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,TODAYSOBJECTIVES,Reviewtheoverallanalysisofregulation,competition,andmarketdevelopment,DiscussthespecificimplicationsforCNCstrategy,ReviewthespecificdraftbusinessmodelsforCNC,Howwemightattackthebusiness,carrier,andIDD/DLDmarkets,Whatkeytrade-offsweneedtomake,Whatarethekeysuccessfactorsandassumptions?,Discusstheinitialeconomicsofthesebusinessmodels,andofCNCoverall,Discussthespecificnextstepsintwokeyareas:,HowtofinalizeandendorsetheoverallCNCbusinessmodel,Howtomoveforwardwiththerefinedfinancials,organizationdesign,andtheplanforimplementation,CONTENT,Keystrategicprinciples,Regulatoryoverview,Marketoverview,Competitionoverview,Businessmodels,Nextsteps,KEYCNCSTRATEGICPRINCIPLES,TheobjectiveoftheseprinciplesistoprovidefurtherclarityinthedevelopmentandevaluationoftheCNCbusinessmodel,Thesewillberevisitedandrefinedastheprojectprogresses,Ourdevelopmentofbusinessmodelswillseektobealignedwiththeprinciples,Strategicprinciplesandkeyassumptionswillbeconsideredinthefollowingaspects,CNCshareholders,Backbonebusiness,Localaccessbusiness,Internationalgatewaybusiness,Regulatorystrategy,Competitivestrategy,Marketingstrategy,CNCSHAREHOLDERS,Principles:,Leverageshareholders,concertedvisionincreatinganewgenerationIPbroadbandcommunicationinfrastructureandaprofitable,successfulcompany,Leverageshareholders,existingbackboneassets,localaccessassets,researchcapabilitiesandlocalgovernmentrelationshipstosecuretime-to-marketandcreatecompetitiveadvantage,Setamodelofanewtypeof,“,“SOE,”,”,asefficientasthebestoftheFIE/privatecompanies;beatshareholders,expectationsbydeliveringhighreturn,Assumptions:,CAS:stronginterestinseeingCNCsuccessfulandprofitablequickly,standsreadyforfavorableregulatoryinfluenceandresearchsupport;wantsopportunitiesfornetworkingR&D,MORandSARFT:extensivebackboneandaccessassetsandROW,mainfocusonusingMORforrightofway,helpingthemparticipateintelecom,willnotuseSARFTlocalCATVinthenearterm,buttheyareakeyuserofthebackbone,LeverageCATV,scitybackbone,MORwillcontinuetofavorCNCoverUnicom,providedCNCmeetstheexpectationasaprofitcenterforMOR,ShanghaiMunicipalGovt:Eagertomake Shanghai as Chinastestgroundfor building high-techinfrastructure(e.g.theintegrationoftelecom,CATV,Internet),inparticular,testing HFCtodeliver broadbandinternet,oneissue: SPTandATT JV;howtohandle?,BACKBONEBUSINESS,Principles:,Targetadvancedbackboneamong15key citiesinEastern China;startwith 2coresfromshareholdersbut quicklybuildown network,Usebackbonefor avarietyofwholesaleand retailvoiceanddataservices,Maintaintheleadingedge IP/packetnetwork,both fortechnological superiority andtofulfill shareholder mission,Maintainthebestcost position,usingROWs,purchasing clout,righttechnology,Buildreserve capacity/conduittodeterothers,Assumptions:,Thecostsofconstruction andROWwillbethemajorityofnew networkcosts,virtuallyall of thenetwork willuse MORorSARFTrightofway,Network willbeIPorpacket in nature,Deployment planwillkeep costs low,buildout quickly, andcreategoodposition,laylargenumber of conduits in onetime,laterfill,lightup,and color fiber strands,leaseoutconduit/fiber/bandwidthtomaximizereturn (utilization),LOCALACCESSBUSINESS,Principles:,Bevery focusedinlocaldeployment,targeting priority business areas only,Emphasizebroadband to thecustomer,usingFTTBandLMDSwherelogical,Seek stronglocalmarketshare, especiallyinnew dataservicesgrowth areas,Differentiate fromChinaTelecombysuperiorservices,quality,responsiveness,Buildstronglocalteamtoenablefastservice response,Emphasize,“,“endtoend,”,” networkownership andmanagement,Assumptions:,SH,BJ, GZ,andSZbusinessdistricts as targetsfor thenear term,Theseaccount forthevastmajorityofbusinesstelecom demand,Need to setspecificestimatesfor timingandsequenceofdeployment,AssumethatCNCwillhave accesstokeycityROW, suchassubway