China Unicom Selects Cisco Systems for Major Expansion of World's Largest Voice over Internet -- VoIP -- Network.

Business Editors/High-Tech Writers

BEIJING--(BUSINESS WIRE)--July 30, 2001

China United Telecommunications Corporation (China Unicom: NYSE:CHU; SEHK:762), China's second largest telecommunications carrier, has chosen Cisco Systems (Nasdaq:CSCO) for the expansion of its Voice over Internet Protocol (VoIP) communications network. The expansion program will extend the China Unicom network to more than 321 cities, across 30 provinces, in the People's Republic of China. The value of the project is approximately USD $40 Million and begins in July 2001.

China Unicom's VoIP network is the largest in the world, measured by size, capacity, traffic, and number of cities it reaches. The existing production network, using Cisco equipment and the H.323 standard for call control, is experiencing dramatic growth in traffic. The national network will include backbone core routers and aggregation routers, including the Cisco 12000 series, VoIP gateways (Cisco AS5800s and AS5300s), H.323 gatekeepers (Cisco 7200), and Cisco Catalyst series switches for cross-connect. In addition, Cisco and several of its Service Provider Solutions Ecosystem partners will provide pre-paid and post-paid voice applications for the packet-based network. This build-out enables China Unicom to take advantage of rapid growth in voice services for calling cards, one stage and two-stage dialing, and enterprise Virtual Private Networking (VPNs).

The expansion project reflects the success of both China Unicom's VoIP business strategy and the reliability, quality and stability of Cisco's VoIP solutions. Services offered on the China Unicom network compete directly with traditional telecommunication services but offer far greater long-term investment value.

According to telecommunications research firm Probe Research, China's VoIP services are expected to account for 15 - 20 percent of all packet-based telephony traffic carried worldwide by the year 2005. This equates to more than 60 billion voice minutes of an estimated 570 billion voice minutes carried annually over packet networks. Currently around 7.7 billion minutes of voice traffic are transmitted across packet networks each year.

"China Unicom has chosen Cisco as our strategic vendor for our national VoIP network. Working together, China Unicom and Cisco are providing easier and cheaper access to residential and corporate customers for both domestic and international usage," said Mr. Yunjie Liu, General Engineer and Vice President of China Unicom. "Our carrier class VoIP network has a proven track record of reliability and is highly scalable. The network adapts very well to the rapid growth we have seen in our VoIP business."

Mr. Gordon Astles, president, Cisco Systems, Asia Pacific said, "Cisco Systems is very pleased to be expanding our relationship with China Unicom. We are honored to be helping China Unicom build out the largest VoIP network in the world today. We believe that the combination of China Unicom's VoIP strategy with Cisco's leading edge networking technologies and service offerings will be a winning solution in the market."

Cisco's open, end-to-end solutions and multiservice platform make the China Unicom VoIP network an ideal opportunity for voice application developers. Third parties can easily use the "plug and play" nature of the network to develop and deploy their own feature servers, delivering a variety of value-added services over a single packet network. The size, scale, and success of China Unicom's VoIP network signifies that VoIP technologies are mature for commercial deployment, and that China is a leader in this infrastructure evolution.

About China Unicom

Founded in 1994, China Unicom has been commissioned by the State Council to provide basic and value-added services for telco networks, such as radio, mobile and engineering services. China Unicom is also responsible for upgrading the existing private telco networks of the Ministry of Railways and Ministry of Electric Power to provide long-distance phone services to the general public and local phone services to remote areas with limited public phone networks.

About Cisco Systems

Cisco Systems, Inc. (Nasdaq:CSCO) is the worldwide leader in networking for the Internet. News and information are available at www.cisco.com.

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