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AUGUST 18 , 2000 VOL. 26 NO. 32 | SEARCH ASIAWEEK
A Net pioneer sees China competition ahead ALSO: • China's Net Plumber: Edward Tian is laying the fattest data pipes ever Edward Tian is laying the fattest data pipes ever James Ding started AsiaInfo with Edward Tian back in 1993. Since then, he's helped it become a leading Internet infrastructure and software provider to China's telecommunications industry. The Nasdaq-listed company claims to have laid the networks that carry more than 80% of China's Net traffic. Its revenues for the past 12 months were $60 million. Ding, AsiaInfo's chief executive, spoke with Asiaweek's Yasmin Ghahremani in Hong Kong recently: Everyone is rushing to increase China's bandwidth right now. But is that really so important, when PC penetration is still so low? Right now if you ask what is the number one barrier to the growth of the Internet in China, I would say bandwidth and the cost of the infrastructure. People can afford a PC fairly easily. But intensive use of the Net is more expensive. For businesses, that is also true. AsiaInfo used to pay $100,000 per month just for a 64k leased line. For business, once you are on the Internet, you want to send out as much traffic as possible and as much data as possible. You want to maximize your usage of the Internet. But right now the cost is traffic-sensitive, so it's definitely going to slow down the business growth or business usage of the Internet. Definitely, adding more bandwidth and having more basic transmission, transport - a layer of infrastructure — will help lower the costs by 50% to 60%. Do you think the government's moves to throw state-backed companies into competition are the right way to go about building the Internet in China? Unless you have competition, nothing will improve. [State-owned enterprises] are still better than no competition at all. If I'm comparing a monopoly versus at least four or five major players, I would say at least it's that much better to have four or five choices. Will WTO bring a lot of foreign competitors into the Internet market in China? I think there will be foreign players. But the major players who are going to call the shots will still be the locals. I think it's a control issue. The government is still quite sensitive about controlling a major [telecommunications] stake through domestic companies. At any rate, existing practices of domestic providers are quickly improving, so multinationals coming in will be facing more sophisticated players. Anyone who can survive the local competition, will find it's not that difficult to beat multinational competition. AsiaInfo is building a 311-city voice-over-IP (VoIP) network for China Unicom, which will allow users to make low-cost IDD calls over data lines. But the quality of (VoIP) is not good. The major value proposition is the overall high pricing of telephone service. Currently, if we look at the U.S., VoIP is not a big deal. The reason is wire lines are already cheap enough. Who would bother to go to voice-over-IP? The reason it is still pretty hot in China is because long-distance calls cost too much. If I tell you making a VoIP call is just 10% cheaper than using a wire line, and 15% cheaper than wireless, would you still bother to buy an IP phone card and punch in a 10-digit number to make a phone call? No you won't. You'll do whatever is most convenient. Write to Asiaweek at mail@web.asiaweek.com
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