BCG-中国网通战略咨询报告完整版01(ppt 143页)(英文).ppt

CHINANETCOMBUSINESSPLANUPDATE,Beijing,TODAYSOBJECTIVES,Reviewtheoverallanalysisofregulation,competition,andmarketdevelopmentDiscussthespecificimplicationsforCNCstrategyReviewthespecificdraftbusinessmodelsforCNCHowwemightattackthebusiness,carrier,andIDD/DLDmarketsWhatkeytrade-offsweneedtomakeWhatarethekeysuccessfactorsandassumptions?Discusstheinitialeconomicsofthesebusinessmodels,andofCNCoverallDiscussthespecificnextstepsintwokeyareas:HowtofinalizeandendorsetheoverallCNCbusinessmodelHowtomoveforwardwiththerefinedfinancials,organizationdesign,andtheplanforimplementation,CONTENT,KeystrategicprinciplesRegulatoryoverviewMarketoverviewCompetitionoverviewBusinessmodelsNextsteps,KEYCNCSTRATEGICPRINCIPLES,TheobjectiveoftheseprinciplesistoprovidefurtherclarityinthedevelopmentandevaluationoftheCNCbusinessmodelThesewillberevisitedandrefinedastheprojectprogressesOurdevelopmentofbusinessmodelswillseektobealignedwiththeprinciplesStrategicprinciplesandkeyassumptionswillbeconsideredinthefollowingaspectsCNCshareholdersBackbonebusinessLocalaccessbusinessInternationalgatewaybusinessRegulatorystrategyCompetitivestrategyMarketingstrategy,CNCSHAREHOLDERS,Principles:LeverageshareholdersconcertedvisionincreatinganewgenerationIPbroadbandcommunicationinfrastructureandaprofitable,successfulcompanyLeverageshareholdersexistingbackboneassets,localaccessassets,researchcapabilitiesandlocalgovernmentrelationshipstosecuretime-to-marketandcreatecompetitiveadvantageSetamodelofanewtypeof“SOE”,asefficientasthebestoftheFIE/privatecompanies;beatshareholdersexpectationsbydeliveringhighreturnAssumptions:CAS:stronginterestinseeingCNCsuccessfulandprofitablequickly,standsreadyforfavorableregulatoryinfluenceandresearchsupport;wantsopportunitiesfornetworkingRhowtohandle?,BACKBONEBUSINESS,Principles:Targetadvancedbackboneamong15keycitiesinEasternChina;startwith2coresfromshareholdersbutquicklybuildownnetworkUsebackboneforavarietyofwholesaleandretailvoiceanddataservicesMaintaintheleadingedgeIP/packetnetwork,bothfortechnologicalsuperiorityandtofulfillshareholdermissionMaintainthebestcostposition,usingROWs,purchasingclout,righttechnologyBuildreservecapacity/conduittodeterothersAssumptions:ThecostsofconstructionandROWwillbethemajorityofnewnetworkcostsvirtuallyallofthenetworkwilluseMORorSARFTrightofwayNetworkwillbeIPorpacketinnatureDeploymentplanwillkeepcostslow,buildoutquickly,andcreategoodpositionlaylargenumberofconduitsinonetimelaterfill,lightup,andcolorfiberstrandsleaseoutconduit/fiber/bandwidthtomaximizereturn(utilization),LOCALACCESSBUSINESS,Principles:Beveryfocusedinlocaldeployment,targetingprioritybusinessareasonlyEmphasizebroadbandtothecustomer,usingFTTBandLMDSwherelogicalSeekstronglocalmarketshare,especiallyinnewdataservicesgrowthareasDifferentiatefromChinaTelecombysuperiorservices,quality,responsivenessBuildstronglocalteamtoenablefastserviceresponseEmphasize“endtoend”networkownershipandmanagementAssumptions:SH,BJ,GZ,andSZbusinessdistrictsastargetsfortheneartermTheseaccountforthevastmajorityofbusinesstelecomdemandNeedtosetspecificestimatesfortimingandsequenceofdeploymentAssumethatCNCwillhaveaccesstokeycityROW,suchassubwaysystemsWillneedspecificassumptionsabouttheeaseandcostofhookingupbuildingsAssumethatprimaryemphasiswillbeonFTTB,butthatLMDScanplayanimportantrole,especiallyininitialdeploymentandinsecondarycitiesWillneedspecificassumptionsabouttimingofaddingsecondarycities,INTERNATIONALGATEWAYBUSINESS,Principles:CNCwillbeoneoffewplayerswithafullinternationallicenseVitaltoenableCNCtoprovideend-to-endservices,globaldataservices,andhighermarginIDDserviceHKgatewaylinkmaybestrategicallyimportantAssumptions:HKasoneofthekeylocationforinternationalconnectionamajortrafficdestinationamajorrelaylocationInternationalvoiceremainshighlyprofitablesegmentinmediumtermfutureExpecthighgrowthtogetherwithsteeppricedropininternationalservicesActivelyplanaheadforjoininginternationalsub-oceaniccableconsortium,REGULATORYSTRATEGY,Principles:Mustactivelylobbyforfavorableregulatorydecisions,togetherwithshareholdersprovideregulatorswithinternationalbenchmarkingforbestpracticesalignCNCobjectiveswithfaircompetition,andpublicinterestshaveeffectiveseniormanagementfocusonlobbyingissuesBecarefulaboutcommittinginvestmentifregulatoryissuestoouncertainEnsureCNCstrategyaddressesnationaleconomicdevelopmentprioritiesPaycarefulattentiontomanagingrelationswithChinaTelecomExpectedWTOin2000willimplygreateropeningofthemarketinthefutureAssumptions:Atleasta2-3yearwindowwhenCNCcancontinuetoenjoyfavorablepolicytreatment,whilealsoworkingtostraightenoutregulatoryissuesatlocallevelManykeyregulationsremainingreyareas,whereCNCcanplayaroleinshapingthepolicyWillneedtomakespecificassumptionsonanumberofregulatoryissues,anddevelopseveralscenariosAssumethatCTandUnicomaretheonlyfullservicecompetitors,butseveralnicheplayersWTOwillintroduceFDIintoChinastelecommarketby2002,butinfrastructureplayremaintightlycontrolled(stilllimitedcompetition)until2004/5maybeopportunityforsomeformofpartnershipwithforeigntelcos,COMPETITIVESTRATEGY,Principles:Focusonthebestservicequality,supplywhatcustomersneed,avoidcompetingonpriceBuildboth“highways”and“tollbooths”PrepareforrapidlychangingindustrystructureBecarefulinpositioningtowardChinaTelecom:complementaryandaddressingunmetneedsgrowingthewholemarketTheonlyviablealternativetoChinaTelecomforcarriersTheonlytrue“endtoend”networkacrossChina,withclearcentralmanagementAssumptions:TechnologyleadstocontinualchangeinindustrystructureThedecentralizednatureandbusinessorientedbehaviorsofChinaTelecomenablesCNCtopartneratthelocallevelHighopportunityforCNCtofillChinaTelecomproduct/servicebacklogUnicomwillbeathreattostarta“pricewar”Variousnicheplayersemergeinlateryears,morethreatthan(carrier)opportunityforCNC,MARKETINGSTRATEGY,Principles:Forlocalaccess,willtargetmediumandlargebusinessesintargetedbuildingsForbackbone,providecarrierservicesForinternational,supportotherbusinessesandalsoofferIDDandrefiling,etc.Inallareas,emphasizequality