UTStarcom Inks $40 Million Deal With China Netcom

UTStarcom Inc. announced that it has inked a $40 million deal to expand China Netcom's IP-based Personal Access System (PAS) networks in the central and eastern Chinese provinces of Henan and Shandong.

PAS allows carriers to offer customers affordable mobile communications services featuring 64 Kbps Internet access, C-MODE web browsing, messaging and location-based services in addition to voice telephony. UTStarcom's IP-based PAS (iPAS) solution employs softswitching technology that will allow China Netcom to add feature-rich wireless services and offer subscribers broadband and third-generation (3G) technology-based services.

Yesterday's announcement builds on a well-established business relationship that has seen UTStarcom build 60% of China Netcom's PAS network infrastructure and supply more than half of its PAS handsets. Chinese users are avid consumers of PAS-based services. More than one-third of the 65 million PAS users in China are China Netcom subscribers and some 7.5 million people are currently served by China Netcom's PAS networks in the Henan and Shandong. The carrier's PAS customer base is expanding rapidly, growing some 81% in one year between 2003 and last year.

"PAS has played an integral role in driving revenue growth for China Netcom nationwide, while market demand for traditional fixed-line telephony has decreased in the face of stiff competition from cellular service providers," UTStarcom China senior vice president of sales Simon Le said in a statement. "Over the last two years, nearly 60 percent of new fixed-line subscribers at China Netcom are PAS users. In a recent interview with Interfax in China, China Netcom officials repeated their commitment to providing PAS service, stating that they expected to see positive growth rates for PAS subscribers through 2008. In addition, the operator believes that they will be able to leverage existing PAS network infrastructure to deploy 3G services when licenses are issued."