Ethernet and HD video offer greatest opportunity for service providers in China

MELBOURNE, AUSTRALIA: As large enterprises in China have fewer sites connected to their wide area networks (WAN) and a smaller international presence than their counterparts in other regions, the Chinese enterprise network services market is still relatively immature. However, it does offer a number of good prospects for service providers, according to Ovum.

In a new survey, the independent telecoms analyst firm found that 65 percent of the Chinese companies surveyed had less than five sites connected to their WAN, and only 11 percent extended their WAN to sites outside the country of their corporate headquarters. This was the lowest rate among all the countries covered in Ovum's large-enterprise survey.

Jane Wang, Ovum telecoms analyst and author of the survey, commented, “These findings demonstrate that national service providers are currently well placed to serve the majority of large enterprises in China, and can hold off on their international expansion plans in the short term.”

The expectation is higher for Ethernet services, and they will provide the greatest opportunity for service providers in China. Ethernet private lines and Ethernet VPN are considered to be the main WAN technologies for future deployments as they provide good value for money and high security for enterprises.

Wang added: “This is a strong requirement for many large Chinese enterprises in specific industry verticals, such as the manufacturing and energy sectors, as 72.5 percent of large Chinese enterprises expect Ethernet private lines and Ethernet VPN to become their key WAN technologies in the next two years. As a result, service providers in China should put Ethernet at the core of their network services strategies.”

High definition (HD) video is the most important application over WAN for large enterprises in China, and is expected to drive the adoption of new network technologies and services. China has a high adoption rate of HD video over WAN as Chinese employees, especially high-level management and decision makers, prefer face-to-face meetings with stakeholders and staff in different offices.

Wang concluded: “The popularity of HD video is a result of a number of direct business and use cases. China has the lowest adoption rate of voice over IP and critical business applications over WAN. As a result, service providers will need to work hard to develop successful case studies to convince customers about the benefits of supporting these networked applications.”