Entering new markets and building new capacity is challenging at any time. In the current recession it’s doubly difficult, but China Telecom Americas is doing just that as it seeks to meet its customers’ demands for massively increased capacity between the US and the Asia-Pacific region and from China to the rest of the world. Co-sponsored feature: China Telecom Americas


As demand for capacity shifts towards Asia it is now more important than ever before that carriers and enterprises have access to reliable, high quality connections. The vast populations of China and India are naturally at the core of this increased demand which saw internet traffic increase from China to the US and the US to China by 80% in 2008.

However, it’s not just the countries with massive populations that need to be addressed. “It’s very important to increase bandwidth across the Pacific,” says Donald Tan, president of China Telecom Americas.

“It’s very important to recognise demand for traffic and applications delivered across the internet from Japan, South Korea, Hong Kong and ex-Asia traffic is growing fast.”

Meeting that demand represents a challenge, as Tan attests. “Chinese enterprises want to go out to the rest of the world and more and more have requirements to interconnect their overseas subsidiaries with their headquarters in China,” he says.

“In addition, carriers in China have the need to interconnect globally so the main part of the requirement placed upon us is to support enterprises and carriers based in the US. Their demands for international services are growing very quickly and in the last two years we’ve certainly seen many more RFQs for international service.”

However, with massive new capacity from its Trans-Pacific Express (TPE) cable, which connects Shanghai with Hillsborough, Oregon, now coming on stream, China Telecom Americas is poised to unleash large volumes of capacity onto the market.

“TPE is the most important cable system for us right now,” says Tan. “In the old days we had China to US cable and Japan to US cable and the new cable’s initial capacity will meet the requirements of the next few years. We’ve finished the landing stations, the colocation facilities and have delivered the first circuit to a customer.

“Traffic and enterprise requirements have grown very fast in the US and China. Internet applications and video games need big bandwidth and the TPE is ideal for this. Phase one of the project is complete and phase two is ongoing. Within two to three years we will have finished all the projects and have a very secure, resilient, high bandwidth capacity.”

Although demand for capacity continues unabated, even new capacity immediately faces price pressure from users.

“Telecoms revenues have decreased although the decline is not large and that’s a challenge for us,” confirms Tan. “For example, our enterprise customers demand lower cost and we have to maintain revenue growth while continuing to attract new customers so the challenge lies in how to do that.

“Our strategy is to use capacity that we own, which enables us to reduce cost and we have an aggressive international strategy to serve our customers. In addition, although the price has reduced in the last year, increased demand will see revenues go up. Customer requirements have risen from 64 kilobits a second to two megabits to 20 megabits and beyond. The increase has been huge during the last year but I am confident for our business and think we have the right strategy.”

China Telecom Americas has come a long way in a short time and has great ambitions. “Eight or nine years ago we entered the US for the first time. So it’s not a long history,” explains Tan.

“China Telecom Group in general had and continues to have a strategy of transitioning from traditional telecoms service provision within China to integrate into the global market so we have to go out and we have to have targets.

“We’ve expanded our transmission network and internet network to better serve our enterprise customers and carriers and we have built more and more points of presence in order to meet customer demands and be prepared for the future.

“The opportunity and demand from customers is enormous and we have to meet that,” adds Tan. “We’ve landed systems to India, Mongolia and Russia, for example, so we can provide lots of routes and that’s essential to address the backbone requirements our carrier customers have across APAC countries.”

Piloting this growth and investing in new capacity is especially challenging in the recession and, as Tan attests, nobody is immune from its ill affects. “In one word, the affect of the recession has been big,” he says. “This year, new sales have been down for the first quarter and some customers have terminated or degraded their services because of their own need to cut costs, currency exchange issues and budgetary constraints.

“In investing in our capacity we’ve taken the risk for our customers but I have confidence that we are in the right position and our carrier and enterprise customers are reaping the benefits of our services.” GTB