systems,Will needspecificassumptionsaboutthe easeand costofhookingupbuildings,Assumethatprimary emphasis willbeonFTTB,but thatLMDScanplayanimportantrole,especiallyininitial deploymentand in secondarycities,Will needspecificassumptionsabouttiming of addingsecondarycities,INTERNATIONAL GATEWAYBUSINESS,Principles:,CNCwillbeoneoffew playerswitha fullinternationallicense,VitaltoenableCNC to provideend-to-endservices,global dataservices, andhighermargin IDDservice,HKgateway linkmay be strategicallyimportant,Assumptions:,HKasoneofthe keylocationforinternationalconnection,a major traffic destination,a major relay location,International voice remains highly profitable segmentin medium term future,Expecthighgrowthtogether with steep price drop in internationalservices,Actively plan ahead forjoining international sub-oceanic cable consortium,REGULATORY STRATEGY,Principles:,Must actively lobby forfavorable regulatory decisions, together with shareholders,provide regulatorswithinternational benchmarking forbestpractices,alignCNC objectives with faircompetition, andpublicinterests,have effective senior management focus onlobbying issues,Be careful about committing investment ifregulatory issuestoo uncertain,EnsureCNC strategy addressesnational economicdevelopmentpriorities,Pay carefulattention tomanaging relations withChinaTelecom,Expected WTOin 2000 will imply greater openingof themarket in the future,Assumptions:,At least a 2-3 year window when CNCcan continueto enjoy favorable policy treatment, while alsoworking tostraighten out regulatory issues atlocallevel,Many key regulations remain ingreyareas,whereCNC can play a role inshaping thepolicy,Will need tomakespecific assumptions ona number ofregulatory issues,and developseveral scenarios,AssumethatCT andUnicom arethe only full service competitors, but several niche players,WTO will introduceFDI into Chinastelecom market by2002,but infrastructureplayremaintightly controlled (still limited competition)until2004/5,may beopportunityfor some form ofpartnershipwith foreigntelcos,COMPETITIVESTRATEGY,Principles:,Focuson thebestservice quality, supplywhat customers need, avoid competing on price,Buildboth “highways” and “tollbooths”,Prepare forrapidly changing industry structure,Be careful in positioning toward China Telecom:,complementary andaddressing unmet needs,growing thewholemarket,The only viable alternative toChinaTelecom forcarriers,The only true “endto end” network acrossChina,withclearcentral management,Assumptions:,Technology leads to continualchangein industrystructure,The decentralizednatureand business oriented behaviors ofChinaTelecom enables CNC to partnerat the local level,High opportunity for CNCto fill China Telecom product/service backlog,Unicomwillbe a threatto start a “pricewar”,Various niche players emerge in later years, more threat than (carrier)opportunityfor CNC,MARKETING STRATEGY,Principles:,For local access,will targetmediumand large businesses intargeted buildings,For backbone, provide carrierservices,For international,support other businesses andalso offer IDD andrefiling, etc.,In allareas, emphasizequality, service,end toend,etc.,Get afew key customersearly;proveourselves and then build further,Assumptions:,Carrier andlargeand medium sized corporationsare the keyfocus,especially those in telecom-intensive industries,Assumea growing demandfor businesstelecom services,will need both high andlow growth scenarios,Need to validate the willingness ofkey customers to switch,and their anticipated areas of future demand growth,IP phone still thesource of revenuein the nearfuture,Dial-up ISP(171)may conflictwithISP carrierinterests, but could also serve as strategic inroad for future 3G,(1),(1),Not inscopeof this project,CONTENT,Key strategic principles,Regulatory