Ericsson to help TV get with the program

BEIJING - Top mobile telecom equipment maker Ericsson AB said it wants to sell more equipment and technical solutions to Chinese broadcasters as China moves toward three-network convergence.

Industry experts estimate the convergence - the merging of telecommunications, television and Internet services - will have a potential market size of more than $100 billion during the next three to five years.

Erick Feng, executive vice-president of Ericsson China & North East Asia, said the company has recently spun off a 300-member TV and new-media department, providing specifically tailored services for Chinese broadcasters.

Ericsson Credit AB, the company's lending branch, is prepared to hand out tens of billions of dollars to fund Chinese TV operators when they need to purchase equipment or services, according to Feng.

The move signifies that Ericsson, the world's largest network equipment vendor by sales, is not satisfied with merely selling equipment to the country's three telecom carriers, but also hopes to tap into a new market with Chinese broadcasters.

"Compared with telecom carriers, broadcasters are motivated to advance the convergence. They will benefit most from the process because they are responsible for content," Feng told China Daily.

He said he is extremely optimistic about the future of Chinese broadcasters, providing they turn themselves from typical TV operators to comprehensive service providers of interactive TV, Internet and telecommunication services.

Though the three-network convergence has been hampered by stakeholders' conflicting interests and has made little progress in the past 10 years, Feng predicted a major breakthrough would come between 2012 and 2015.

The company is fully prepared to embrace the business opportunity, according to Gao Junliang, general manager of the TV and new-media department of Ericsson China.

Gao said the company has invested about $10 billion in mergers and acquisitions in the past three years to acquire 11 TV-related enterprises, helping Ericsson retain its competitive edge in the field.

Ericsson has already provided consultancy and technical solutions for broadcasters in 12 pilot cities, including Beijing, Shanghai and Shenzhen.

In January 2010, the Chinese government said it planned to accelerate the move toward three-network convergence. The first pilot project began in July in 12 cities. However, little progress has been made, which has delayed the second trial project.

Compared with the third- and fourth-generation telecom investment, three-network convergence presents more lucrative opportunities for equipment makers, said Wu Hequan, director-general of the China Communications Standards Association.

Broadband upgrading, cable network transformation and set-top box production could result in a total investment of more than 688 billion yuan ($104.8 billion), Wu said.

Besides Ericsson, other telecom equipment suppliers, including Huawei Technologies Co Ltd, ZTE Corp and Alcatel-Lucent SA, have all participated in the race to win contracts with Chinese broadcasters.

Wang Yinfeng, president of the home and enterprise device product-line department of Huawei, said the company shipped more than 5 million set-top boxes (the device that helps turn signal into content for television) worldwide in 2010, 20 percent of which were purchased by Chinese buyers.

Wang expects shipments to double to 10 million this year and is optimistic about the domestic business growth.

Hong Tianfeng, executive vice-president of Huawei, said business with domestic broadcasters is critical for Huawei, which will invest 10 percent of its sales annually into research and development.

According to Hong, Huawei will provide equipment and services for TV operators in cloud computing, networks and terminals.

China Daily

(China Daily 03/25/2011 page16)