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Cui Hang: cloud network and local maintenance are Dr. Peng's magic weapons in transformation

2019-01-07

January 2, 2019, China's largest private value-added telecom operator - Dr. Peng declared the company had spent 400 million yuan to buy back a total of 39,728,000 shares, accounting for 2.77% of its total equity. Now Internet has become as common as water and electricity, so it's not easy to increase new users. How should Dr. Peng plan its future? Recently, Dr. Peng's general manager Mr. Cui Hang accepted an interview from Securities Times. Cui thinks Dr. Peng's direction is to be a business and home Internet service provider. "Cloud network foundation, local promotion and maintenance" is Dr. Peng magic weapon in transformation. And as the schedule of 5G commercialization is advanced, Dr. Peng and other private Internet enterprises will see new opportunities of development.

 

Cloud 

Assist with digital transition from cloud

Dr. Peng is the largest private Internet service provider in China. In many people's minds, its core brand business, "Great Wall Broadband", with its cost-effective, efficient and good services, has won trust of a great deal users. But in fact, Dr. Peng's business, in addition to home broadband services, also includes cloud data center, Internet-based corporate marketing, and Domy Box-based home video service platform.

In the era of rapid changes and upgrading of the industry, the traditional businesses, against the digital tide, have to embrace reform and innovation one after another, to broaden the sales channels, improve the internal efficiency, enhance the user experience. Cloud computing turns to be a rigid demand for enterprise restructuring and development. For the cloud services market, Dr. Peng comprises of four major business segments, 16 products in total, providing customers in the cloud sector with public cloud, private cloud, hybrid cloud, on-cloud service, multi-cloud management, cloud security. With a complete ecological closed loop, it offers one-stop solutions that address the "cloud" challenges with government, business, education, health care and other customers in digital transition.

Cui introduced that currently, Dr. Peng's data centers cover the whole industrial chain. It has established distributed and commercially available high-standard T3+ and T4 data center computer rooms in Beijing, Shanghai, Guangzhou, Shenzhen, Wuhan and Chengdu, covering a total area of more than 200,000 sqm, total cabinets amounting up to 30,000, and total installed capacity of servers exceeding 330,000 units. A nationwide telecom neutral data center cluster is thus formed. In the future, Dr. Peng will continue to expand the scale of data centers, increasing the amount of cabinets to 60,000, to therefore retain its position as the largest neutral third-party private data center.

"There's an additional advantage with Dr. Peng's data centers, that is, convenient user experience. You may notice that Dr. Peng's data centers are all placed in the best locations of first-tier and second-tier cities, spreading across the populated regions of Beijing-Tianjin-Hebei Region, Yangtze River Delta, and Pearl River Delta." Cui said, the geographical advantage and physical distance is helpful to enhance the user stickiness and make it easier to gain the trust of high-end customers.

 

Network

Overseas layout, potential with home and industrial Internet

Dr. Peng will continue to escalate in value-added Internet services. Currently, Dr. Peng continues to focus on Domy Box and OTT home video service platform, to enter the "home economy" industry from the telecom operator perspective, and dig deep into the consumption potential of more than 13 million active network users. Meanwhile, by content distribution, precise advertising, content consumption, the company's broadband profitability has been enhanced, hence raised value of ARPU.

Dr. Peng also put forward the concept of "cloud network-based, local promotion & maintenance" to conduct in-depth cooperation with some innovative companies. On November 9, at the 5th World Internet Conference in Wuzhen, Dr. Peng and WeDoctor, a unicorn company of medical technology, jointly released the country's first carrier-class Internet health application - "Health Network", thereby comprehensively upgrading the Internet health infrastructure and service experience. "Health Network" adopts cloud network technology, cloud-channel-device integration delivery, to achieve efficient operations of medical and health services and reliable transmission of data, to fully protect the privacy of user data, and guarantee the user experience. Cui introduced that Dr. Peng is to create a medicine network, an education network, a video network, a game network, and a finance network, and so on, making use of the "+Internet" opportunity to provide targeted industrial Internet services.

