1. Broadband In China ADSL, LAN, Cable Modem, Wireless LAN and Satellite Broadband.

2. Telecom Market Overview Existing Market: 400 million Telephones, 200 million Cellar phone, 58 million Internet users, 3 million broadband users and 20 million “Local Smart Phone” users. 2002 Highlight: CDMA: 7 million users “Local Smart phone” increased from 10 million to 20 millions and cover 300 cities in the past 2 years SMS: 100 billion messages, revenue $1 billion US LU: Invested $2 billion US in China Nokia: $3 billion US revenue

3. Broadband Access Broadband users increased from 1 million to 3 million in 2002. China Telecom 50%, CNC 20% and others 30% Access methods: ADSL: China telecom, CNC LAN: CNC, China Broadcasting Net, Bluewave WWW and Great Wall Broadband. Wireless: CNC and others Cable modem: China Broadcasting Net Satellite: China Satcom, Two-way Com, others

4. ADSL ADSL is the biggest winner for broadband access in 2002. It should have good business future. Reached 2 million users; estimated 6 million by 2003 end. Successful business model: Low cost to beat other competitors: installation fee $35, services fee (unlimited access) $20. Expanded new services: VOD, games, education, tele-medicine, stock exchange and home communities. Limited investment and relatively good returns Employ existing phone line Easy to install and service

5. LAN Deployed metro LAN in cities since 2000 China Cable Net, Great Wall Broadband, Blue Wave WWW and CNC. Only a few success cases China Cable in Zhan Jiang has 5000 to 10000 users and barely breakeven. China Cable + CNC success in two cities. CNC provides service for about 2000 office buildings and small communities in cities. It combines network resources of China Cable Net to provide LAN in some cities. Failed case Blue Wave WWW bankruptcy after spend $10 million US in two years Great Wall changed to become an ISP and set up Great Wall Broadband Dream

6. Cable Modem Cable Modem trials in many cities since 1999, but fails to be deployed widely. Shanghai, approximately 20 thousands, Beijing several thousands. The Cable operators do not have ICP and ISP license. Insufficient investments for system upgrade. No successful business case. Require backbone broadband access facilities linking operators such as the old @home etc. May be too late for mass market deployment.

7. WLAN WLAN is the hottest investment project in China since 2002. Leaders: CNC, China Telecom, China Mobile Frequency band: 2.4 GHz and 5.8 GHz Market: Office buildings for enterprises and companies; schools; hotels and airport, small communities. Success cases: CNC WLAN covers about 2000 office buildings in 50 cities. University campuses The competitors: 3G, GPRS, data offerings from Local Smart Phone operations.

8. Satellite DVB/IP and Direct PC are the two systems trying to provide broadband data for users. The operators: CETV, Two-Way Satcom, China Satcom, CNC, China Telecom, and others. Frequency band: Ku System providers: Hughes, Norsat, Gilat, Comstream, Web Sat, Skystream Main market: Education, stock information, Success: CETV deployed about 15 thousands receiving systems Potential problems  Not at business breakeven  Too many small operators  No killer applications

9. Conclusion Broadband access increases rapidly in China Many good business opportunities Wireless LAN + Cable Net Cable Net has the backbones in the cities Low investment and easy to deploy Progression from small implementations Competitive in high density areas