Can the strategic cooperation between the hottest

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Can the strategic cooperation between telecom and Unicom accelerate the establishment of CDN joint venture

on January 13, 2016, Chinatelecom and China Unicom held the signing ceremony of the strategic cooperation agreement on Resource Co Construction and sharing, customer service and quality improvement in Beijing. According to the agreement, the two sides will carry out in-depth cooperation in five aspects in the future: Network Co Construction and sharing, terminal, network interconnection, innovative business and international roaming. At the signing ceremony, Yang Jie, general manager of Chinatelecom, once again denied the rumors of the merger of Chinatelecom and China Unicom. Although the merger of the two companies faces many complex problems and cannot be carried out in the short term, there are still many cooperation points between the two sides at the specific business level, even including in-depth cooperation at the capital level. The important one is CDN service, which is also an important area of network interconnection in the five aspects. Based on the information about the establishment of CDN joint venture by the two companies at the end of 2014, we can't help asking: will the strategic cooperation between telecom and Unicom promote the establishment of CDN joint venture? This paper analyzes this

first, network interconnection is the key area of strategic cooperation between Chinatelecom and China Unicom

according to the strategic cooperation agreement, there are five specific aspects of strategic cooperation between Chinatelecom and China Unicom: (1) further promote network co construction and sharing, accelerate network coverage, and improve network service capacity. After the implementation of major new national standards, they will assist each other in business recovery in the event of disasters, emergencies and important support, so as to improve the emergency communication support capacity of both sides; (2) Enrich the terminal categories, better meet the diversified needs of users, and jointly promote six modules all in one to become a national standard; (3) Improve the quality of network interconnection and user service perception; (4) Adopt new mechanisms and market-oriented operation to carry out innovative business cooperation; (5) Jointly carry out international roaming business cooperation with overseas operators to improve the quality of international roaming services

the key objectives of strategic cooperation include: (1) implementing the new concept of innovation, coordination, green, openness and sharing proposed in the 13th five year plan by implementing the central enterprises with practical actions. By opening up and sharing various resources including networks, businesses and services, and exploring cooperation at all levels such as business and capital, we will build a new format for industrial development; (2) Jointly promote the supply side structural reform of networks and terminals, realize cost reduction and efficiency increase, improve the operation efficiency of state-owned assets, and provide better networks and services for customers and promote information consumption by improving the quality of the supply side; (3) Provide a better information service environment for mass entrepreneurship and innovation, and support the rapid progress of the Internet + action plan and made in China 2025

from the strategic cooperation fields and objectives, it can be seen that whether for Chinatelecom or China Unicom, the ability to strengthen and consolidate the channels of both sides is the most fundamental, including mobile network and fixed network. On the solid side, how to optimize the long-standing connectivity issues through in-depth cooperation is of great significance at the business operation level. Can cooperation at the capital level make a breakthrough in this field first? This will certainly become the focus of attention of all parties, especially the listed companies with CDN services as their main business, including Su, Lanxun and Dilian

II. Rumors and difficulties about the establishment of a CDN joint venture between Chinatelecom and China Unicom

as early as October 24, 2014, a message that China Telecom and China Unicom would jointly contribute to the establishment of a CDN company was relayed by major media in the industry. The main contents are as follows:

after more than half a year of discussion on the joint venture, the strategic investment department of the two groups will contribute to the establishment of the company, which may be listed in the near future. In addition to Chinatelecom and China Unicom, two private companies will also be included (according to Caixin, the two private companies are Beijing Haohan deep Information Technology Co., Ltd. and Beijing YUELIAN Information Technology Co., Ltd., both of which operate CDN and intelligent pipeline businesses). The newly established company is operated by Chinatelecom cloud computing branch. In addition, it was also revealed that Wang Xiaochu, the former chairman of Chinatelecom group, mentioned in the Guangdong research work instruction that the establishment of CDN company by Chinatelecom and China Unicom can greatly improve the quality of the two basic operators and compete with other Internet companies