Cui also mentioned the subsidiary PLD Holdings Limited's full efforts in advancing the construction of the PLCN submarine cable project. The PLCN submarine cable project is the first submarine cable that directly links China, Hong Kong and Los Angeles, co-constructed by Dr. Peng, Google, and Facebook. The cable project provides communication services with more advanced technology, greater transmission capacity, faster speed, more stable quality and better services. Meanwhile, the company combines its cloud network strategy for portfolio sales. Now it has conducted pre-sale negotiations with a number of potential clients, including internationally renowned Internet companies and world-leading telecom operators. Some have already come to the basic agreement. The "PLCN submarine cable project" will contribute long-term stable cash flows and earnings for the company, and become an important point to extend to the overseas.

 

People

Activate local maintenance resources, and seize the opportunity of 5G

During the interview, Cui mentioned for several times a key word, that is, "Internet service." "We are an Internet company, we used to sell broadband with service, but now it is the era of Internet of everything, in which network application services will be rigidly demanded. No matter which operator's broadband is used, as long as you have the need, we could provide relevant services, whether it's repairing computer or configuring router, or even maintaining mobile phone, iPad, and smart home devices," said Cui.

In fact, as Dr. Peng completed its election of new board of directors and senior management appointment, the transformation had been already started. Mr. Cui is talkative and good at concluding. He has been recommending the company's new image either at the World Internet Conference in Wuzhen in October or at other public occasions, i.e., "business and home Internet service provider"

Cui believes that in the next 10 years, the whole society will shift from consumer Internet to industrial Internet. Dr. Peng will develop the data center and cloud services, build the business ecology of cloud network integration, to therefore position itself at a distance next to the residential and business customers - the last mile of digital life experience service. Dr. Peng's advantages also include its staff of more than 40,000 Internet technicians. It's now the era of IoT. All kinds of smart terminals are facilitating people's lives. But the user experience of broadband applications is not exactly proportional to the speed. Some older users, due to the lack of necessary skills, could not even open the telemedicine application, let alone performing a smooth video interaction with the community personnel. That inspired Cui's thoughts. What the broadband operator sells should not be just bandwidth, but also differentiated services to both end users and content providers, so that it can get rid of the "red sea" of a price war.

In this regard, Dr. Peng designed a new platform - "Xiaopeng Manager," or "the DiDi in the ISP industry" as Cui called so. Cui conceived that this application is developed mainly based on the 10+ million Great Wall broadband users' need for Internet maintenance, and can efficiently assemble more than 40,000 workers of the ground operation and maintenance personnel. Those who used to install the Great Wall broadband for community residents now turn to be the CTO, or expert-level technician in the neighborhood. Xiaopeng Manager also intends to make use of the social force, allowing part-time workers to get involved after Dr Peng's training and evaluation by its certification system. By exerting the advantage of the local maintenance resource, Dr. Peng's transition to be "an enterprise and home Internet service provider" has been fully activated.

As for the development of the 5G industry, which the market is quite concerned about, Cui believes it will bring about new opportunities for private enterprises, like Dr. Peng. "Due to higher frequency bands in 5G network construction, the base station coverage area will turn to be smaller, while the 5G application scenarios will rise. As such, to meet 5G's high speed and broad coverage requirements, the number of base stations should be greater than that of 4G base stations. And the construction of base stations shall require the community property resources, which are exactly the strength of Dr. Peng. And in many installation and maintenance projects, Dr. Peng's professional teams are also needed," said Cui. The collaboration of fixed-line and 5G will be a general trend in the era of 5G. If the full coverage requirement is met, the amount of fiber use for 5G will be 16 times greater than for 4G. However, due to the high density of current 4G base stations, it is expected that 5G fiber use would be 2 to 3 times than 4G. The country's investment on the 5G application market may reach several hundred billion yuan in the future. Dr. Peng's advantages in fixed network, base station construction, and equipment installation and maintenance will be further demonstrated with the coming of the 5G era.