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1、單擊此處編輯母版標(biāo)題樣式,單擊此處編輯母版文本樣式,第二級(jí),第三級(jí),第四級(jí),第五級(jí),2021/2/8,#,CHINA NETCOM BUSINESS PLAN UPDATE,TODAYS OBJECTIVES,Review the overall analysis of regulation, competition, and market development,Discuss the specific implications for CNC strategy,Review the specific draft business models for CNC,How we might at

2、tack the business, carrier, and IDD/DLD markets,What key trade-offs we need to make,What are the key success factors and assumptions?,Discuss the initial economics of these business models, and of CNC overall,Discuss the specific next steps in two key areas:,How to finalize and endorse the overall C

3、NC business model,How to move forward with the refined financials, organization design, and the plan for implementation,CONTENT,Key strategic principles,Regulatory overview,Market overview,Competition overview,Business models,Next steps,KEY CNC STRATEGIC PRINCIPLES,The objective of these principles

4、is to provide further clarity in the development and evaluation of the CNC business model,These will be revisited and refined as the project progresses,Our development of business models will seek to be aligned with the principles,Strategic principles and key assumptions will be considered in the fo

5、llowing aspects,CNC shareholders,Backbone business,Local access business,International gateway business,Regulatory strategy,Competitive strategy,Marketing strategy,CNC SHAREHOLDERS,Principles:,Leverage shareholders concerted vision in creating a new generation IP broadband communication infrastructu

6、re and a profitable, successful company,Leverage shareholders existing backbone assets, local access assets, research capabilities and local government relationships to secure time-to-market and create competitive advantage,Set a model of a new type of “SOE”, as efficient as the best of the FIE/priv

7、ate companies; beat shareholders expectations by delivering high return,Assumptions:,CAS: strong interest in seeing CNC successful and profitable quickly, stands ready for favorable regulatory influence and research support; wants opportunities for networking R&D,MOR and SARFT: extensive backbone an

8、d access assets and ROW,main focus on using MOR for right of way, helping them participate in telecom,will not use SARFT local CATV in the near term, but they are a key user of the backbone,Leverage CATVs city backbone,MOR will continue to favor CNC over Unicom, provided CNC meets the expectation as

9、 a profit center for MOR,Shanghai Municipal Govt: Eager to make Shanghai as Chinas test ground for building high-tech infrastructure (e.g. the integration of telecom, CATV, Internet),in particular, testing HFC to deliver broadband internet,one issue: SPT and ATT JV; how to handle?,BACKBONE BUSINESS,

10、Principles:,Target advanced backbone among 15 key cities in Eastern China; start with 2 cores from shareholders but quickly build own network,Use backbone for a variety of wholesale and retail voice and data services,Maintain the leading edge IP/packet network, both for technological superiority and

11、 to fulfill shareholder mission,Maintain the best cost position, using ROWs, purchasing clout, right technology,Build reserve capacity/conduit to deter others,Assumptions:,The costs of construction and ROW will be the majority of new network costs,virtually all of the network will use MOR or SARFT r

12、ight of way,Network will be IP or packet in nature,Deployment plan will keep costs low, build out quickly, and create good position,lay large number of conduits in one time,later fill, light up, and color fiber strands,lease out conduit/fiber/bandwidth to maximize return (utilization),LOCAL ACCESS B

13、USINESS,Principles:,Be very focused in local deployment, targeting priority business areas only,Emphasize broadband to the customer, using FTTB and LMDS where logical,Seek strong local market share, especially in new data services growth areas,Differentiate from China Telecom by superior services, q

14、uality, responsiveness,Build strong local team to enable fast service response,Emphasize “end to end” network ownership and management,Assumptions:,SH, BJ, GZ, and SZ business districts as targets for the near term,These account for the vast majority of business telecom demand,Need to set specific e

15、stimates for timing and sequence of deployment,Assume that CNC will have access to key city ROW, such as subway systems,Will need specific assumptions about the ease and cost of hooking up buildings,Assume that primary emphasis will be on FTTB, but that LMDS can play an important role, especially in

