【正文】 apEx (2023,2023): ~ B RMB?Fiber/construction: ~ B RMB?IP/DWDM equipment: ~720 M RMB?POP/VOIP: ~530 M RMB?OSS/Network management system: ~100 M RMBOpEx expected to be ~30% of revenue by 2023Market share and revenue estimates 2023?Off DLD: 30%?Off ILD: 30% ~ $2 B RMB?IP Intl. termination: 27%5 year NPV: Essentially breakeven considering off voice alone1Key Issues to be AddressedInterconnect agreements with local PTA’s。 consider supplying fixedline incumbents Cover POPs in all major calling zones。 BCG analysis 15 China Net The Boston Consulting GroupConfidentialDestroy by Shredding4503405Interim14Dec99TZDgxSHIAGENDA Business Models? Domestic and international longdistance voice? Wholesale/carrier? Enterprise solutions? Issues going forward 16 China Net The Boston Consulting GroupConfidentialDestroy by Shredding4503405Interim14Dec99TZDgxSHIAPPROACH TO WHOLESALE/CARRIER BUSINESS MODELObjectives Hypothesized ApproachDevelop wholesale business as traffic generator to improve economics of backbone through higher utilizationBee the wholesale carrier of choice with technologically superior service offerings including high bandwidth international gateway connectivityConsider wholesaling access to CT, Uni, and Jitong depending on petitive implicationsSuperior customer service with clear positioning ? “The clear alternative to CT”Aggressive deployment of backbone infrastructure ? Connecting top 15 cities by end of 2023 and expanding to top 50 cities by 2023 Seek partnerships to establish high bandwidth international gateway connectivityabsolutely essential for differentiating CNC offeringDevelop interconnection capabilities in all major POPs and mobile basestations in key geographical locationsWholesale access to incumbent providers where feasible, but do not wholesale sources of petitive advantage (., enhanced data services such as IP VPNs) Rollout product offering in staged manner to ensure quality of service? Inter connectivity? Mobile interconnect? Access ports to backbone 17 China Net The Boston Consulting GroupConfidentialDestroy by Shredding4503405Interim14Dec99TZDgxSHIWHOLESALE/CARRIER SUMMARYPreliminary EconomicsPhase I CapEx (2023,2023): ~100 M RMB?ISP access platform: ~50 M RMB?OSS/Provisioning systems: ~50 M RMBOpEx expected to be ~ 10% of revenue by 20231Market share and revenue estimates 2023?Mobile (backbone): 15%?ISPs: 9% ~ B RMB?Access ports: 100%2?Dark fiber: 100%25 year NPV: ~ $ B RMBAssumes launch date of 3Q 2023 for leased lines and relatively aggressive mobile shares?Potentially too optimisticKey Issues to be AddressedBackbone technology platform QOS for voice vs. lower cost deployment?Highbandwidth international gateway paramount to differentiating ISP accessFavorable regulatory backing for courting regional CT mobile carriersEnsuring existing VOIP gateways can serve wholesale needsRevenue opportunity of wholesaling dark fiber vs. enabling petitionOrganizational challenges(1) Including allocation of backbone OpEx(2) Market estimates based on revenue generation by CNC alone 18 China Net The Boston Consulting GroupConfidentialDestroy by Shredding4503405Interim14Dec99TZDgxSHIPOTENTIAL WHOLESALE CUSTOMERS INCLUDE ISPs, MOBILE OPERATORS, AND FIXED LINE CARRIERS ISPs offer significant potential if CNC can provide superior bandwidth access and to international gateway? Current satisfaction among regional ISPs very low? International gateway license in conjunction with high bandwidth transoceanic carrier alliance could provide vastly superior service Mobile carriers will be searching for lower cost alternatives to carry long distance traffic due to intensifying petition ? CNC’s new high capacity VoIP work and international gateway likely to yield lower costs Fixed line carriers potentially looking for alternatives? Existing longhaul transport infrastructure limited? China Tele could even be a possible customer given current focus on increasing residential teledensity 19 China Net The Boston Consulting GroupConfidentialDestroy by Shredding4503405Interim14Dec99TZDgxSHIOVERALL WHOLESALE MARKET SIZE IS SUBSTANTIAL AND GROWING AT A MODEST RATEAnticipated Price Decrease in Leased Lines Limits Overall Revenue Growth Leased Lines ISP Market Size (RMB B)15 Total Leased Lines Mobile99’04’CAGR Access Ports Leased Lines Paging18 18202226284%41%1%152%(1)9%(1) 01’04’ CAGRSource: CNC team inputs。 BCG analysis 29 China Net The Boston Consulting GroupConfidentialDestroy by Shredding4503405Interim14Dec99TZDgxSHISTAGED PRODUCT INTRODUCTION NECESSARY TO MANAGE QUALITYHypothesized Product IntroductionsVoiceData2023 2023 2023 2023 2023 2023Phase I II Phase III Phase IV Leased Lines? Mobile carriers? EerpriseHigh bandwidth dedicated inter access for businesses and ISPsAccess Ports VPN? Basic enterprise Broadband applications? Platforms to enable VOD, etc... Web HostingDark FiberResidential ISP?Advanced VPN? Extra? Voice, video QoS guarantees? Industry specific offeringsOther emerging services (. eCommerce)IPphone voice? Prefix ? “Dialaround” solutionsEqual access voice? On voice?Focus on quality over quantityMarket as integrated productsStress CNC role as integrated data playerPositioningIssues 30 China Net The Boston Consulting GroupConfidentialDestroy by Shredding4503405Interim14Dec99TZDgxSHICNC SHOULD USE CREATIVE WAYS TO GROW THE MARKET, AVOID HEAD TO HEAD COMPETITIONCompetitors all focus on the same demand from the same customersSavagely pete on priceReactively wait for customers to identify need, request productsPursue growi