overview,Marketoverview,Competitionoverview,Business models,Next steps,REGULATORY HIGHLIGHTS,Our key assumptions:,MII regardsCNCsIP-based license as FullService license,but lacks clear regulatory documentation.In case oflocalinterpretation difference, MIIis willingto clarify on behalf ofCNC,e.g. ambiguity onlocalfixedline (CNC number),CNC will begranted International Gatewaylicense by 1Q 2000,CNC IPnetwork protectedby the current fixed/mobile interconnectregulation,CNC not required to meetspecific coveragetargets forthe near future (2-3 years),The market will beopened up gradually, with FDIincreasing:,more value added serviceproviders by 2003,more I-Phoneproviders by 2001,no newFullService providerstill 2004/2005,Account settlementspecific for I-Phone will beregulated after the trial stage ends. It will belowerthanthe RMB0.14/min rate forbasictelecom networkson a per call basis,Equalaccessby prefix/pre-select in1 year; number portability may takeanother 1-2yearsat least,CNC will have LMDSspectrum,CNC anticipates awell-intentioned regulator, with varied degreesof control over local incumbent practice,None of these assumptions are,“,“guaranteed;,”,” CNCmust fight aggressivelyfor them,KEY REGULATORYISSUES ANDIMPLICATIONS,Service licenses,FullService licenseinterpretation,Interconnect enforcement,Account settlement,Pricing and rebalancing,ROW and access,Frequencyspectrum allocationand fees,UniversalService Obligation,EqualAccess,Numberingand portability,IGW license important tocompetitiveness,sizeof customer base and# ofpartners,MII notification oneachinstance adds delayto CNC local interconnection,Timeto marketin each city affected, detractCNCresources,Future Interconnecteconomics,Future price competitiveness vs. other players (e.g. CT),economics;price competitiveness vs. CT,Case-by-case local coordination andnegotiation delay localaccess build-out; may also beexpensiveto obtain,Timeto marketfor localaccess build-out byLMDSaccess solutions,Subsidizing incumbent forUSOaffect cost structure ofnew entrants,Unable toreachCT locallinecustomer,Medium term implication:on-net voice not targetedforthe near 4-5 years,3,fullservice carrierincludingCNC,Morelicenses for value-addedservice providers (type II),MII supports CNC IPbasedlicense as Full ServiceLicense,But lack of clear documentation maycause confusion atlocallevel,Basedon cooperationof carriers,Arbitration/settlement processexist buttimeconsuming,Mildpunishment, lawsuitas last resort,For current IP-phonetrial, fees not settled,Likely future settlement:LD carrier pays local PSTN operator RMB0.14/min,Pricefloor likely specified for incumbent byregulation,No imminent initiative for rebalancing,Legally feasible forpublic telecomcarrier (e.g.CNC),Practice will have to coordinate with municipalities and infrastructure building,Controlledby MII inco-ordinationwithPTAs,Frequencynot likelyto be auctioned,USO for incumbent with contributionfromnewentrant,2-3 yearsbefore transparent and equitable approach,Prefix based solution providedby regulationin 1year,Number asnational resources controlledcentrally,Fee will be collected foroccupation ofnumber resource,2-3 yearsbefore portability regulations,Impact onCNC,Highest/,Immediate,High/,MediumTerm,Keyissues,Assumption,ImplicationtoCNC,KEYREGULATORYBODIESAND RESPONSIBILITIES,Otherdepts,e.g SETC,Various lawmakingbodies,NPC,StateCouncil,Dept.ofRadioFrequencyAdministration,Telecom Administration Bureau,Otherdepts.,Provincial TelecomAdministrationBureau,China,Telecom,National,Company,MunicipalLevelTelecomAdministrationBureau,Telecom OperatingEntities:,e.g. CT fixed line,Provincial government,MII,Administration,Operations,National,Provincial,Municipality,Drafting,passingoftelecom lawsand statues, e.g.ChinaTelecomsLaw,International,NationalandInter-Provincialscopelicensegranting,Highest