China reforms telecom wth IP telephony

19 May 2000 - In a rare example of positive trade relations between China and the U.S., Chinese telecommunications companies have received government approval to begin a nationwide build-out of a voice-over-Internet Protocol telephony network provided by U.S. wholesale carriers ITXC and iBasis, with equipment provided by Cisco Systems.

The Chinese Ministry of the Information Industry (MII), has regulatory power over the four Chinese telecoms — China Jitong, also known as China CNC, China Netcom, China Telecom and China Unicom — as well as China Mobile, which also received approval to build out Internet Protocol (IP) telephony. While the service has only been in trials, China has already become one of ITXC's top five international call destinations out of the 57 countries the company currently services.

China is moving toward IP telephony because the nation has an extremely low teledensity. China only has 7 percent teledensity, meaning there are only seven phone lines per 100 people, whereas the U.S. has 63.8 percent teledensity, according to TeleGeography.

"This is good news in general for the whole industry, because here's a huge population now moving their calls to the Internet," said Tom Evslin, president and chief executive of ITXC. Evslin said the MII was mostly concerned with the quality of service and could have easily disapproved of IP telephony if it had not been satisfied.

After the trials were approved in March 1999, iBasis began to work with China Unicom, ramping up points of presence in 12 cities, which all connected to the iBasis network for terminating international calls. Chris Ward, director of marketing at iBasis, said China Unicom has already deployed equipment in 100 cities and will be operating in 300 cities by the end of July.

There are differences between China and the U.S., said Hong Guo, iBasis' director for greater China. For instance, he said, U.S. telecom companies see IP telephony as an interesting application that can run on top of the Internet, while China sees it as an opportunity for total telecom restructuring.

By using the Internet, China can provide citizens who have never had phone service a way to get in touch. Guo said that in rural areas, people can use what is called a "virtual phone" or "mailbox in the clouds." When people who don't have a phone or a PC want to place a call or get their voice-mail, they can travel to the nearest merchant or neighborhood store and dial in to retrieve messages and place calls. — Brian Ploskina

How Dense Can You Be?

*Teledensity is based on number of phone lines per 100 people in 1998, when the U.S. population was roughly 270 million and China's was 1.3 billion. Internet penetration is measured by the number of computers connected to the Internet as of September 1999.

Source: TeleGeography (www.telegeography.com).

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