16、 initial deployment and in secondary cities,Will need specific assumptions about timing of adding secondary cities,INTERNATIONAL GATEWAY BUSINESS,Principles:,CNC will be one of few players with a full international license,Vital to enable CNC to provide end-to-end services, global data services, and

17、 higher margin IDD service,HK gateway link may be strategically important,Assumptions:,HK as one of the key location for international connection,a major traffic destination,a major relay location,International voice remains highly profitable segment in medium term future,Expect high growth together

18、 with steep price drop in international services,Actively plan ahead for joining international sub-oceanic cable consortium,REGULATORY STRATEGY,Principles:,Must actively lobby for favorable regulatory decisions, together with shareholders,provide regulators with international benchmarking for best p

19、ractices,align CNC objectives with fair competition, and public interests,have effective senior management focus on lobbying issues,Be careful about committing investment if regulatory issues too uncertain,Ensure CNC strategy addresses national economic development priorities,Pay careful attention t

20、o managing relations with China Telecom,Expected WTO in 2000 will imply greater opening of the market in the future,Assumptions:,At least a 2-3 year window when CNC can continue to enjoy favorable policy treatment, while also working to straighten out regulatory issues at local level,Many key regula

21、tions remain in grey areas, where CNC can play a role in shaping the policy,Will need to make specific assumptions on a number of regulatory issues, and develop several scenarios,Assume that CT and Unicom are the only full service competitors, but several niche players,WTO will introduce FDI into Ch

22、inas telecom market by 2002, but infrastructure play remain tightly controlled (still limited competition) until 2004/5,may be opportunity for some form of partnership with foreign telcos,COMPETITIVE STRATEGY,Principles:,Focus on the best service quality, supply what customers need, avoid competing

23、on price,Build both “highways” and “tollbooths”,Prepare for rapidly changing industry structure,Be careful in positioning toward China Telecom:,complementary and addressing unmet needs,growing the whole market,The only viable alternative to China Telecom for carriers,The only true “end to end” netwo

24、rk across China, with clear central management,Assumptions:,Technology leads to continual change in industry structure,The decentralized nature and business oriented behaviors of China Telecom enables CNC to partner at the local level,High opportunity for CNC to fill China Telecom product/service ba

25、cklog,Unicom will be a threat to start a “price war”,Various niche players emerge in later years, more threat than (carrier) opportunity for CNC,MARKETING STRATEGY,Principles:,Forlocal access, will target mediumandlarge businesses intargeted buildings,Forbackbone, provide carrier services,Forinterna

26、tional, support otherbusinessesandalsooffer IDD and refiling,etc.,In all areas, emphasizequality,service, end toend, etc.,Geta few key customersearly; proveourselves and thenbuild further,Assumptions:,Carrierandlarge and mediumsized corporationsarethekeyfocus,especially thoseintelecom-intensive indu

27、stries,Assume agrowingdemandforbusinesstelecomservices,willneed both highandlowgrowth scenarios,Needtovalidatethewillingnessofkeycustomers toswitch,andtheir anticipated areasoffuture demand growth,IP phonestill the source ofrevenueinthenearfuture,Dial-upISP(171) may conflict withISPcarrierinterests,

28、 but couldalso serveas strategicinroadforfuture 3G,(1),(1),Notin scopeofthisproject,CONTENT,Keystrategic principles,Regulatory overview,Market overview,Competitionoverview,Businessmodels,Nextsteps,REGULATORY HIGHLIGHTS,Ourkeyassumptions:,MIIregardsCNCs IP-based license as Full Service license,butlac

29、ks clearregulatory documentation. In case of localinterpretation difference, MII is willing toclarifyonbehalf of CNC,e.g.ambiguity on localfixed line (CNCnumber),CNCwillbegrantedInternational Gateway license by1Q2000,CNCIP network protectedbythecurrentfixed/mobileinterconnect regulation,CNCnotrequir

30、edtomeetspecific coverage targets for the nearfuture (2-3years),Themarket willbe opened upgradually,withFDIincreasing:,morevalue addedserviceproviders by 2003,moreI-Phoneproviders by 2001,no new FullServiceproviders till 2004/2005,Accountsettlement specificforI-Phonewillberegulated afterthetrial sta