level of regulatoryenforcement/ arbitration,International Gatewayadministration,Nationalleveltelecom resourcescontrol (e.g. numbers, frequencyspectrums),Provincial level telecomadministration,Provincial level licensegranting,Provincial level regulatoryenforcementfocusoncoordination,Intheprocessofsplittingoperation andadministration,A numberofMunicipalLevelTABsareyet to be created,Limited enforcement power,Operationand administration notseparate,Settleinterconnect andotherdisputes,When notsettled by provincial&municipalcoordination,propagateuptoprovinciallevelandMII,PTAs,PTB,Source: PyramidResearch; BCGanalysis,KEYLICENSEASPECTSANDIMPLICATIONTOCNC,FullServiceandInternational,Valueaddedservices,ownership,Geographicscope,Duration,licensefees,Performancetargets,Technology,KeyAspects,Numberoflicensestightlycontrolled:atmost3in2003,includingCNC,CNCfullservicelicenseexpected1Q2000,Internationallicensestightlycontrolled:atmost4in2003,includingCNC,CNCIGWlicenseexpectedbyEOY1999,Morethan4value-addedservicelicensespossible,Control-shareforeignownershipnotallowedinbasictelecomandpublicdatatransportservices,Upto50%ofFDIinvalueaddedserviceproviders,IntraprovincialservicesundercontrolofprovincialTABs,Nolimit,Regulationwillrequirelicensefees,Regulationwillspecifyclearservicebuildouttargets,Regulationswillbetechnologyneutral,Butwillgivepreferencetonewtechnology,Assumptions,Currentregulationonlycoverinterconnectionbetween7typesoflicensedbasictelecomcarriers(e.g.NLD,local,wireless,international),WithIP-phonelicense,CNCneedstonegotiatewithCTlocalbranchescitybycity,CNCIPbasedbandwidthwholesaleservicenotcoveredinpublishedregulation,addsdelayinlocalnegotiation,Numberofpotentialcustomersforcarrierscarrierservices,Speedofestablishmentandcoverageoftargetedcustomerforcarrier,scarrierservice,Financialstrengthofnewentrantcustomers,Intra-provincialLMDSservicerequireapplicationineachtargetedarea,Competitor,sabilitytolockoutkeyserviceareas,Limiteddegreeofimpactoneconomics,AddsplanningandlocalcoordinationpressuretoCNClocalaccesssolutions,CNCIP/DWDMbackbonereceivepositiveinfluence,ImplicationtoCNC,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,Maintainsatellite 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 networks,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,Providewirelessvoice services,Interconnectwith national transportcarrier,Building& operationofLocal PagingNetworks,Interconnectwith national transportcarrier,Withorwithoutbuilding& operationoflocal network,Offer web-hosting, VPN,callcenterservices, etc.,Scope,Nationalcoverage,Cross internationalpoint ofpresence,Servicenationaltransport carriers,Cross provincialboarders,Haveaccessto internationalPOconnects,Servicelocal PSTNs,Covers localserviceareas,(e.g. citiesmunicipalities),Cross provincialboarders,Accesstointernationalpointsofconnect,Covers12-25trailcities,Accesstointernationalpointsofconnect,Coverslocalserviceareas:cities municipalities,Majorityinlocalscope,4 national coverage,Primarilyinlocalscope,No.offuture,licenses,Remain3forthe next6years(CT, Unicom,and CNC),3,Inthenext6 years(CT, Unicom,CNC),3,Inthenext6 years (CT,Unicom,CNC),45,in1-2years,5-6,possibleinthenext12years,Multiplelicenses,possibleinthenext4-5years,Numerousnationalscopelicenses,possibleinthenext2 years,Numerousmore licenses (with FDI)possibleinthe next2years,License controlledby,MII,MII,MII,MII,MII,MII,MII,Primarilybyprovincialgovernment,Provincial government,No.ofcurrentlicenses,1,3,2,2,3,(,CT,Unicom,CNC),4,Trailstage,2,2,nationalscope;,multiplelocal,Unlimited,Basictelecom services,Remain1forthe next6years,INTERCONNECTIONISSUES ANDIMPLICATIONTOCNC,KeyIssues,Assumptions,ImplicationtoCNC,Obligation clearlyspecified by regulationfor interconnectionbetween 