When 24-year-old Beijing resident Xiao Xie called his telecom operator Beijing Communication Corp to apply for an asymmetric digital subscriber line (ADSL), a popular means of broadband connection, he was told the company would respond to his application with service in about 10 days.

Even though Beijing Communications has outsourced some applications and installation services to third parties, the increase in the number of ADSL subscribers is astonishing.

According to the China Internet Network Information Center, broadband users reached 31.1 million by June 30, compared with 17.4 million in the end of December.

The brisk growth in broadband users does not simply mean a gold mine to telecom operators. It will brings both challenges and opportunities to Internet companies, which provide content to users.

The renaissance of 263

The Beijing Capital Information Co Ltd, owner of the 263.net website, decided to change its name to Net263 Ltd on October 12, after using the previous name for six years.

The change does not reflect 263's intention to get rid of its image as a local Beijing business, but means the start of its renaissance, officials said.

The company, one of the most famous and influential firms in China's Internet industry, became prosperous from Internet connections and e-mail services from the emergence of the narrow-band Internet.

However, with the faster development of some of its peers like NASDAQ-listed Sina Corp, Netease.com Inc, Sohu.com Inc, and the rise of the broadband Internet, it faces mounting challenges: more and more people stop using the traditional dial-up Internet connection and other e-mail providers like Sina, Netease, and US giant Yahoo! That has posed increasing pressure on 263.

The company started a strategic transformation on October 12 and launched a multimedia communications service strategy.

"We are well in the process of entering a broadband society," said Huang Mingsheng, president and chief operating officer of 263.

To focus on broadband, 263 has given up its enterprise Internet connection service and sold its web hosting service-focused Internet data centre business to Beijing Communication.

Among its Internet connection business, it kept the Internet connection services to individual users, since it is a good way to spread its influence and reputation among Internet subscribers.

In multimedia communication services, 263 will centre around two lines: instant communications, as well as online storage and distribution.

In the instant communications arena, 263 acquired Hangzhou-based ET66, a major Chinese instant-messaging service provider, which specializes in large-scale video chat at the same time.

With the acquisition, 263 got 17 million registered broadband users from the latter, adding its total active users to 30.4 million by the end of September.

It was also granted a multi-party call licence from the Ministry of Information Industry and launched the service in Beijing and Guangzhou in August with almost 10,000 users, which will start in Shanghai and Wuhan next month.

Huang said that in the line of online storage and distribution business, e-mail service remains the most important one.

The company is one of the biggest paid e-mail service providers in China with 6.4 million users, but in the future, the e-mail service will be integrated with instant communications service.

Huang said 263 aimed to expand the user population to 50 million by next year with the launches of more integrated services in later this year and the next.

Li Xiaolong, chairman and CEO of 263, said his company had been reorganized into a limited company and may list on either a domestic or overseas market, but no timetable has been set.

Sina: Defending its throne

When Sina invested into the Hong Kong-based Sun Media Networks two years ago, broadcasting the TV channel's programs on Sina's website was a major way to co-operate.

However, few people believed it would become a reality to watch TV programs on the Internet through a 56-kilobyte modem, which meant it might take hours to watch a TV program.

In the past two years, Sina has consolidated its position as the Number One Internet portal in China and survived the winter of the Internet in 2001 and 2002 without the online TV business.

However, with the explosive growth of the broadband Internet, how to maintain its leadership in the narrow-band age in a society of broadband is a major challenge for Sina.

The NASDAQ-listed company decided to position itself as an interactive entertainment platform in the era of broadband.

Instant messaging service is believed by Sina CEO Wang Yan as the central link to all Sina services on a broadband Internet.

The company is expected to launch its instant messaging service Sina UC 2005 today in Beijing after acquiring UC, maybe the second most famous instant-messaging tool in China after QQ of Shenzhen-based Tencent.

The Sina UC 2005 integrates the instant chat service with Sina's strengths like news, e-mail, casual games and online dating.

Users can also share their drawings painted in Sina UC with other friends or play games with them together in Sina UC.

With Sina UC, Sina's users of news, e-mail, online games, wireless messages, can form a community and add their loyalty.

At the same time, it will be easier for Sina to promote its services and integrate these resources.

Besides instant messaging service, Sina finally saw its vision two years ago become popular.

During the Olympics Games in Athens, Sina partnered with China Interactive Sports Co Ltd under the State Sports General Administration to provide interviews with Chinese champions.

The programs were sold to more than 30 TV channels in China, which wanted to find an alternative to China Central TV, the official broadcaster of the Olympics Games in China.

Sina also formed partnerships with several Chinese TV channels to broadcast their TV programs on its website with the popularity of the broadband Internet.

Although Wang declined to say how much revenue his company made from online broadcasting, he believed it was a good beginning for Sina in extending its leadership to the broadband age.

A Chinese Disney

Chen Tianqiao and his Shanda Interactive Entertainment Ltd have become a legend in China.

Chen was the richest man in China's IT industry ranked by Euromoney on Thursday.

According to Beijing-based research company Analysys, Shanda takes 46 percent share of the online game market in China. Its revenues are estimated to reach 1.6 billion yuan (US$193 million) this year, out of 3.6 billion yuan (US$435 million) of the country's total.

When many people believed that the Internet bandwidth was too narrow to conduct large-scale online games in 2002, Chen started to operate Mir, a massively multiplayer role play game imported from South Korea, which became an immediate success.

The popularity of broadband makes it easier for users to play on the Internet, but it also means that game developers need to design more sophisticated and attractive games.

Shanda decided to invest US$10 million this year to develop five to six new games this year.

The company acquired or invested into six companies this year to shore up resources in online game development, casual games, online literature, and mobile games.

It also extended its game platform from computers from mobile phones Digital-Red Mobile Software Co Ltd in September.

In June, it also partnered with Alcatel to bundle its games with the French telecom equipment giant's ADSL products.

Shanda also formed an alliance with Beijing Great Wall Broadband Network Service Co Ltd to promote its games among the latter's subscribers.

It also issued US$150 million convertible bonds earlier this month to get more cash for future expansion.

However, Chen still needs to make additional efforts to build his company into a Chinese Disney his dream although Shanda's leadership in online gaming is hard to challenge now.

(China Daily October 27, 2004)