31、geends. Itwill belower thantheRMB0.14/minrateforbasic telecom networkson apercall basis,Equal accessbyprefix/pre-select in1 year;numberportabilitymaytakeanother1-2years at least,CNCwillhave LMDS spectrum,CNCanticipatesa well-intentioned regulator, with varied degrees ofcontrolover localincumbent pra

32、ctice,Noneofthese assumptions are “guaranteed;”CNCmustfight aggressivelyforthem,KEYREGULATORY ISSUES AND IMPLICATIONS,Servicelicenses,FullServicelicenseinterpretation,Interconnectenforcement,Accountsettlement,Pricingandrebalancing,ROWandaccess,Frequency spectrum allocation and fees,Universal Service

33、 Obligation,Equal Access,Numbering and portability,IGWlicenseimportant tocompetitiveness,sizeofcustomerbase and #of partners,MIInotificationoneachinstance adds delaytoCNClocal interconnection,Timetomarket in each cityaffected, detract CNC resources,Future Interconnecteconomics,Future pricecompetitiv

34、enessvs.other players (e.g.CT),economics; pricecompetitivenessvs.CT,Case-by-caselocal coordinationandnegotiationdelay localaccess build-out; may also be expensiveto obtain,Timetomarket for localaccessbuild-out byLMDS accesssolutions,Subsidizingincumbent for USO affectcost structureof new entrants,Un

35、able to reachCT localline customer,Medium termimplication:on-netvoice not targeted for the near4-5years,3,fullservicecarrierincluding CNC,Morelicenses for value-added service providers(type II),MIIsupportsCNCIPbased license asFull Service License,Butlackofclear documentationmaycause confusionat loca

36、llevel,Based oncooperationofcarriers,Arbitration/settlement process existbuttime consuming,Mildpunishment,lawsuit aslast resort,ForcurrentIP-phonetrial,feesnotsettled,Likely future settlement: LDcarrierpays localPSTNoperator RMB0.14/min,Price floorlikely specifiedforincumbent by regulation,No immine

37、ntinitiative for rebalancing,Legallyfeasibleforpublictelecomcarrier(e.g. CNC),Practicewill have to coordinatewith municipalitiesandinfrastructurebuilding,Controlled by MII inco-ordination withPTAs,Frequency not likelytobe auctioned,USOforincumbent with contributionfromnewentrant,2-3years beforetrans

38、parentandequitable approach,Prefix basedsolution provided by regulationin1 year,Number as national resourcescontrolledcentrally,Feewillbecollected for occupationofnumber resource,2-3years beforeportabilityregulations,Impact on CNC,Highest/,Immediate,High/,Medium Term,Keyissues,Assumption,Implication

39、to CNC,KEYREGULATORY BODIES AND RESPONSIBILITIES,Other depts,e.gSETC,Variouslawmaking bodies,NPC,State Council,Dept. ofRadio FrequencyAdministration,TelecomAdministration Bureau,Other depts.,Provincial Telecom Administration Bureau,China,Telecom,National,Company,Municipal LevelTelecomAdministration

40、Bureau,TelecomOperating Entities:,e.g.CTfixed line,Provincial government,MII,Administration,Operations,National,Provincial,Municipality,Drafting, passing oftelecomlaws and statues, e.g.China Telecoms Law,International, NationalandInter-Provincialscopelicensegranting,Highestlevel ofregulatoryenforcem

41、ent/arbitration,International Gateway administration,Nationallevel telecom resourcescontrol(e.g. numbers,frequency spectrums),Provincial leveltelecomadministration,Provincial levellicensegranting,Provincial levelregulatoryenforcementfocus oncoordination,In the process of splittingoperation and admin

42、istration,A numberofMunicipal LevelTABsareyettobe created,Limitedenforcementpower,Operation and administrationnotseparate,Settle interconnectandother disputes,Whennotsettledbyprovincial &municipal coordination,propagate up toprovinciallevel and MII,PTAs,PTB,Source:PyramidResearch; BCG analysis,KEYLI