7typesoftelecomnetwork licensed operators,CNC,sIPbroadbandnetworkreceive equivalentprotection,MIIsetstechnicalspecificationofinterconnectsolutions,Clearprovisiononcostandownership of technicalasset,From timeofwrittenrequest,interconnectcompletewithin:,2 monthsifonly CO datamodification is involved,4 monthsifcapacityexpansionneeded,7 monthsifnewPOI,(1),needed,Time frame notstrictlyadhered to,variesfrom4-6months,Dispute settledprimary via coordination,Arbitratedby MII and local government,Violationfineis very low (30,000RMB max per offense),Possible to claim for compensationdue to non-cooperation ofincumbents (the last resort),RMB0.07/min forPSTNaccess ofeachendof call path,SettlementforIP based will followscheme when trial finishes,Incumbentsprovide cabinet room andconduit access,In case theresno excessconduit capacity, incumbent has toprovide feasible expansion plan,Localpracticewillvary,Incumbentcharges rentalfee for conduitaccess,Incumbentcharges for leased line neededforinterconnect,Infrastructureand network investment relatedto interconnect areresponsibilityof both parties, separated from POI,Incumbentobligationto interconnect,Interconnect timeframe,Enforcement,Account settlement,Access andcollocation,Charges and fees,If CNC networkis not coveredby regulation,localnegotiation will leave loophole for incumbent andadddelay,Incumbentlocalpracticevaries, add complexity and delay toproject,Incumbentcan take advantage of timeframe loopholes, add delays at local level,Central controloverlocal TAB,(2),varies dueto varieddegree ofseparation, lead todifferentdegree ofjustandresolutiontimeframe,Upward propagation to MIItimeconsuming, adding delaysto resolution,Future economics: upto 30% ofrevenue paid to PSTN based on0.30/minIP rate,Incumbentcan take advantage of capacityconstraints todelay interconnectat local level,Someincumbentlocalbranchesrequire CNC topay for investment,ownershipgoesto incumbent, adds cost to CNCservice,Note1: Point Of Interconnect,2: Telecommunications Administration Bureau,CLEARGUIDANCEFOR INTERCONNECT ALREADYPUBLISHED,LOCAL PTAOBLIGED TO FOLLOW,LocalPTAcan be resistant, also its organizationnot suitable for quick execution,The policydecisionrequestinglocal PTAs tocorporatewithinterconnectiontricklesfromtop down:the central,provincialPTA,cityPTA,CityPTA beforeimplementationwillgenerallyaskfor lead time for verificationwithupper levels.E.g.in some cases new entranthasto wait for extendedtimeperiod for this process,UndertheMarket Departmentscoordination, thereare up to18 independentdepartments within each city PTA tocooperateforthe execution and resource planningof interconnect,Eachof these departmentcan add delay to theprocess,leadtimesaddup,In case ofinsufficient resource, the requesting and approval processfor expansion /upgrade is even longer,LocalPTAcan easilyuseresource constraintas anexcuse for delay ininterconnection,But interconnectionis feasible,CNC has sofarbeenableto reach interconnect contractat provinciallevels,MostPTAsin CNCs targetcities displayed timelycooperation,In order to ensure quickexecution,CNCshould,Understandandincorporate into planningprocess the statusof incumbent networkresources,Giveleadtimein planning andcommunicatingintentionto interconnectwiththeincumbent,Buildstrong communication channelwithall levelsof PTAs,Co-ordinate forgoodtiming acrossall levels; parallelprocessing tominimize time neededandclearbottleneck,BACKUP,THE PROCESS OFLOCALINTERCONNECT IS GENERALYSMOOTH,But Theres Great Difficulty in Some Cities,Interconnect inmajor cities is smooth,e.g.BJ, SH, GZ,Greatdifficulty insomecities,e.g.Wuhan,Fastagreementreached,Fromnegotiation toimplementationusually takes 2-3 weeks,Takes4-6monthto complete negotiation,Issues:,-local CTbranch attempted tocurtail CNC byforbidding co
展开阅读全文