资源描述
Main point,Bullet point,dash point,period point,Quote reference,MASTER SLIDE TITLE,-,143,-,China Netcom - The Boston Consulting Group,-Confidential-Destroy by Shredding-,45034-05-,Interim-14Dec99-TZD-gx-SHI,CHINA NETCOM BUSINESS PLAN UPDATE,December 14, 1999 - Beijing,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 attack 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 CNC 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 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 following 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 infrastructure 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/private 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 and 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 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,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 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 right 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 BUSINESS,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, quality, 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 estimates 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 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 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 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 practices,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 to 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 regulations 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 Chinas 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 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” network 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 backlog,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:,For local access, will target medium and large businesses in targeted buildings,For backbone, provide carrier services,For international, support other businesses and also offer IDD and refiling, etc.,In all areas, emphasize quality, service, end to end, etc.,Get a few key customers early; prove ourselves and then build further,Assumptions:,Carrier and large and medium sized corporations are the key focus,especially those in telecom-intensive industries,Assume a growing demand for business telecom services,will need both high and low growth scenarios,Need to validate the willingness of key customers to switch, and their anticipated areas of future demand growth,IP phone still the source of revenue in the near future,Dial-up ISP (171) may conflict with ISP carrier interests, but could also serve as strategic inroad for future 3G,(1),(1),Not in scope of this project,CONTENT,Key strategic principles,Regulatory overview,Market overview,Competition overview,Business models,Next steps,REGULATORY HIGHLIGHTS,Our key assumptions:,MII regards CNCs IP-based license as Full Service license, but lacks clear regulatory documentation. In case of local interpretation difference, MII is willing to clarify on behalf of CNC,e.g. ambiguity on local fixed line (CNC number),CNC will be granted International Gateway license by 1Q 2000,CNC IP network protected by the current fixed/mobile interconnect regulation,CNC not required to meet specific coverage targets for the near future (2-3 years),The market will be opened up gradually, with FDI increasing:,more value added service providers by 2003,more I-Phone providers by 2001,no new Full Service providers till 2004/2005,Account settlement specific for I-Phone will be regulated after the trial stage ends. It will be lower than the RMB0.14/min rate for basic telecom networks on a per call basis,Equal access by prefix/pre-select in 1 year; number portability may take another 1-2 years at least,CNC will have LMDS spectrum,CNC anticipates a well-intentioned regulator, with varied degrees of control over local incumbent practice,None of these assumptions are “guaranteed;” CNC must fight aggressively for them,KEY REGULATORY ISSUES AND IMPLICATIONS,Service licenses,Full Service license interpretation,Interconnect enforcement,Account settlement,Pricing and rebalancing,ROW and access,Frequency spectrum allocation and fees,Universal Service Obligation,Equal Access,Numbering and portability,IGW license important to competitiveness,size of customer base and # of partners,MII notification on each instance adds delay to CNC local interconnection,Time to market in each city affected, detract CNC resources,Future Interconnect economics,Future price competitiveness vs. other players (e.g. CT),economics; price competitiveness vs. CT,Case-by-case local coordination and negotiation delay local access build-out; may also be expensive to obtain,Time to market for local access build-out by LMDS access solutions,Subsidizing incumbent for USO affect cost structure of new entrants,Unable to reach CT local line customer,Medium term implication: on-net voice not targeted for the near 4-5 years,3,full service carrier including CNC,More licenses for value-added service providers (type II),MII supports CNC IP based license as Full Service License,But lack of clear documentation may cause confusion at local level,Based on cooperation of carriers,Arbitration/settlement process exist but time consuming,Mild punishment, law suit as last resort,For current IP-phone trial, fees not settled,Likely future settlement: LD carrier pays local PSTN operator RMB0.14/min,Price floor likely specified for incumbent by regulation,No imminent initiative for rebalancing,Legally feasible for public telecom carrier (e.g. CNC),Practice will have to coordinate with municipalities and infrastructure building,Controlled by MII in co-ordination with PTAs,Frequency not likely to be auctioned,USO for incumbent with contribution from new entrant,2-3 years before transparent and equitable approach,Prefix based solution provided by regulation in 1 year,Number as national resources controlled centrally,Fee will be collected for occupation of number resource,2-3 years before portability regulations,Impact on CNC,Highest/,Immediate,High/,Medium Term,Key issues,Assumption,Implication to CNC,KEY REGULATORY BODIES AND RESPONSIBILITIES,Other depts, e.g SETC,Various law making bodies,NPC,State Council,Dept. of Radio Frequency Administration,Telecom Administration Bureau,Other depts.,Provincial Telecom Administration Bureau,China,Telecom,National,Company,Municipal Level Telecom Administration Bureau,Telecom Operating Entities:,e.g. CT fixed line,Provincial government,MII,Administration,Operations,National,Provincial,Municipality,Drafting, passing of telecom laws and statues, e.g. China,Telecoms,Law,International, National and Inter-Provincial scope license granting,Highest level of regulatory enforcement/ arbitration,International Gateway administration,National level telecom resources control (e.g. numbers, frequency spectrums),Provincial level telecom