however, the news of establishing a CDN joint venture has not been officially confirmed by Chinatelecom and China Unicom. The most critical evaluation standard for CDN service level is the whole process. However, limited by the pattern of South China Telecom and North China Unicom, the middle zone between telecom and China Unicom is the key to the survival of many CDN service providers. Therefore, if the plan of the two joint ventures to establish CDN companies can be implemented, it is bound to bring a new round of impact and even reshuffle to China's CDN market. On the day after the announcement of the establishment of the joint venture, the share price of sushi technology, which is listed in China, fell by more than 8%. In the United States, the production capacity of NASD lithium battery materials will gradually shift to China. The share price of Lanxun, which is listed on AQ, fell by nearly 6%. The short-term and long-term impact of the establishment of CDN joint venture on the industry can be seen

however, the news of this joint venture is only in the rumour stage. First, in response to the investor's query, Chinatelecom said that Chinatelecom currently has no plan to establish a CDN subsidiary with China Unicom. This means that the CDN joint venture may only be an important plan, and it has not been considered to be included in the listed company for the time being. China Telecom cloud computing branch has only been established and operated for a short time. In fact, it faces many problems in undertaking the operation of the specific CDN joint venture. Therefore, looking back on the news of the establishment of CDN joint venture, it seems that it is both reasonable and meaningful in other aspects

however, these are not important. In terms of time, so far, the joint venture CDN company has not seen any further action in more than a year. It can be seen that the two companies still face difficult problems in the joint venture, such as the design of the equity structure of the joint venture parties; Whether the joint venture has tried to keep the 3D printing technology at the group level or incorporated it into the asset composition of their respective listed companies; Whether the joint venture will cause new monopoly problems, resulting in unnecessary passivity (this is the most critical point, and it also needs to repeatedly communicate with stakeholders including the competent authority) and the team formation and running in of the joint venture

therefore, even though the senior management of Chinatelecom and China Unicom have moved the idea of establishing a CDN joint venture, they still need to continue their efforts to be listed for operation

III. Prospect: can the strategic cooperation between Chinatelecom and China Unicom make a breakthrough in the CDN joint venture

2015 was a year when rumors of merger between Chinatelecom and China Unicom were very popular. In particular, the in-depth cooperation between the two companies in networking, co construction and sharing made some people more firm in their judgment on the merger. However, due to the many operation details involved in the merge, the test curve and test scheme information are displayed in the query results in a short time; It is impossible for companies to merge the sensor setting module of the tensile testing machine. However, there is more room for in-depth cooperation at the specific business level. In the author's opinion, taking the time dimension a little longer and adopting a more market-oriented approach to cooperation at the specific business level can not only provide experience for the cooperation between the two companies at a higher level, but also be a kind of intentional exploration. It can not only test the response of the industry, but also leave room for the relevant regulatory authorities in operation. Therefore, we are looking at the specific contents of the five major aspects of strategic cooperation signed by Chinatelecom and China Unicom at the beginning of the year. Personally, I believe that in addition to co building and sharing in the mobile network to counter the competition of China Mobile, at the solid level, the establishment of a CDN joint venture has more strategic value. This is an effective means to further consolidate the competitive advantages of both sides, so as to further realize network complementarity and data center complementarity and improve network quality. This is also an effective way to deal with some new competition in the fixed business of China Mobile in the future through the joint efforts of both sides

in addition, with the rapid development of cloud computing service providers represented by Alibaba cloud, Chinatelecom and China Unicom can effectively deal with the potential challenges they may bring in the CDN business field through joint ventures. With the rapid development of the Internet, the dependence on the network is becoming stronger and stronger, especially the growing popularity of video services. The problems caused by the segmentation of the North-South network should be solved by the operators themselves, or continue to leave the business opportunities in this vast middle zone to the third-party CDN service providers. Under the pressure of new Ott challenges faced by operators, it needs to be carefully reviewed again

in view of the current period of love between Chinatelecom and China Unicom, in terms of networking services, the first breakthrough in the CDN joint venture will be a highlight of the strategic cooperation between the two sides in 2016. Both sides have consensus, foundation and mutual needs. At the same time, this is more realistic and meaningful than the so-called merger between the two companies. What's next? Will this be a true rumour (a distant prediction)

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