PRC Net Dreams: Is Control Possible?

A report from U.S. Embassy Beijing September 1997

Summary: In the future Ministry of Telecommunications (MPT) officials want to reserve access to foreign Internet web sites for people (such as academics) who have a need for international communications. In their view, Internet service providers will wither away, replaced by a state-owned electronic information network. However, there is an alternative view. An Internet entrepreneur and State Council information policy advisor Edward Zeng says that internal PRC government debate on the future of Internet was settled three months ago in favor of openness.

Ministry of Posts and Telecommunications Plan Closed Intranet Limited Access to Internet

Economic pressures towards openness compete with political pressures towards regulation of information flows into China. The solution of this paradox will be define the future of the Internet in China. Chinese government officials concerned with that future are now considering how to deal with the problem of undesirable information flows into China. The Ministry of Posts and Telecommunications (MPT) champions a multi-media "backbone" with Chinese language multi-media content.

After establishment of the Chinese Intranet, access to the Internet would be limited, an MPT official told us, to those with a specific need such as scholars and university students. The MPT official said that within a few years the Multi-Media Backbone Intranet will become the dominant electronic information service provider in China and the Internet service providers will wither away. The details of this plan to stop the Internet from bringing undesirable information into China are vague in the minds of government officials. The plan may prove unworkable. Several Chinese government ministries including the Ministry of Public Security are closely associated with one or another of the current Chinese domestic networks, so the additional control the government gains from having a multi-media backbone may prove to be minimal. Moreover, if Internet access were limited to those with a need to know this might amount to giving Internet access to just those people most likely to latch onto foreign ideas not welcome by the Chinese government.

An MPT official told ECONOFF that China has made considerable progress in building a Chinese-language based domestic intranet based on the same technical standards as the Internet. The MPT official said that the PRC national Intranet would be like Shanghai On-Line -- a web browser- based information and communications system that works completely in the Chinese language. The Intranet would limit users to sites on the domestic Intranet except for those users who have a need to use the international Internet. According to the MPT official, control of the Internet in China is possible because all four network operators in the PRC (CHINANET, CERNET, CASNET, and GBNET) must use China Telecom microwave or cable links to reach Internet sites in other countries. Furthermore, all Internet service providers (ISPs) in China must be licensed by the MPT. The official also said the four Chinese network operators now exchange traffic within China so that it is no longer necessary for messages between Chinese networks to be routed through North America. Another Embassy contact pointed out that although Chinese networks are now interconnected inside China, these links are inefficient but make it easier to control network traffic flows. EMBOFFs also learned that the planning for the Chinese Intranet is being done in the newly-established Multimedia Bureau of the MPT.

Dragonpulse/Sparkice CEO Zeng: Economic, Technological Trends Towards PRC Gradual Opening Are Unstoppable

Sparkice CEO, PRC government information policy advisor and Dragonpulse founder Edward Zeng [Zeng Qiang] told EMBOFFs, "In China, if you push too hard you are dead. But if you work together with the government so that the government thinks that it is in control, then things will gradually become more and more open." As an example, Zeng said that if he had talked about privatization ten years ago, the government would have cut off my telephone service. Today, Zeng said, things are different. Today Zeng faces the challenge of outwitting a slow-footed former state monopoly that is reluctant to relinquish its power, however he does so with the approval of the higher levels of the PRC government.

"International Calls at One Percent of Current Rates..."

"The economic trend towards the opening of the Chinese economy and the technological trends towards openness are unstoppable," Zeng said. Zeng said Internet telephone is an example. "The first generation of Internet telephone was computer-to-computer. The present second generation has made it possible for an Internet telephone call to enter the ordinary telephone network at the far end. The third generation of Internet telephone, now in the experimental stage, will not require end users to have a computer at all," Zeng explained. Completely transparent telephone-to-telephone connections will be mediated by international Internet links that will multiply the number of people who can benefit from Internet telephone technology.

Zeng said that by working together with Unicom (The state-run company created to compete with MPT's China Telecom) and using voice compression technology that will only require a 4 kilobits per second data transmission rate for a telephone call, Sparkice will be able to offer telephone service to the United States for just one percent of its present cost. Zeng said that Sparkice will offer video conferencing as well as easy e-mail access at Internet Cafes throughout China. Sparkice is working with Beijing cable television to produce a dramatic television series about the Internet cafes are part of a great educational effort to teach Chinese people about the Internet, Zeng said. [Note: several people at U.S. Embassy Beijing now use Internet telephone software such as the Microsoft freeware Net Meeting and, net speed permitting, net video to talk with friends in the U.S. for nothing more than the Internet access fee averaging US$2 per hour. Advances in audio and video data compression techniques available in recent software, rather than any increase in network transmission speeds, have made this possible. End note]

PRC Government Internal Debate on Internet's Future Resolved in Favor of Openness

"Three months ago, there were policy discussions in the PRC government about how to stop the Internet or whether the Internet should be stopped. Openness won. President Jiang Zemin is committed to high tech and opening to the outside world", concluded Zeng. Zeng also told ESTOFFs that the requirement implemented one year ago that net users sign a promise not to use their Internet account illegally is less strictly enforced than before. He added that Sparkice makes no effort to verify any of the identifying information that customers put on the form. [Note: ESTOFF was not required to sign the "break no laws" implemented during mid 1996 pledge when he signed up with the China On Line Internet provider in early September. End note]

Unicom - Sparkice Alliance to Drive Down Phone Costs?

Unlike other ISPs, Sparkice, because it is 51 percent owned by Unicom, is clearly allowed under current PRC telecom regulations to provide basic telecom services, including long distance telephone and international data communications services, in direct competition to China Telecom. Unicom is the only company authorized to compete with China Telecom in these services, and Sparkice is the only ISP associated with it. According to Edward Zeng, Unicom's right to provide international data communications services is undisputed, but the right to carry voice telephony on international circuits is a grey area. Zeng says that Unicom's right to provide voice service over international circuits will become clearer over the next six months. [Note: International telephone calls are usually carried as digital signals in any case, so any distinction between the right to carry data transmissions and the right to carry voice transmissions may have already become untenable. End Note]