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China and SE Asia

Explore the growth and challenges of the telecom industry in China, including government policies, industry players, infrastructure, and opportunities for foreign companies.

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China and SE Asia

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  1. China and SE Asia China - Bill Harding & Glen Heller Philippines - Marcelino Racoma Indonesia - Riandy Hendrawan Thailand - Russ McGuire

  2. China

  3. Environment • Population: 1,246,871,951 • 4th Largest Nation • Literacy Rate: 81.5% • Move from centrally planned economy to market-oriented • Within framework of Communist party

  4. Economy • Quadrupling of GDP since 1978 • GDP per capita: $3,460 • Opening up to foreign trade and investment • Major trade partners: Honk Kong, U.S., Japan, South Korea, Germany

  5. Role of Telecom • Growth of telecom instrumental to economic development • China’s Strategy • Import of technologies • Establishment of joint ventures • Domestic development • Technology transfer for access to market • Buy local policy

  6. The Players • Local providers: China Telecom, China Unicom • Joint ventures • Beijing Nokia, Beijing Ericsson • Fierce competition in mobile market • Motorola, Ericsson, Nokia, Nortel • Japan’s NEC providing advanced trunk telecom network

  7. Infrastructure • One of most dynamic markets in world • 112 million telephones at end of 1998 • 87 million fixed line, 25 million mobile • Growth rate in 1998 • 24% fixed line, 88% mobile • Telecom service sector growing at 48% annual clip

  8. Teledensity

  9. Mobile System • 25 million users, third largest in world • 60% of telecom investment to cellular market • Cellular penetration 2% • Key users are business people and young people • Design important

  10. Transmission Media • Interprovincial fiber-optic trunk lines • Cellular systems • Domestic satellite system • International satellite system • Fiber-optic links to Asia countries • Buildout of broadband

  11. Use of Internet • 324% growth in 1999 • 75.6% under 30 years old, 79% male • 50% access from home, 37% access from school or work • Government pushing development • 20 million people access by 2003

  12. Opportunities Low penetration Need for advanced technologies Increasing government investment Threats Aggressive domestic manufacturers Buy local policy Technology transfer for market share Opportunities/Threats for Foreign Companies

  13. Telecom Standards • Total Access Communication System- • European Standard est in China @ 1987 • Analog cellular telecom network • Analog sales have slumped since ‘94 as users move towards GSM networks • Global Systems Mobil (GSM) • Began in ‘94 when Unicom established • Provided nations first digital GSM network

  14. More Standards • Code Division Multiple Access (CDMA) • 4 international companies are currently allowed to operate pilot projects with this technology in 4 chinese cities, Lucent in Guangzhou, Motorola in Beijing, Nortel in Xi’an and Samsung in Shanghai • Despite success China’s Ministry of Information Industry has not allowed the commercial deployment of CDMA in China

  15. Providers of Local and Global Telecom • China Telecom - run by Ministry of Information Industries • Provincial subsidiaries • Guangdong Telecom-largest telecom operator in China • Guandong is the most affluent and technologically advanced in China • Beginning to rival AT+T as the largest provider of telecommunications services in the world

  16. Local + Global Providers • China Unicom - domestic rival to China Telecom • More flexible and customer oriented however reliability is often questioned • Only have 5% of national market

  17. Local + Global Players • Ji Tong Communications • Niche player - building a nationwide backbone • Links networks belonging to government ministries, universities, research institutes and state owned organizations as part of a value added network (VAN)

  18. Government Regulation • As of ‘97 meeting of Ninth Party Congress changed who was in charge of telecom policy • March ‘98 the Ministry of Post and Telecom (MPT), Ministry of Electronics Industry (MEI), and parts of the ministries handling aerospace and radio and TV were merged to create the Ministry of Information Industries (MII)

  19. Partnerships for Advancement • Post + Telecom Administrations (PTA’s) • Wary of foreign investment • There is realization though that foreign products and technology are needed in order to allow local companies to participate in the global information age • Fuels desire for joint ventures with technology transfer

  20. Policy Liberalization • Developing communications infrastructure • Leaders in MII concede that it may take 20 yrs before domestic companies catch up with the world • Feared that the Ministry may do more to close the market and protect Chinese companies rather than liberalize policies

  21. China’s Foreign Investment Laws • Preference given to sourcing locally • Products produced by joint ventures in China must contain 60% local content in order to qualify as domestic products

  22. Future role of Telecom • China as a B2B, B2C player • Country in general suffers from a dearth of PC’s which is seen as a huge potential stumbling block • Only 10% of large and medium sized Chinese firms are now online • However, most Chinese business people carry a mobile or a pager • Planning a system which could send B2B purchase inquiries via mobile devices to 2 m manufacturers