administration,Provincial level license granting,Provincial level regulatory enforcement focus on coordination,In the process of splitting operation and administration,A number of Municipal Level,TABs,are yet to be created,Limited enforcement power,Operation and administration not separate,Settle interconnect and other disputes,When not settled by provincial & municipal coordination, propagate up to provincial level and MII,PTAs,PTB,Source: Pyramid Research; BCG analysis,KEY LICENSE ASPECTS AND IMPLICATION TO CNC,Full Service and International,Value added services,ownership,Geographic scope,Duration,license fees,Performance targets,Technology,Key Aspects,Number of licenses tightly controlled: at most 3 in 2003, including CNC,CNC full service license expected 1Q 2000,International licenses tightly controlled: at most 4 in 2003, including CNC,CNC IGW license expected by EOY1999,More than 4 value-added service licenses possible,Control-share foreign ownership not allowed in basic telecom and public data transport services,Up to 50% of FDI in value added service providers,Intra provincial services under control of provincial,TABs,No limit,Regulation will require license fees,Regulation will specify clear service,buildout,targets,Regulations will be technology neutral,But will give preference to new technology,Assumptions,Current regulation only cover interconnection between 7 types of licensed basic telecom carriers (e.g. NLD, local, wireless, international),With IP-phone license, CNC needs to negotiate with CT local branches city by city,CNC IP based bandwidth wholesale service not covered in published regulation, adds delay in local negotiation,Number of potential customers for carriers carrier services,Speed of establishment and coverage of targeted customer for carriers carrier service,Financial strength of new entrant customers,Intra-provincial LMDS service require application in each targeted area,Competitors ability to lockout key service areas,Limited degree of impact on economics,Adds planning and local coordination pressure to CNC local access solutions,CNC IP/DWDM backbone receive positive influence,Implication to CNC,NATURE, SCOPE AND NUMBER OF LICENSES,Source: BCG analysis,VSAT transport service,International,NLD,On-net voice,IP backbone,IP-phone (including international),Wireless,Paging,VAS,(e.g.ISP,VPN),Service nature,Owning satellite,Maintain satellite channel,VSAT base stations,Ownership & operation of international gateways,Interconnect with foreign carriers,Leasing IDD channels and lines,Building & operating of national switches and trunk lines,Maintaining POP is nationwide,Provide basic voice & data national transport,Ownership & operation of local access networks,Ownership of last mile,Provide basic local voice/data transport and access to NLD/IDD,Building and leasing of broadband IP based backbone transport capacity,Provide IP based voice service,No requirement in infrastructure building,Including international IP based LD,Building & operation of local BSC network,Provide wireless voice services,Interconnect with national transport carrier,Building & operation of Local Paging Networks,Interconnect with national transport carrier,With or without building & operation of local network,Offer web-hosting, VPN, call center services, etc.,Scope,National coverage,Cross international point of presence,Service national transport carriers,Cross provincial boarders,Have access to international PO connects,Service local,PSTNs,Covers local service areas, (e.g. cities municipalities),Cross provincial boarders,Access to international points of connect,Covers 12-25 trail cities,Access to international points of connect,Covers local service areas: cities municipalities,Majority in local scope,4 national coverage,Primarily in local scope,No. of future,licenses,Remain 3 for the next 6 years (CT, Unicom, and CNC),3,In the next 6 years (CT, Unicom, CNC),3,In the next 6 years (CT, Unicom, CNC),45,in 1-2 years,5-6,possible in the next 12 years,Multiple licenses,possible in the next 4-5 years,Numerous national scope licenses,possible in the next 2 years,Numerous more licenses (with FDI) possible in the next 2 years,License controlled by,MII,MII,MII,MII,MII,MII,MII,Primarily by provincial government,Provincial government,No. of current licenses,1,3,2,2,3,(,CT, Unicom,CNC),4,Trail stage,2,2,national scope;,multiple local,Unlimited,Basic telecom services,Remain 1 for the next 6 years,INTERCONNECTION ISSUES AND IMPLICATION TO CNC,Key Issues,Assumptions,Implication to CNC,Obligation clearly specified by regulation for interconnection between 7 types of telecom network licensed operators,CNCs IP broadband network receive equivalent protection,MII sets technical specification of interconnect solutions,Clear provision on cost and ownership of technical asset,From time of written request, interconnect complete within:,2 months if only CO data modification is involved,4 months if capacity expansion needed,7 months if new POI,(1),needed,Time frame not strictly adhered to, varies from 4-6 months,Dispute settled primary via coordination,Arbitrated by MII and local government,Violation fine is very low (30,000 RMB max per offense),Possible to claim for compensation due to non-cooperation of incumbents (the last resort),RMB0.07/min for PSTN access of each end of call path,Settlement for IP based will follow scheme when trial finishes,Incumbents provide cabinet room and conduit access,In case theres no excess conduit capacity, incumbent has to provide feasible expansion plan,Local practice will vary,Incumbent charges rental fee for conduit access,Incumbent charges for leased line needed for interconnect,Infrastructure and network investment related to interconnect are responsibility of both parties, separated from POI,Incumbent obligation to interconnect,Interconnect timeframe,Enforcement,Account settlement,Access and collocation,Charges and fees,If CNC network is not covered by regulation, local negotiation will leave loophole for incumbent and add delay,Incumbent local practice varies, add complexity and delay to project,Incumbent can take advantage of timeframe loopholes, add delays at local level,Central control over local TAB,(2),varies due to varied degree of separation, lead to different degree of just and resolution timeframe,Upward propagation to MII time consuming, adding delays to resolution,Future economics: up to 30% of revenue paid to PSTN based on 0.30/min IP rate,Incumbent can take advantage of capacity constraints to delay interconnect at local level,Some incumbent local branches require CNC to pay for investment, ownership goes to incumbent, adds cost to CNC service,Note 1: Point Of Interconnect,2: Telecommunications Administration Bureau,CLEAR GUIDANCE FOR INTERCONNECT ALREADY PUBLISHED, LOCAL PTA OBLIGED TO FOLLOW,Local PTA can be re
展开阅读全文