, there are already more than 211,000 UMTS/hSdPA subscriptions in Latin America and the Caribbean after less than 18 months.

The outlook for the GSM family of technologies’ evolution to 3G in Latin America is very promising. hSdPA and EdGE will be the best foundation to offer 3G services to both enterprise and consumers. The operators have made an extra effort to offer good coverage and a variety of 3G devices that will suit the needs and budgets of both postpaid and prepaid users. With wireless penetration in the region approaching 70 percent, the operators realize that to increase ARPU, retain customers and remain competi-tive, the name of the game is 3G.

Erasmo Rojas is director of Latin America and the Caribbean at 3G Americas, a group of mo-bile operators and equipment manu-facturers in the Americas using the GSM fam-ily of wireless tech-nologies. For more

information, visit www.3gamericas.org.

3G Comes to Latin AmericaIn less than a year, 25 operators in 14 countries have launched 3G. Why now?BY ER A SMO ROJA S

ARPU: Average Revenue Per user EDGE: enhanced data Rates for GsM evolution FOMA: Freedom of Mobile Multimedia Access GSM: Global system for Mobile Communications HSDPA: High-speed downlink Packet Access HSPA: High-speed Packet Access 3G: Third-Generation 2G: second-Generation UMTS: universal Mobile Telecommunications system

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