Chinese wireline operator Shanghai Telecom Co., Ltd. and Shanghai Media Group (SMG) will be collaborating with Siemens Communications in connection with the commercial introduction of its Home Entertainment solution, the two companies announced today at a press conference in Shanghai (China). The solution has been in successful test operation since mid August. By the end of February 2006, 5,000 households in the Shanghai borough of Pudong will be able to enjoy digital television over the Internet (IPTV). Siemens Home and Office Communication Devices will deliver the Gigaset M358 IP set top box, that has been adapted for the Chinese market.

Home Entertainment offers network operators enormous growth opportunities, with which they can compensate for their declining income from conventional telephony and significantly boost their average revenue per user (ARPU). Market research institute In-Stab predicts that IP TV usage will soar, especially in China, in connection with the 2008 Olympic Games in Beijing. More and more attractive applications and an increasingly mature technology are expected to push the number of subscribers to 4.5 million and generate set-top box income of some US$231 million. China's 360 million TV viewers and around 25 million broadband users represent gigantic Home Entertainment subscriber potential.

With its demonstrated expertise in systems integration, Siemens offers network operators solutions that range from switches to broadband access right through to set-top boxes. Moreover, the open middleware architecture, the "brain" behind the solution, affords fast and simple installation and control of the Siemens Surpass Home Entertainment solution. Just last March, Siemens acquired the U.S.-based Myrio company, the market leader in the field of middleware. This means that Siemens can offer one-stop shopping for wall-to-wall solutions, as well as what is currently the most complete and highly developed Home Entertainment product available anywhere in the marketplace.

Siemens will initially be supplying and installing a turnkey wall-to-wall solution for 5,000 subscribers at Shanghai Telecom: From video streamer right through to service and the set-top box, which merely needs to be connected to a DSL telephone line and the television set. In addition to IPTV, the IP network will also offer the network operator's subscribers an entire package of additional new applications that all run on the television set. They include fast Internet access, a digital videotheque (Video on Demand), digital recording of TV programs (PVR, or Personal Video Recording) and videotelephony, made possible by means of a webcam on the TV set. In addition, interactive services are also possible, like dynamic wagering during live sport telecasts, for example, which is highly popular in China.

Andreas Müller-Schubert, President Fixed Networks Solutions at Siemens Communications: "It was especially important for us that all applications be easy to operate and that they run on the television set as the interface. We are designing the entire menu system in accordance with Shanghai Telecom's wishes and will be installing a turnkey wall-to-wall solution that contains both entertainment and communication offerings, such as online gaming and fast Internet access."