IDC Predicts the China Telecom IT Market Will Reach RMB46.10 Billion By 2011, With Local Operators F

IDC Predicts the China Telecom IT Market Will Reach RMB46.10 Billion By 2011, With Local Operators Facing New Challenges in Business Transformation
06 Jul 2007
Beijing, July 6, 2007-- According to IDC’s report China Telecom Industry IT Solution 2007–2011 Forecast and Analysis (Doc#CN383103P), overall IT spending in China’s telecom industry is estimated at RMB26.95 billion (US$3,360.1 million) in 2006, an increase of 10.9% over 2005. The overall telecom IT market will reach RMB46.10 billion (US$5,747.7 million) by 2011, at a 5-year CAGR of 11.3%, where the share of software in total IT spending will increase to 14.2% and that of services to 34.3%.
Telecom operators in China have been playing an important role as the builders of information infrastructure. Amidst increasingly fierce competition, the four major operators (China Mobile, China Unicom, China Telecom, and China Netcom) have all implemented customer centric transformation strategy to strengthen corporate competence and ensure sustainable growth. As a result, more value added services (VAS) were launched, which led to the introduction of different billing models, such as traffic-based billing, monthly billing and content based billing, to cover voice, short message, and WAP services,. In addition, business partners in the value chain, such as service providers (SPs), have new requirements for the settlement system including multi-party settlement and mixed settlement. With the demand for real-time query from both subscribers and business partners, and the introduction of bundled packages, an integrated operation system must be able to conduct rigorous control and management over activities such as account opening, information changes, number generation and allocation, SIM pre-activation, user data input and change, etc. so as to ensure detailed, accurate and consistent customer data.
“Business transformation within operators requires an integrated management of multiple resources. However, the current network management systems are characterized by separate development for switch network, transport network, data network, pipeline network, and power network. Hence, converging specialized management of various resources and providing detailed and accurate data is a huge challenge. Without an integrated network management system, it would be difficult to calculate the value of resource and data, such as the correlation between resource and business data, and the status of resource occupation by users,” said Freda Tong, Senior Analyst at IDC‘s China Vertical Research.
As 2008 approaches, the count-down to 3G license issuance in China has also began. 3G testing and the preparation for IT system development have already started in earnest. IDC believes that operation support system in the 3G era will be modularized and the design based on business processes to ensure system agility and scalability. In addition, business and service realization will be standardized to contribute to the accuracy of corporate operational analysis and decision support, and support the organic integration of customer and business segmentation.
Although no 3G license has been issued, China Mobile, China Unicom, China Telecom and China Netcom have already started preparing for 3G in 2006 and invested in relevant IT software and hardware. China Mobile and China Netcom, in particular, have invested heavily in 3G solutions aimed at meeting the demand for 3G service in 2008. The big four telcos are now concerned with the ROI in IT development and have become more rational towards 3G-related development and purchases. IDC believes that their investment priority will remain in fixed assets such as transport network, and 3G-related IT hardware procurement will not show major growth over the next 2 or 3 years .

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