The Asian Telecommunications Revolution
by Paul Wollner
Ghost written by Mark HaasUntil very recently, the telephone offices on China's Hainan Island used antiquated "cord boards," with operators manually plugging wires into rows of sockets to connect all the telephone calls. Virtually overnight, these offices upgraded to sophisticated AT&T 5ESS digital switches, a change that in the United States took five technology cycles and more than 50 years.
Just as ports, roads and rail systems once were key ingredients for a country's economic development, today national growth is increasingly dependent on a modern, reliable telecommunications infrastructure. This fact has not been lost on Asia's leaders, who have declared the modernization of the their telecommunications infrastructures a top priority.
Asia's governments are rapidly installing fiber-optic networks, digital switches, wireless services and other state-of-the-art telecommunications equipment, prompted by changes in the global economy, increased competition among telecommunications companies and a number of other factors. Indonesia, for example, plans to add 5.8 million telephone lines over the next four years, Thailand 4 million lines by the end of next year and China -- where nearly one-third of all the region's telecommunications investment goes -- plans to add an incredible 48 million lines by the year 2000.
Last year, Asian countries installed $23.7 billion of telecommunications equipment, most of it from foreign companies, according to analysts at Pyramid Research, a Cambridge, Mass., research firm. By the year 2000, these analysts expect the demand to reach as much as $47.9 billion, more than doubling its current level. China alone is spending $1.3 billion just to install 33,000 kilometers of fiber in its current five-year plan ending this year, and will lay an additional 96,000 kilometers over the next five years, all part of its new digital data network that will feature a range of data and digital voice services, including ISDN and frame relay.
The huge growth of Asia's telecommunications infrastructure now is creating major opportunities for businesses in Asia to be more competitive by modernizing their information systems. Local-area-network-based client-server systems linked by wide-area networks are opening the door to a new generation of applications, such as signature verification and imaging, that can vastly improve customer service and make companies significantly more efficient. But the migration to client-server systems often means protecting existing investments in legacy mainframe-based technology, and this requires specialized equipment and sophisticated knowledge to implement correctly.
One company that specializes in consolidating legacy and LAN technologies is about to expand its Asian operations to address this need. Hypercom, Inc. is already the largest supplier of point-of-sale terminals and networks for credit and debit card transactions in Asia, and recently has been working with major banking institutions in China and Singapore to consolidate their branch office networks. Now Hypercom is introducing its core networking technology -- the Integrated Enterprise Network family of hybrid routers -- to the Hong Kong market for banks, financial institutions and other businesses located there.
"The consolidation of their existing legacy networks with client-server LANs is the major technological challenge banks are facing today," said Paul Wallner, Hypercom's vice president of engineering and one of its founders who is spearheading the company's Asian expansion. "Banks, in particular, have significant investments in legacy technologies. Besides their mainframe computers, they have large numbers of teller controllers and automated teller machines that must now co-exist with the new client-server technologies."
Historically, IBM has had a strong presence in Asia, having installed a large number of their mainframe computers, and SNA is the dominant protocol used by these systems to communicate with remote terminals, printers and other equipment. But client-server systems use different, incompatible communications protocols. More importantly, legacy data traffic tends to be fairly constant and the protocols are very sensitive to timing delays, while LAN data traffic tends to be very bursty. Getting both types of data to travel over a single network is not a simple task.
"During the migration to client-server systems, banks and other companies are still dependent on their centralized host systems, and in many cases the mainframes will continue to run certain mission-critical applications that will never completely disappear" said Wallner. "Getting both to work together over a single network is our specialty, and we've been doing it successfully for years in the U.S. and in other parts of Asia."
Several telecommunications technologies can be used to link remote offices with the headquarters. One of the newest, and one whose use has grown tremendously over the past 12 months, is frame relay. Less costly than dedicated leased lines, frame relay capitalizes on the new high-speed digital transmission lines being installed all over Asia to boost network performance. Frame relay also simplifies the physical network and provides greater reliability by eliminating single points of failure that are common with typical SNA multidrop lines. And frame relay is an international standard, an important consideration for organizations engaged in multinational operations.
"Consolidation, especially using frame relay, offers the potential for tremendous cost savings over leased lines, but because the technology is relatively new, making the changeover requires working with a vendor that has considerable experience in this process," advises Wallner. "From the experience we've gained over the past three years installing frame relay networks for major U.S. banking and retail operations, we're well aware of the many technical pitfalls to watch out for, such as maintaining guaranteed data delivery and network response times, protocol prioritization, ensuring that the carrier has provisioned the service properly and just generally making sure that everything works. You no longer have a simple piece of wire connecting the front-end processor to the terminal controller. It's not a job for the faint of heart."
Bank networks typically also have a large number of small endpoints. As a result, network management and network reliability are principal considerations when making the changeover to client-server systems.
"Network managers want to be able to control their networks from a central location and be able to reconfigure equipment and monitor operations," said Wallner. "The equipment located out in the branches has to be robust enough to withstand the harsh conditions often found at these locations. You don't want six or seven separate pieces of equipment with wires hanging out everywhere just waiting for someone to step on. And you have to provide some form of dial back-up in case the primary network service is interrupted. The minute you lose access to the mainframe, you lose that branch."
Attractive as frame relay is, in some cases other types of service may be more attractive, depending on the location and the types and costs of services available there. Therefore, it is crucial that the network equipment vendor premises equipment that is able to connect to a variety of services. In addition, new technologies are on the horizon, and they should be able to be accommodated without having to scrap the current investment.
"ATM is going to be the next big telecommunications revolution, a single service that can transport legacy data, LAN data, voice, video and just about anything else," explains Wallner. "You want a vendor that can supply future protection for this new technology, but you also want to be able to choose the best available technology today, whether that's X.25 leased lines, frame relay, ISDN or ATM."
Whatever the future holds, one thing is certain. Businesses in Asia will be turning to new information systems and telecommunications technologies to gain competitive advantages in an increasingly global marketplace. And companies like Hypercom will be needed to provide the equipment and expertise to make these systems work.
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