Report: China Telecom to Focus on Data Networking

China Telecom Ltd., the dominant player in the fast expanding Chinese telecommunications market, plans to focus its resources on expanding its data communications network, according to a report on the state-run Xinhua news service.

The report said China Telecom will focus on four main areas: completion of a broadband IP (Internet protocol) based network in 2000; raising network service levels through introduction of services such as high-speed access and virtual private networks (VPN); bringing more information sources and applications online and the development of a service management system to increase service quality.

Xinhua cited increasing domestic competition as the reason for China Telecom's move. While still dominating the domestic market, there are signs that more competition is ahead. Despite the failure of China United Telecommunications Co. (China Unicom) to gain significant market share since its establishment in 1995, the government recently gave the alternative carrier a freer hand to battle China Telecom and also licensed a third national carrier, the China Network Communication Corp. (CNCC).

The areas targeted by China Telecom, including higher bandwidth and VPNs, are the same as those being targeted by CNCC, which is a joint venture of the China Academy of Sciences, the Ministry of Railroads, Shanghai City Municipality and the State Administration of Radio, Film and Television.

When it began operations in 1993 as ChinaPac, China Telecom's packet data network linked just 30 cities but now extends into 2,000 cities and 2,000 towns and villages, according to Xinhua. In addition, China Telecom's ATM (asynchronous transfer mode) and IP networks connect 200 cities across the nation, said the report.

Use of the network is also growing, said Xinhua. In 1993 the network had just 2,000 users but this increased to 14,000 in 1994, 60,000 in 1995, 160,000 in 1996, 420,000 in 1997 and 1.5 million in 1998. By September 1999, the network had expanded to service 4 million customers.

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