  23. Growth • Internet use grew at 324% in 1999 • In ‘98 there were 2.1 m users, by the end of ‘99 there were 8.9m • Chinese government expects that over 20m people will have internet access in the country by 2003

  24. The Philippines

  25. Background Archipelago consisting of over 7,100 islands and islets Includes over 50 ethnic groups of Spanish, Malay, and Chinese descent Mountainous with narrow to extensive coastal lowlands

  26. Social, Political, and Economic Environment Struggle to regain independence and freedoms Unitarian Republic with strong return to democracy Improving the overall economy

  27. Technological Infrastructure Teledensity 4.6 per 100 persons, increase of 3% from 1995 Development of the the Philippine Information Infrastructure (PII) Turn the Philippines into the Knowledge Center of Asia within the first decade of the 21st century

  28. TeleCom Standards and Service Providers Department of Transportation and Communications (DOTC) National Telecommunication Commission (NTC) Philippine Long Distance Telephone Company (PLDT)

  29. Gov Regulation and Private Partnerships Membership in the ITU and ISO Oracle Academic Initiative RPWEB

  30. Future Role of Telecommunications Deregulation and privatization Satellite competition Philippine IT City

  31. Indonesia Telecommunications

  32. Map

  33. Social • Estimated Population : 220 million • Literacy rate : 83.8% • Religion : 88% Islam, 10% Christian, & 2% others

  34. Economic • Agricultural industry • Some high technology industry • 1997-present: economic crisis - unhealthy banking sectors - untenable levels of private foreign debt - uncompetitive business practices

  35. Telecommunications Infrastructure • Telephone : - 25 per 1000 people - Domestic : fixed wireline, microwave - International : fiber optic submarine cable, satellite • Mobile phone : - 5 per 1000 - Global System for Mobile (GSM)

  36. Telecommunication Infrastructure - Advanced Mobile Phone System (AMPS) - Nordic Mobile Telecommunications (NMT450) • Paging - 700,000 subscribers • Satellite - Coverage of most Asia and some Australia & New Zealand

  37. Telecommunication Infrastructure • Internet - First available in 1995 - Dial-up 56 Kbps, ISDN, cable modem - Active providers: 30 - 250,000 subscribers - PC’s owner : 8 per 1000 people

  38. Service Providers • Domestic wireline (monopoly) - Telkom Indonesia: gov • Domestic wireless (duopoly) - Telkom & Ratelindo: private • International Gateway (duopoly) - Indosat: gov - Satelindo: private

  39. Cellular Providers • GSM - Telkomsel, Satelindo, Excelcomindo • NMT-450 - Mobisel • AMPS - Komselindo, Metrosel, Telesera

  40. Government Regulations • Ministry of Tourism Art and Culture - Directorate of Post & Telecommunications • Telkom Indonesia remain for domestic and domestic long distance • Deregulation - Privatization Telkom (domestic) & Indosat (int’l) - Competition for other telecom markets

  41. Future Role • Potential market • Improve business sector & education • Dilemma facing economic crisis • Modernize Infrastructure - establish backbone to connect all islands - telephone line, wireless, internet

  42. Thailand Telecommunications MAP

  43. Social, Political and Economic Environment Geography • 514,000 square kilometers • Tropical climate • Borders Burma, Laos, Cambodia and Malaysia Population • 60,000,000 • 94% literacy rate • 35% domestic savings rate

  44. Economic Environment Government • constitutional monarchy • very progressive since 1800’s Economy • one of the most advanced in SE Asia, but the devaluation of the baht triggered a financial crisis in 1997 • current 2% economic growth rate 1999 • service and export oriented • GDP $119 billion

  45. Technological Infrastructure Domestic Teledensity • 5 per 100 teledensity- 7,400,000 lines • Current Surplus of Lines- 1997 waiting list • Good coverage to rural areas • 4.5 million urban lines • 2.9 million rural lines • 671.6 million domestic calls • 86 million international calls

  46. Technological Infrastructure • Under the MOTC the TOT and CAT have provided traditional line services • Thailand has latest technology in value added services through license agreements • Full government support • E-commerce and Internet growth

  47. Telecommunications Standards and Protocols and Service Providers • TOT and CAT retain domestic line monopolies set standards • Liberalization through licensing and partnerships using new frequencies • Example: Telecom Asia (a NYNEX joint venture) and Thai Telephone and Telecom have the contract for the additional 3 million lines

  48. Telecommunication Service Providers Value Added Services • licensees for paging, cellular, PCS,data/voice operators,fiber optics • Shinawatra owns majority of cellular, paging and broadcasting licenses • Thaicom 1 and 2 launched in early 1990’s by Shinawatra provide satellite services

  49. Governmental Regulation and Private Partnerships MOTC • Ministry of Transport and Communications PTD • Post and Telegraph Department TOT • Telecommunications Authority of Thailand CAT • Communications Authority of Thailand

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