43、CENSEASPECTSANDIMPLICATIONTO CNC,FullServiceandInternational,Value addedservices,ownership,Geographic scope,Duration,licensefees,Performancetargets,Technology,KeyAspects,Number of licenses tightly controlled: at most 3in2003, includingCNC,CNCfullservicelicenseexpected 1Q2000,International licenses t

44、ightly controlled: at most 4in2003, includingCNC,CNCIGWlicenseexpectedbyEOY1999,Morethan 4value-addedservicelicensespossible,Control-share foreign ownershipnotallowedin basictelecomandpublicdatatransport services,Up to 50% ofFDIinvalue addedserviceproviders,Intra provincialservices undercontrolof pr

45、ovincial TABs,No limit,Regulation willrequirelicensefees,Regulation willspecifyclear service buildout targets,Regulationswillbetechnology neutral,Butwillgive preferencetonewtechnology,Assumptions,Currentregulation onlycover interconnection between 7types oflicensed basictelecomcarriers(e.g. NLD,loca

46、l, wireless,international),WithIP-phone license, CNC needstonegotiate with CT localbranchescity bycity,CNCIP basedbandwidth wholesaleservicenotcoveredinpublished regulation, adds delayinlocal negotiation,Number of potentialcustomers for carrierscarrierservices,Speed ofestablishment and coverageof ta

47、rgetedcustomerforcarrier,s carrier service,Financial strength of new entrant customers,Intra-provincialLMDS service require application ineach targeted area,Competitorsabilitytolockoutkeyserviceareas,Limiteddegree of impactoneconomics,Addsplanning and localcoordinationpressure toCNClocal access solu

48、tions,CNCIP/DWDMbackbonereceivepositive influence,Implicationto CNC,NATURE,SCOPE AND NUMBEROFLICENSES,Source:BCGanalysis,VSATtransport service,International,NLD,On-net voice,IP backbone,IP-phone(includinginternational),Wireless,Paging,VAS,(e.g.ISP,VPN),Servicenature,Owning satellite,Maintainsatellit

49、e channel,VSATbase stations,Ownership &operation ofinternational gateways,Interconnectwith foreign carriers,LeasingIDDchannelsandlines,Building& operatingofnationalswitches and trunklines,MaintainingPOPis nationwide,Providebasic voice& data nationaltransport,Ownership &operation oflocal access netwo

50、rks,Ownership oflast mile,Providebasic localvoice/data transportandaccessto NLD/IDD,Buildingandleasingofbroadband IPbased backbonetransport capacity,ProvideIP basedvoice service,No requirement in infrastructurebuilding,Including internationalIP basedLD,Building& operationoflocal BSC network,Providew

51、irelessvoice services,Interconnectwith national transportcarrier,Building& operationofLocal PagingNetworks,Interconnectwith national transportcarrier,Withorwithoutbuilding& operationoflocal network,Offer web-hosting, VPN,callcenterservices, etc.,Scope,Nationalcoverage,Cross internationalpoint ofpres

52、ence,Servicenationaltransport carriers,Cross provincialboarders,Haveaccessto internationalPOconnects,Servicelocal PSTNs,Covers localserviceareas,(e.g. citiesmunicipalities),Cross provincialboarders,Access to internationalpoints of connect,Covers 12-25trail cities,Access to internationalpoints of con

53、nect,Covers localserviceareas:cities municipalities,Majorityinlocal scope,4 national coverage,Primarily inlocal scope,No.of future,licenses,Remain 3forthenext 6years (CT, Unicom, and CNC),3,In the next6 years(CT, Unicom, CNC),3,In the next6 years(CT,Unicom,CNC),45,in 1-2 years,5-6,possibleinthenext1

54、2years,Multiplelicenses,possibleinthenext4-5years,Numerousnational scopelicenses,possibleinthenext2 years,Numerousmore licenses (withFDI) possible in the next 2years,Licensecontrolled by,MII,MII,MII,MII,MII,MII,MII,Primarily byprovincialgovernment,Provincial government,No.ofcurrentlicenses,1,3,2,2,3

