COMMUNICASIA, SINGAPORE--Fixed-line operators must evolve to counter the threats from the mobile and Internet world, a senior Huawei executive says.

Lim Chee Siong, director of fixed network solutions at Huawei Technologies, said fixed-line operators are facing lower voice revenues due to "free, high-quality voice services" from Net telephony service providers, as well as fixed-mobile substitution where consumers choose to make a call on their mobiles instead of wireline phones. He was speaking at a next-generation network (NGN) conference during CommunicAsia held here.

Citing market figures from Gartner, Lim said 75 percent of voice traffic will originate from cellphones by the end of 2009, while 35 percent of fixed-line subscribers will completely switch to mobile lines and Net telephony services.

Lim also highlighted the broadband challenge. Referring to investments made in broadband infrastructures by fixed-line operators, he pointed out that "people are paying content providers, not the operators, for [profitable] services such as gaming".

China Telecom, for instance, has a profit margin of about 20 percent, according to Lim. In contrast, Chinese content providers including Sina.com and Sohu.com have "much higher" profits, he said.

"The richest man in China happens to be the owner of Shanda, an online gaming company. So, if operators continue to invest in their infrastructures, it will only make it easier for content providers to deliver their services and increase their profits," Lim added.

The solution, Lim suggested, is for fixed-line operators to transform their business models and hunt for new revenue growth. "They have to transform to survive," he said.

For example, operators can work with content providers to provide QoS (quality of service) assurances for online services that flow through their networks. "This way, revenues from content can be shared between content providers and operators," Lim said.

However, services such as QoS may require fixed-line operators to migrate their networks to IP (Internet Protocol). Although he does not expect all fixed-line operators to rip out their existing infrastructure and replace it with an IP-based one, they can "optimize" their networks to provide similar services.

Still, Lim said that an all-IP network is more flexible for rolling out new cross-platform services quickly. For instance, British Telecoms' 21st century network (21CN) will give subscribers the ability to access voice messages, data, and video any time on any device--which can be a cellphone, PC or home phone.

One delegate from the Malaysian government, however, said several head honchos of telecommunications companies are still reluctant to transform their businesses. While Lim agreed, he said it is inevitable that operators will migrate to IP networks.

"BT knows that its returns on investment for 21CN will only be realized 10 or 20 years later. But if they do not [build the IP network], they will not even survive, or even talk about long-term investments," Lim said.

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