Thus, the document arms the company with a key government sanction in one of the world's hottest telecom markets. The license also may make Clarent more attractive than archrival Cisco in bidding on large telecom utility contracts, at least for now. Many telecom vendors required to pass the test already are doing business in China, and can continue to do so at least temporarily. Cisco is pursuing the same approval. Mass. China is a huge market that is aggressively adopting VOIP equipment, which allows voice calls to be transmitted over the Internet.
China generates more VOIP traffic than any other country based on call volume.
Clarent controls 37 percent of the Asia-Pacific market for VOIP equipment, while Cisco holds 34 percent, according to market analyst Synergy Research Group in Phoenix. However, Clarent faces new challenges due to the economic slowdown and its depressed stock price. Although it faces the same issues, Cisco is better positioned during the slowdown because it has greater cash resources and larger product lines. Many analysts predicted a few years ago that the world's telecom operators would aggressively adopt VOIP systems. However, that adoption has occurred more slowly than expected, with China being the largest exception.