55、,(,CT,Unicom,CNC),4,Trail stage,2,2,nationalscope;,multiplelocal,Unlimited,Basic telecom services,Remain 1forthenext 6years,INTERCONNECTIONISSUES AND IMPLICATION TO CNC,KeyIssues,Assumptions,Implicationto CNC,Obligation clearly specifiedbyregulation for interconnection between 7types of telecom netw

56、ork licensed operators,CNCs IPbroadband network receive equivalent protection,MIIsetstechnical specificationofinterconnectsolutions,Clear provisionon costandownership oftechnical asset,Fromtime ofwrittenrequest, interconnect completewithin:,2 monthsifonlyCOdatamodification isinvolved,4 monthsifcapac

57、ityexpansion needed,7 monthsifnewPOI,(1),needed,Timeframe not strictlyadheredto,varies from4-6months,Disputesettledprimaryviacoordination,Arbitrated by MII and localgovernment,Violation fine is very low (30,000 RMB max per offense),Possibletoclaim for compensation due to non-cooperation ofincumbents

58、(thelast resort),RMB0.07/minforPSTNaccessof eachendof callpath,Settlement for IP basedwillfollowscheme whentrial finishes,Incumbents provide cabinet roomandconduitaccess,In casetheresno excess conduit capacity,incumbent has toprovidefeasible expansionplan,Local practice willvary,Incumbent charges re

59、ntalfeeforconduitaccess,Incumbent charges for leasedline neededforinterconnect,Infrastructure and network investment related tointerconnect are responsibilityofbothparties, separatedfromPOI,Incumbent obligationtointerconnect,Interconnecttimeframe,Enforcement,Accountsettlement,Access and collocation,

60、Chargesandfees,If CNC network is not covered byregulation,local negotiation willleave loophole for incumbentandadddelay,Incumbent localpracticevaries,addcomplexityanddelay toproject,Incumbent can take advantageoftimeframe loopholes,adddelaysat locallevel,Centralcontroloverlocal TAB,(2),varies due to

61、 varieddegreeof separation, leadto differentdegreeof justandresolution timeframe,Upward propagation to MII time consuming, addingdelaysto resolution,Future economics: upto30%of revenue paidto PSTNbased on0.30/min IPrate,Incumbent can take advantageofcapacityconstraintstodelay interconnect at localle

62、vel,Someincumbent localbranches require CNC topayforinvestment,ownership goesto incumbent, adds costto CNC service,Note1:Point OfInterconnect,2: Telecommunications AdministrationBureau,CLEAR GUIDANCE FOR INTERCONNECTALREADYPUBLISHED, LOCALPTAOBLIGEDTOFOLLOW,Local PTA can beresistant,alsoitsorganizat

63、ion not suitable for quickexecution,Thepolicy decisionrequesting localPTAs tocorporate withinterconnectiontricklesfrom top down:thecentral,provincial PTA,cityPTA,CityPTAbeforeimplementation willgenerally ask for lead timeforverificationwith upperlevels.E.g.insomecases new entrant has to wait for ext

64、endedtimeperiodforthisprocess,Under the MarketDepartments coordination,there are upto18 independent departments within each cityPTAto cooperatefortheexecution and resourceplanningofinterconnect,Eachofthese departmentcanadddelay to the process, leadtimes add up,In caseof insufficientresource, the req

65、uestingandapproval process for expansion/ upgrade iseven longer,Local PTA can easilyuseresource constraintasan excuse for delayin interconnection,Butinterconnectionis feasible,CNChasso far beenabletoreach interconnect contractat provincial levels,MostPTAs inCNC,s target citiesdisplayed timely cooper

66、ation,In ordertoensure quickexecution,CNCshould,Understand and incorporate intoplanningprocessthestatusof incumbentnetworkresources,Givelead time in planning and communicatingintention to interconnect withtheincumbent,Build strongcommunication channel withalllevels of PTAs,Co-ordinateforgoodtimingacross all levels;