When China Netcom Corp. (CNC) first set up shop in Beijing back in 1999, it was as part of a massive information technology (IT) investment program. The government had already installed a staggering 100 million new phone lines since 1990, when the country's teledensity languished at a dismal one telephone per 100 people—roughly on a par with the poorest sub-Saharan African nations.
As China's largest dedicated broadband services provider, CNC can take a good deal of the credit for the astonishing turn-around that's transformed China from a third-world backwater into an IT powerhouse. Already the world's single largest cellular market with 140 million-plus subscribers, the country also boasts more than 10 million Internet hosts and is adding new users at a rate of four million every six months. With analyst IDC forecasting annual IT spending growth of 25 percent—compared with a paltry 6 to 7 percent in the U.S. and Europe—China's 2001 accession to the WTO is widely regarded as the candle on the cake of a market expected to be worth US$49.2 billion in equipment and services by 2005.
A joint venture between the Chinese Academy of Sciences, the State Administration for Radio, Film and Television, the Ministry of Railways and the Shanghai Municipal Government, CNC successfully entered what was essentially a greenfield market for Internet and broadband services. That success depended on extremely rapid deployment of one of the world's most extensive and advanced Internet protocol (IP)/dense wavelength division multiplexing fiber-optic networks.
Covering 22,700 miles and servicing 126 cities nationwide, the 40Gbps CNCnet project had a punishing implementation schedule of just 30 months from initiation to full rollout—and is on schedule for completion by the end of 2002. Zhou Ming, a senior project manager in CNC's Network Construction division, says the company dedicated two full months in September and October 1999 to project planning, which involved basic network design along with the creation of four specialized technical expert groups—Transmission, IP, Fiber and Machine Room (switching center)—and 17 on-the-ground area groups.
“The technical groups were charged with deciding which equipment would best deliver our planned portfolio of advanced services,” says Zhou. “The area teams, meanwhile, undertook in-depth design of each city node, including four high-speed metropolitan area networks (MANs) servicing Beijing, Shanghai, Guangzhou and Shenzhen, as well as managing equipment procurement and the complex task of securing rights-of-way from local authorities for the thousands of miles of fiber that had to be laid.”
With construction speed paramount—CNC says build-out has been one of the fastest in the world, averaging twice the speed of U.S. carriers like Qwest and Sprint—keeping to timelines was crucial. To maximize efficiency, the company opted for a parallel approach comprising two fully equipped build teams that could be rapidly mobilized to help one another if a section fell behind, or to move on to the next node if construction in any part of the network was held up by weather or administrative glitches.
“Flexibility was key, and contingency planning essential,” says Zhou. “With rights-of-way negotiations taking anything from three months to more than a year, we needed to be very adaptable, moving ahead wherever we could while we were waiting for clearances. If we hit a problem, we always tried to solve it in the most time-effective way possible.
“For example, if we encountered difficulties getting permission to build a machine room, we looked at renting existing property to get our equipment up and running fast. We also looked at short-term capacity-leasing options if it looked like our dig was going to be held up, to ensure our network path was in place, even if our own fiber wasn't. In addition, we augmented our core construction team of around 100 workers with additional labor whenever needed, to keep the project on track.”
Zhou says keeping the lines of communication open between the different technical and area groups also was critical. As a broadband services provider, the company took advantage of in-house competencies to supplement the traditional schedule of weekly meetings with videophone chats and a rigorous e-mail procedure that ensured team members were automatically copied on all discussions to keep everyone in the loop.
With Phase II of CNCnet completed three months ahead of schedule in October 2001, Zhou and his colleagues must only maintain the momentum and complete the final phase of the project. But while that was not due until December, the company has hastened to get its fiber lit. Thanks to a phased deployment plan, the company has been able to offer narrowband services like IP telephony to selected markets since early 2000. This generated revenues to fund ongoing build-out and to spur investor confidence ahead of a first-round equity placement in February 2001, which netted US$325 million from investors like Goldman Sachs and News Corp.
That money will help fund the final phase of the project, as well as being used to transform the company into a fully fledged public voice, data and mobile services provider. This follows the Chinese government's announcement in early January 2002 of a sectorwide restructuring that will see CNC become one of four national public carriers. With the company now obliged to take over China Telecom's operations in 10 northern provinces and absorb erstwhile rival, Jitong Communications, ahead of an official relaunch on February 12, the highly flexible culture fostered by the CNCnet project should stand the carrier in good stead in the frantic weeks ahead. PM
Sarah Parkes is a freelance journalist with more than 12 years experience in the telecom and IT sectors. Based in France, she is a regular contributor to a number of U.S. and European publications, including London's Financial Times.
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