WCA November 2014

Telecom news

With Japan’s NEC as lead supplier, a consortium in- cluding Google plans the ‘FASTER’ subsea cable for the trans-Pacific route The 6,200-mile trans-Pacific subsea cable system announced by Google in August and given the ambitious name FASTER will be landed at Chikura and Shima in Japan and will feature seamless connectivity to neighbouring systems in Asia. Connections in the USA will further extend the network to major West Coast hubs serving the Los Angeles, San Francisco, Portland and Seattle areas. Employing 6-fibre-pair cable and optical transmission technologies, FASTER will have an initial design capacity of 60Tbit/s, made up of 100Gbit/s from 100 wavelengths of 6-fibre pairs. The $300 million system is expected to enter service in the second quarter of 2016. The system, in which Google is one of six commercial partners, has NEC of Japan as lead supplier. The other partners are KDDI (also Japanese); China Mobile International and China Telecom Global; Singapore’s SingTel; and Global Transit, of the USA. Noting that the cable system features the largest design capacity on the trans-Pacific route, one of the longest in the world, Woohyong Choi, chairman of the FASTER executive committee, asserted that the announcement of the project should buoy all users of the global Internet. The Google spokesman, Urs Hölzle, VP of technical infrastructure for the California-based Internet services giant, was more characteristically company-centred. At Google, he said: “[We] want our products to be fast and reliable, and that requires a great network infrastructure, whether it’s for the more than a billion Android users or developers building products on Google Cloud Platform.” As noted by Guy Daniels of TelecomTV , FASTER does not represent Google’s first investment in a submarine cable. In 2008 it joined a consortium to finance the $300 million, 3.3Tbit/s trans-Pacific Unity cable that entered service in 2010, linking the USA to Japan. It was also a participant (by way of its Bermuda subsidiary) in the $400 million,

In a strong indication that the Chinese telecom industry has become less willing to underwrite expensive devices like the iPhone and Galaxy S, China Mobile Ltd, the number one carrier, is cutting subsidies by $2 billion. This will make things considerably harder for Apple Inc, of the USA, and South Korea’s Samsung Electronics Co in the world’s biggest phone market. But, as noted by Bloomberg News , the pullback may promote growth for Chinese makers like Xiaomi Corp and Lenovo Group Ltd that offer similar phones for lower prices. (“Apple, Samsung Face Rising Challenges in China Market”, 15 th August) The 38 per cent cut in subsidies follows an order from government regulators to the three national carriers, China Mobile, China Unicom and China Telecom, that they lower their marketing expenses, thus dictating a change in practices that have spurred sales of premium handsets to an increasingly wealthy population. While the order could save the companies $6 billion, it may also further shift the hierarchy in Chinese market share after Samsung lost the top spot in the April-June quarter and Apple failed to crack the top five in sales. “High-end flagship phones will suffer the most from the regulation due to their prohibitive prices in the China market without subsidies,” Lydia Bi, a Shanghai-based analyst at researcher Canalys, told Bloomberg in Beijing. “Samsung and Apple, as the two major high-end flagship phone makers, have the most to lose.” According to Tay Xiaohan, a Singapore-based analyst with IDC, Chinese consumers are already becoming more receptive to the higher-end phones produced by Chinese vendors. The trend will likely favour companies like Xiaomi, which Canalys said shipped 15 million devices in the second quarter, giving it 14 per cent of the market to Samsung’s 12 per cent. Xiaomi was not even among the top five vendors a year earlier. China’s state-owned Assets Supervision and Administration Commission reportedly told the three national carriers to cut spending on advertising and subsidies by a combined estimated $6.4 billion over three years. At China Mobile, subsidies for high-end phones can reach $750. In mid-August, the carrier’s website was offering the 16-gigabyte iPhone 5s for $860, without a contract. Ø An item in the South China Morning Post for 18 th August reflected the Bloomberg view of a global mobile phone market shifting gears, with aggressive Chinese companies ‘bent on conquering the world with boatloads of low-cost Android-based smartphones.’ According to Hong Kong-based reporter Bien Perez, these companies are benefiting from the rapid evolution of smartphone technologies, cheaper components, expert electronics contract manufacturers on the mainland, and a vast domestic market of budget-conscious consumers ‘to build scale and compete head-on against Apple, Samsung Electronics, and the other major global brands.’ Citing a report by Bernstein Research, the Post identified these ambitious Chinese mobile handset suppliers. The ‘Gang of Six,’ so called by Bernstein senior analyst Alberto Moel, is led by ‘computer kingpin’ Lenovo and ‘red-hot start-up’ Xiaomi, followed by telecom equipment manufacturing giants Huawei Technologies and ZTE Corp and consumer electronics firms Coolpad Group and TCL Communication Technology. As the era of Chinese subsidies for high-end phones nears its end, ambitious smaller names aim to overtake the majors

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Wire & Cable ASIA –November/December 2014

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