【正文】 BCG analysis。 assumes km radius for LMDS area(2) Assume half of the buildings are prime business buildings for economic modeling 36 China Net The Boston Consulting GroupConfidentialDestroy by Shredding4503405Interim14Dec99TZDgxSHIOVERALL ECONOMICS APPEAR MARGINAL FOR SHIJIAZHUANG5 year PV(1) (M RMB)CapEX OpExRevenue5 year NPV15%: ~ 3M RMB5 year IRR: ~5%Cities without dense business districts may not be attractive enterprise markets regard less of overall sizeSGAPower, provisioning, etc.IDDEmerging data servicesDLDData servicesBase station(1) Assuming 15% cost of capitalSource: BCG benchmark database。 BCG analysis。 assumes km radius for LMDS area(2) Assume half of the buildings are prime business buildings for economic modelingSR 34 China Net The Boston Consulting GroupConfidentialDestroy by Shredding4503405Interim14Dec99TZDgxSHIPRELIMINARY FUZHOU ECONOMICS UTILIZING LMDS VERY FAVORABLE5 year PV(1) (M RMB)CapEX OpExRevenue5 year NPV15%: ~20M RMB5 year IRR: ~60%LMDS solutions for medium sized cities will play a critical role in developing enterprise solutionsSG APower, provisioning, etc.IDDEmerging data servicesDLDData servicesBase stationCPE(1) Assuming 15% cost of capitalSource: BCG benchmark database。 real estate agency interviews。 industry interviews。 BCG analysis 27 China Net The Boston Consulting GroupConfidentialDestroy by Shredding4503405Interim14Dec99TZDgxSHICUSTOMER NEEDS EXIST THRUGHOUT THE VALUE CHAINCT’s Offering Yields Significant GapsLearn Buy Get Use/support PayCustomer value chainNeeds identified? How data services can help their business ? Assistance deploying solutions? Quicker and more convenient application channels? Rapid and reliable provisioning? Faster, reliable repair services? Prompt, customized billing? Lack customer focus? Solutions virtually nonexistent? Mostly oneway product marketing? No customer input for provisioning? CT determines queue without specific timing ? No penalties for missed appointments? Negligent repair service? Slow fulfillment technical support response? Poor response to customers? Limited bill customizationCTapproachSignificant opportunity for CNC establish position in customer solutions, ease of use, and responsive serviceAreas highlighted most in customer interviewsSource: Customer interviews。 3 times Fuzhou estimate for cities 510(2) Assumes no local voice revenue through 2023 25 China Net The Boston Consulting GroupConfidentialDestroy by Shredding4503405Interim14Dec99TZDgxSHIENTERPRISE SOLUTIONS BUSINESS MODEL MOST COMPLEX WITH HIGH CAPEX AND OPEX REQUIREMENTS... Building metropolitan fiber rings to offer access to medium and large businesses poses significant challenge? Operating expenses required dwarfs long haul work costs on a per city basis? Complexity in obtaining nightofway varies by districts within each city? Designing fiber route and work configuration requires significant experience Converting customers to full CNC service may not be as easy as it seems on surface? Initial risk for panies utilizing new entrant ? Coverage issues for offering service to all business locations? Experienced salesforce with established relationships a must 26 China Net The Boston Consulting GroupConfidentialDestroy by Shredding4503405Interim14Dec99TZDgxSHI…BUT COMPRISES TREMENDOUS UPSIDE POTENTIALInter AccessLeased LinesILDDLDLocalOtherPortalBroadband ContentWeb Hosting/ CollocationExisting Services Emerging Services9804CAGR124%40%10%7%11% IP VPNBroadband Network Applications71%83%186%98%111%286%0004CAGRMarket size (RMB BN)Market size (RMB BN)7896187Overall 16% Overall 86%332Source: CNC team inputs。 industry interviews。 foreign benchmarks。 industry interviews。 various benchmarks。 CNC’s team inputs。 develop local leased lines work in key locations Aggressive deployment of backbone infrastructure to provide unparalleled bandwidth Establish high bandwidth international gateway to differentiate inter access Superior service with clear positioning ? “The clear alternative to CT”ISP Long distance voice Capture early revenue from to fund development of subsequent business models Top 60 POPs by end of year 2023 utilizing mix of leased lines from CT and CNC work Position off voice as first product from “China’s first data carrier” Do not overextend resources in VOIP as it does not fit CNC’s long term strategy Create “dialaround” solutions for business and interconnect terms 17930 6 China Net The Boston Consulting GroupConfidentialDestroy by Shredding4503405Interim14Dec99TZDgxSHIEnterprise solutionsPOTENTIAL BUSINESS MODELS COVER WIDE RANGE OF PRODUCT/MARKET ALTERNATIVESOpportunity for growthCurrent market sizeWholesale/carrierConsumer ISP?Domestic and International Long Distance VoiceResidential Med/large enterprise customersCarriersPotential traffic per consumerProductsEmerging dataDataVoiceEmerging data niche 7 China Net The Boston Consulting GroupConfidentialDestroy by Shredding4503405Interim14Dec99TZDgxSHIAGENDA Business Models? Domestic and international longdistance voice? Wholesale/carrier? Enterprise solutions? Issues going forward 8 China Net The Boston Consulting GroupConfidentialDestroy by Shredding4503405Interim14Dec99TZDgxSHIAPPROACH TO DOMESTIC AND INTERNATIONAL VOICE BUSINESS MODELObjectives Hypothesized ApproachCapture early revenue from launch of prepaid IP calling cards? “Cash cow” for funding other business model developmentPursue prefix and equal access long dis