,service,endtoend,etc.Getafewkeycustomersearly;proveourselvesandthenbuildfurtherAssumptions:Carrierandlargeandmediumsizedcorporationsarethekeyfocusespeciallythoseintelecom-intensiveindustriesAssumeagrowingdemandforbusinesstelecomserviceswillneedbothhighandlowgrowthscenariosNeedtovalidatethewillingnessofkeycustomerstoswitch,andtheiranticipatedareasoffuturedemandgrowthIPphonestillthesourceofrevenueinthenearfutureDial-upISP(171)mayconflictwithISPcarrierinterests,butcouldalsoserveasstrategicinroadforfuture3G(1),(1)Notinscopeofthisproject,CONTENT,KeystrategicprinciplesRegulatoryoverviewMarketoverviewCompetitionoverviewBusinessmodelsNextsteps,REGULATORYHIGHLIGHTS,Ourkeyassumptions:MIIregardsCNCsIP-basedlicenseasFullServicelicense,butlacksclearregulatorydocumentation.Incaseoflocalinterpretationdifference,MIIiswillingtoclarifyonbehalfofCNCe.g.ambiguityonlocalfixedline(CNCnumber)CNCwillbegrantedInternationalGatewaylicenseby1Q2000CNCIPnetworkprotectedbythecurrentfixed/mobileinterconnectregulationCNCnotrequiredtomeetspecificcoveragetargetsforthenearfuture(2-3years)Themarketwillbeopenedupgradually,withFDIincreasing:morevalueaddedserviceprovidersby2003moreI-Phoneprovidersby2001nonewFullServiceproviderstill2004/2005AccountsettlementspecificforI-Phonewillberegulatedafterthetrialstageends.ItwillbelowerthantheRMB0.14/minrateforbasictelecomnetworksonapercallbasisEqualaccessbyprefix/pre-selectin1year;numberportabilitymaytakeanother1-2yearsatleastCNCwillhaveLMDSspectrumCNCanticipatesawell-intentionedregulator,withvarieddegreesofcontroloverlocalincumbentpracticeNoneoftheseassumptionsare“guaranteed;”CNCmustfightaggressivelyforthem,KEYREGULATORYISSUESANDIMPLICATIONS,ServicelicensesFullServicelicenseinterpretationInterconnectenforcementAccountsettlementPricingandrebalancingROWandaccessFrequencyspectrumallocationandfeesUniversalServiceObligationEqualAccessNumberingandportability,IGWlicenseimportanttocompetitiveness,sizeofcustomerbaseand#ofpartnersMIInotificationoneachinstanceaddsdelaytoCNClocalinterconnectionTimetomarketineachcityaffected,detractCNCresourcesFutureInterconnecteconomicsFuturepricecompetitivenessvs.otherplayers(e.g.CT)economics;pricecompetitivenessvs.CTCase-by-caselocalcoordinationandnegotiationdelaylocalaccessbuild-out;mayalsobeexpensivetoobtainTimetomarketforlocalaccessbuild-outbyLMDSaccesssolutionsSubsidizingincumbentforUSOaffectcoststructureofnewentrantsUnabletoreachCTlocallinecustomerMediumtermimplication:on-netvoicenottargetedforthenear4-5years,3fullservicecarrierincludingCNCMorelicensesforvalue-addedserviceproviders(typeII)MIIsupportsCNCIPbasedlicenseasFullServiceLicenseButlackofcleardocumentationmaycauseconfusionatlocallevelBasedoncooperationofcarriersArbitration/settlementprocessexistbuttimeconsumingMildpunishment,lawsuitaslastresortForcurrentIP-phonetrial,feesnotsettledLikelyfuturesettlement:LDcarrierpayslocalPSTNoperatorRMB0.14/minPricefloorlikelyspecifiedforincumbentbyregulationNoimminentinitiativeforrebalancingLegallyfeasibleforpublictelecomcarrier(e.g.CNC)PracticewillhavetocoordinatewithmunicipalitiesandinfrastructurebuildingControlledbyMIIinco-ordinationwithPTAsFrequencynotlikelytobeauctionedUSOforincumbentwithcontributionfromnewentrant2-3yearsbeforetransparentandequitableapproachPrefixbasedsolutionprovidedbyregulationin1yearNumberasnationalresourcescontrolledcentrallyFeewillbecollectedforoccupationofnumberresource2-3yearsbeforeportabilityregulations,ImpactonCNC,Highest/Immediate,High/MediumTerm,Keyissues,Assumption,ImplicationtoCNC,KEYREGULATORYBODIESANDRESPONSIBILITIES,Otherdepts,e.gSETC,Variouslawmakingbodies,NPC,StateCouncil,Dept.ofRadioFrequencyAdministration,TelecomAdministrationBureau,Otherdepts.,ProvincialTelecomAdministrationBureau,ChinaTelecomNationalCompany,MunicipalLevelTelecomAdministrationBureau,TelecomOperatingEntities:e.g.CTfixedline,Provincialgovernment,MII,Administration,Operations,National,Provincial,Municipality,Drafting,passingoftelecomlawsandstatues,e.g.ChinaTelecomsLawInternational,NationalandInter-ProvincialscopelicensegrantingHighestlevelofregulatoryenforcement/arbitrationInternationalGatewayadministrationNationalleveltelecomresourcescontrol(e.g.numbers,frequencyspectrums)ProvincialleveltelecomadministrationProvinciallevellicensegrantingProvinciallevelregulatoryenforcementfocusoncoordinationIntheprocessofsplittingoperationandadministrationAnumberofMunicipalLevelTABsareyettobecreatedLimitedenforcementpowerOperationandadministrationnotseparateSettleinterconnectandotherdisputesWhennotsettledbyprovincialBCGanalysis,KEYLICENSEASPECTSANDIMPLICATIONTOCNC,FullServiceandInternationalValueaddedservicesownershipGeographicscopeDurationlicensefeesPerformancetargetsTechnology,KeyAspects,Numberoflicensestightlycontrolled:atmost3in2003,includingCNCCNCfullservicelicenseexpected1Q2000Internationallicensestightlycontrolled:atmost4in2003,includingCNCCNCIGWlicenseexpectedbyEOY1999Morethan4value-addedservicelicensespossibleControl-shareforeignownershipnotallowedinbasictelecomandpublicdatatransportservicesUpto50%ofFDIinvalueaddedserviceprovidersIntraprovincialservicesundercontrolofprovincialTABsNolimitRegulationwillrequirelicensefeesRegulationwillspecifyclearservicebuildouttargetsRegulationswillbetechnologyneutralButwillgivepreferencetonewtechnology,Assumptions,Currentregulationonlycoverinterconnectionbetween7typesoflicensedbasictelecomcarriers(e.g.NLD,local,wireless,international)WithIP-phonelicense,CNCneedstonegotiatewithCTlocalbranchescitybycityCNCIPbasedbandwidthwholesaleservicenotcoveredinpublishedregulation,addsdelayinlocalnegotiationNumberofpotentialcustomersforcarrierscarrierservicesSpeedofestablishmentandcoverageoftargetedcustomerforcarrierscarrierserviceFinancialstrengthofnewentrantcustomersIntra-provincialLMDSservicerequireapplicationineachtargetedareaCompetitorsabilitytolockoutkeyserviceareasLimiteddegreeofimpactoneconomicsAddsplanningandlocalcoordinationpressuretoCNClocalaccesssolutionsCNCIP/DWDMbackbonereceivepositiveinfluence,ImplicationtoCNC,NATURE,SCOPEANDNUMBEROFLICENSES,Source:BCGanalysis,VSATtransportservice,International,NLD,On-netvoice,IPbackbone,IP-phone(includinginternational),Wireless,Paging,VAS(e.g.ISP,VPN),Servicenature,OwningsatelliteMaintainsatellitechannelVSATbasestations,Ownershipmultiplelocal,Unlimited,Basictelecomservices,Remain1forthenext6years,INTERCONNECTIONISSUESANDIMPLICATIONTOCNC,KeyIssues,Assumptions,ImplicationtoCNC,Obligationclearlyspecifiedbyregulationforinterconnectionbetween7typesoftelecomnetworklicensedoperatorsCNCsIPbroadbandnetworkreceiveequivalentprotectionMIIsetstechnicalspecificationofinterconnectsolutionsClearprovisiononcostandownershipoftechnicalassetFromtimeofwrittenrequest,interconnectcompletewithin:2monthsifonlyCOdatamodificationisinvolved4monthsifcapacityexpansionneeded7monthsifnewPOI(1)neededTimeframenotstrictlyadheredto,variesfrom4-6monthsDisputesettledprimaryviacoordinationArbitratedbyMIIandlocalgovernmentViolationfineisverylow(30,000RMBmaxperoffense)Possibletoclaimforcompensationduetonon-cooperationofincumbents(thelastresort)RMB0.07/minforPSTNaccessofeachendofcallpathSettlementforIPbasedwillfollowschemewhentrialfinishesIncumbentsprovidecabinetroomandconduitaccessIncasetheresnoexcessconduitcapacity,incumbenthastoprovidefeasibleexpansionplanLocalpracticewillvaryIncumbentchargesrentalfeeforconduitaccessIncumbentchargesforleasedlineneededforinterconnectInfrastructureandnetworkinvestmentrelatedtointerconnectareresponsibilityofbothparties,separatedfromPOI,IncumbentobligationtointerconnectInterconnecttimeframeEnforcementAccountsettlementAccessandcollocationChargesandfees,IfCNCnetworkisnotcoveredbyregulation,localnegotiationwillleaveloopholeforincumbentandadddelayIncumbentlocalpracticevaries,addcomplexityanddelaytoprojectIncumbentcantakeadvantageoftimeframeloopholes,adddelaysatlocallevelCentralcontroloverlocalTAB(2)variesduetovarieddegreeofseparation,leadtodifferentdegreeofjustandresolutiontimeframeUpwardpropagationtoMIItimeconsuming,addingdelaystoresolutionFutureeconomics:upto30%ofrevenuepaidtoPSTNbasedon0.30/minIPrateIncumbentcantakeadvantageofcapacityconstraintstodelayinterconnectatlocallevelSomeincumbentlocalbranchesrequireCNCtopayforinvestment,ownershipgoestoincumbent,addscosttoCNCservice,Note1:PointOfInterconnect2:TelecommunicationsAdministrationBureau,CLEARGUIDANCEFORINTERCONNECTALREADYPUBLISHED,LOCALPTAOBLIGEDTOFOLLOW,LocalPTAcanberesistant,alsoitsorganizationnotsuitableforquickexecutionThepolicydecisionrequestinglocalPTAstocorporatewithinterconnectiontricklesfromtopdown:thecentralprovincialPTAcityPTACityPTAbeforeimplementationwillgenerallyaskforleadtimeforverificationwithupperlevels.E.g.insomecasesnewentranthastowaitforextendedtimeperiodforthisprocessUndertheMarketDepartmentscoordination,thereareupto18independentdepartmentswithineachcityPTAtocooperatefortheexecutionandresourceplanningofinterconnectEachofthesedepartmentcanadddelaytotheprocess,leadtimesaddupIncaseofinsufficientresource,therequestingandapprovalprocessforexpansion/upgradeisevenlongerLocalPTAcaneasilyuseresourceconstraintasanexcusefordelayininterconnectionButinterconnectionisfeasibleCNChassofarbeenabletoreachinterconnectcontractatprovinciallevelsMostPTAsinCNCstargetcitiesdisplayedtimelycooperationInordertoensurequickexecution,CNCshouldUnderstandandincorporateintoplanningprocessthestatusofincumbentnetworkresourcesGiveleadtimeinplanningandcommunicatingintentiontointerconnectwiththeincumbentBuildstrongcommunicationchannelwithalllevelsofPTAsCo-ordinateforgoodtimingacrossalllevels;parallelprocessingtominimizetimeneededandclearbottleneck,BACKUP,THEPROCESSOFLOCALINTERCONNECTISGENERALYSMOOTHButTheresGreatDifficultyinSomeCities,Interconnectinmajorcitiesissmoothe.g.BJ,SH,GZGreatdifficultyinsomecitiese.g.Wuhan,FastagreementreachedFromnegotiationtoimplementationusuallytakes2-3weeksTakes4-6monthtocompletenegotiationIssues:-localCTbranchattemptedtocurtailCNCbyforbiddingconnectionsofmultiplelinesatCNClevelResolution:-resorttoregulatoryprovisiontoreachIPphoneinterconnectagreement-pushoffmultiplelineissueasfuturenegotiationagenda,BACKUP,TERMINATIONSETTLEMENTMAYREDUCECNCMARGIN(I),Current,LikelyscenariosforY2000,Enduser,CustomerpayslocalPTAforPSTNusagee.g.RMB0.1every3mintoPTANosettlementpaidbyCNCtoPTACustomerpayslocalPTAforPSTNusagee.g.RMB0.1every3mintoPTANosettlementpaidbyCNCtoPTACNCpaysRMB0.14/mintoPTAforbothoriginationandtermination,CNCchargescustomerIP-phonecarrierratee.g.RMB0.3/minpaidtoCNC(debitfromprepaidIPphonecard)CNCchargescustomerIP-phonecarrierratee.g.RMB0.3/minPerminuteIPrate0.44/minpaidtoCNCotherwiseCNCseemarginreducing,NosettlementNosettlementNosettlement,CNC,CNC,Enduser,PTA,Switch,SH,PSTN,Switch,CNCbackbone(1),Switch,Switch,BJ,PSTN,PTA,Transmission(paidbyCNC),Fees:,1,2,Transmission(paidbyCNC),Note1:CurrentlyleasedfromCT.OwnbackbonebyJuly2000,ExampleInter-connection,Backup,TERMINATIONSETTLEMENTMAYREDUCECNCMARGIN(II)Example:NationalLongDistance,Backup,CNCpaysPTA,CNCpaysPTA,KeepIP-phonepricethesame,CustomerpaysPTA(1),IP-phoneprice,CustomerpaysPTA,IP-phoneprice,NewIP-phoneprice,CurrentIP-phoneTrialStagescenario:nosettlement,CNCAlternativeI,CNCAlternativeII,RMB/min,Note1:PTAchargescustomeron3minuteunits,RMB0.18per3min.CalculationforthisexampleusesaverageperminuterateofRMB0.06,assumingcustomercallslongenoughduration.Source:BJPTA,Possiblescenariofor2000:RMB0.14/minsettlementrateforbothoriginationandterminationends,2,IncreaseIPpricetocoversettlementcostCustomerdoesntpayPTAbutperceiveIP-phonepriceincreaseCNCmaintaincurrentIP-phonerevenue,KeepIPpricesameCustomerdoesntpayPTAnorperceiveIP-phonepriceincreaseCNCpaysPTAoutofIP-phoneincomeCNCrevenue=54%ofcurrentIP-phonerevenue,0.3,0.44,0.36,0.36,CNCretains100%ofIP-phonepriceasrevenue,CNCretains100%ofIP-phonepriceasrevenue,TheRMB0.14/minsettlementratespecifiedbycurrentregulationisbasedontraditionalfixedlineeconomics.CNCwouldlobbyfornewsettlementratespecifictoIP-phoneeconomics,KEYPRICINGREGULATIONISSUESANDIMPLICATIONTOCNC,KeyIssues,Assumptions,ImplicationtoCNC,Regulationfollowscost-basedpricing