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To: riposte who wrote (1396)	11/20/1999 7:29:00 PM
From: pat mudge	Read Replies (2) \| Respond to of 2702

Note numbers in China: November 19, 1999 Dow Jones Newswires Govt Still Key To Telecom Growth In China -Panelists By RICK JURGENS SAN FRANCISCO -- China's government will continue to play a big investment and regulatory role in the country's rapidly growing telecommunications and data networks, according to panelists at an Asia-Pacific Information Technology summit here. China's telecommunications industry has grown dramatically over the past nine years, driven by deregulation, new technology and government investment equal to 6.1% of gross national product, said Edward Tian, chief executive of China Netcom Co. China will surpass the U.S. as the world's largest telecommunications market within seven years, he predicted. Developing the physical and financial infrastructure needed for further expansion will require "involvement and guidance" by the government, predicted Heather Killen, a senior vice president of Yahoo Inc.'s (YHOO) international unit. "Scale issues are absolutely phenomenal." Noting that a single Chinese bank has more employees than the population of Ireland, Killen observed, "If you screw up in China, it's going to be on a fairly big scale." Chang Xiaobing, an official of the Information Industry Ministry, said the Chinese government is committed to providing universal service to its 1.3 billion people. During 1999 the number of new Internet users is expected to increase by 5 million. There will be 20 million new fixed-line telephone subscribers and 16 million new wireless telephone subscribers, he said. 100 Million Subscriber Mark Reached In June, China reached the 100 million mark for fixed-line telephone subscribers; by the end of the year, it will have 40 million cellular telephone subscribers, according to data compiled by Chang's ministry. As its networks grow, China will have to make choices among competing technologies, overcome the limitations imposed by immature capital markets and develop a framework for fair competition, including interconnectivity and equal access policies, Tian said. The number of cellular and pager service users may make wireless devices an important medium for the growth of the Internet in China, Killen said. The country's cable television systems, which are relatively new, may also become an important medium for data transmission since little upgrade investment will be needed for those networks to support interactive devices, she said. China Netcom, which is owned by the Shanghai Municipal Government and three other government entities, was set up this year - with backing from the son of China's president - to compete with two other state-owned companies as a data network operator. Government and large business users are its initial target market, said Tian, who noted the potential for Chinese manufacturers to use the Internet to eliminate the middlemen to directly sell to overseas markets. Within six months, China Netcom also plans to open a 6,000-mile fiber-optic network connecting 15 Chinese cities with a population of 50 million, Tian said. In an interview with Dow Jones Newswires, he said China Netcom will invest $50 million in electronics for the network. The cost of fiber optics will be absorbed by another arm of the government, he said. China Netcom has already sold 50,000 units of a new Internet telephony product, which it brought onto the market last week, Tian said, adding that unit prices range from 50 yuan to 500 yuan ($1=CNY8.3). China Netcom's strategy also includes the construction of local-access networks in Shanghai and three other cities and gateways connecting Chinese networks to the Internet worldwide, he said.