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Orange Business Services and China Telecom Partner on Next-generation MPLS VPN| February 13, 2007 | Business Telecom Services - Europe | Competitive Intelligence Report | Client Access Analyst: Bernt Ostergaard
Current Perspective: Positive
On February 9th Orange Business Services (OBS) partnered with China Telecom to offer MPLS VPN services to multinational corporations in China. OBS is extending its coverage to 200 additional cities, including Dongguan, Dalian, Guangzhou, Shenzhen and Xiamen. OBS’ IP services include IP voice and video streaming as well as managed IP services. OBS has also obtained a Chinese ‘integration services license’ allowing the operator to import and distribute 61 categories of enterprise telco equipment. Analytical Summary • Current Perspective: Positive on Orange Business Services’ partnership with China Telecom to offer MPLS services to 200 additional Chinese cities, because it will give OBS a significantly improved MPLS capability in China, which is a fast growing market for managed MPLS services. • Vendor Importance: High to Orange Business Services in Asia, because this takes the company to the lead in the biggest Asian market: China. It will swallow a large part of the carrier’s Asian investment going forward and it must quickly generate strong revenues for Orange Business Services to remain competitive in other Asian markets, notably India. • Market Impact: High on the Asian MNC services market, where the significant increase in Chinese metropolitan MPLS coverage sets a new bar for enterprise IP services in Asia. To follow through on the announcement still requires a huge effort on Orange Business Services’ part, but the announcement itself will spur competitors to catch up. Recommended Competitor Actions • All the global carriers need to follow Orange Business Services’ lead by expanding their present MPLS partnerships in China to cover many more cities than they do today. With the huge IP infrastructure investments undertaken by both China Telecom and China Netcom, this should not be a significant problem. • Competitors need to examine closely the degree to which their alliances in China provide them with infrastructure control, allowing them to deploy their own customer portal end-to-end. MNC customers are not happy with today’s mix of partly overlapping, partly transmission protocol-dependent management and monitoring platforms. • Managed IP services represent a fast growing market and competitors should ‘follow the money,’ looking for partnerships that can provide them with coverage in the locations requested by their existing MNC customers, rather than seeking much greater coverage to areas where they might not derive any significant business in the near-term. • Telefonica should be positioning itself as the only European carrier to actually own significant shares in one of the major Chinese telecommunications incumbents, namely its 5% stock in China Netcom, giving it greater network control advantages. Telefonica seriously needs to ramp up its marketing in Western Europe to ensure adequate presentation to multinationals looking for cost-effective and innovative solutions from Europe into China and the Far East.
• Users should consider the Orange Business Services-China Telecom MPLS partnerships with great interest, since the deal doubles OBS’ MPLS coverage in China for European and North American MNCs. Combined with the emergence of Ethernet in the last mile, this opens up higher transmission speeds and better QoS, and thus wider deployment of latency-sensitive applications across MNC networks. Customers with business in China should question their present carriers about coverage plans and what QoS they can support with SLAs. • Customers can expect competitors to follow-up quickly with wider geographical coverage. However, it is essential for customers to examine the level of service integration across global MPLS networks as well as what tools they are provided to monitor and manage their global MPLS networks. • Orange Business Services customers in China connected over a China Netcom connection should investigate possible service improvements coming from a shift to China Telecom.
Business Telecom Services - Europe
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