exv10w3



 





Exhibit 10.3





EXECUTION COPY




TECHNICAL SERVICES AGREEMENT




By and Among




CHlNACAST TECHNOLOGY (SHANGHAI) LIMITED




THE CCLX SHAREHOLDERS




and




CHlNACAST LI XIANG CO LTD




Dated as of 11th August 2003




 









 








     This
TECHNICAL SERVICES AGREEMENT (“Agreement”) is entered into
as of
11th August
2003, by and among ChinaCast Technology (Shanghai) Limited, a wholly foreign-owned limited
liability enterprise organized and existing under the laws of the
People’s Republic of China (“PRC”) (“CCT
Shanghai”); CHINACAST LI XIANG CO LTD (CHINESE
CHARACTERS), a limited
liability company organized and existing under the laws of the PRC (“CCLX”); CHINACAST CO., LTD.
a limited liability company organized and existing under the laws of the PRC, (“CCL”); and LI
WEI, an individual and citizen of the PRC, (“LW”) (CCL and LW are referred to collectively as the
“CCLX Shareholders”). CCLX and CCT Shanghai are each individually referred to herein as a “Party”
and both are collectively referred to herein as the “Parties”.



RECITALS




     WHEREAS, CCLX wishes to secure the assistance of CCT Shanghai to assist CCLX in the
implementation of CCLX’s businesses in the PRC, which are in relation to the provision of computer,
telecommunications, and information technology products and services including but not limited to
the provision of internet service and content and generally, to perform all acts, matters and
things as may be consistent with, necessary for and incidental to the attainment of the foregoing
object (the “Business”);



     AND WHEREAS, CCT Shanghai wishes to assist CCLX to implement the Business;



     NOW THEREFORE, in consideration of the foregoing and the mutual promises, covenants and
agreements contained in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are acknowledged expressly, the Parties hereby agree as follows:



ARTICLE I. PROVISION OF SERVICES AND ANCILLARY EQUIPMENT




     Section 1.1 Services. CCT Shanghai will, during the term of this Agreement and to the
extent of CCLX’s needs, provide and CCLX will take and pay for the Services set forth in Appendix
A, with respect to the Business. CCT Shanghai will provide the Services solely in the capacity of
an independent contractor and consultant to CCLX. The General Manager of CCLX will retain all
authority and responsibility to conduct the affairs of and to manage CCLX. CCT Shanghai may, at
its option, assign any of its rights hereunder and/or delegate the performance of the Services
described in this Section 1.1 to a subcontractor or affiliate of CCT Shanghai; provided that any
such assignment, delegation, or subcontract will not relieve CCT Shanghai of its obligations
hereunder. CCLX shall not assign this Agreement without the prior written approval of CCT
Shanghai.



     Section 1.2 Equipment. In connection with provision of the Services hereunder, CCT
Shanghai will supply to CCLX for its use ancillary Equipment as set forth in Appendix B hereto
together with certain associated software and technical documentation. Such use of ancillary
Equipment by CCLX will be without additional charge.



     Section 1.3
Obligation to Return Equipment. Upon the occurrence of any of the
following events in the determination of CCT Shanghai, CCLX will promptly take all action to



1









 




deliver and return the Equipment and the related software and documentation in the possession of
CCLX to CCT Shanghai, except to the extent CCT Shanghai has waived its right to the return of such
Equipment as contemplated in Section 2.3 hereof: (i) termination of this Agreement, or (ii)
material breach by CCLX of this Agreement, the pledge agreement among ChinaCast Co., Ltd. (“CCL”),
Beijing Col Network Technology Co., Ltd., Shenzhen Zhongxun Teng Investment Development Co., Ltd.,
Tibet Tiantai Investment Management Co., Ltd. and CCT Shanghai dated November 15, 2000 and amended
pursuant to the supplemental deed of even date between the same parties (collectively, the “CCL
Pledge Agreement”) or the pledge agreement among CCLX, CCL, Li Wei and CCT Shanghai of even date
(the “CCLX Pledge Agreement” and together with the CCL Pledge Agreement, the “Pledge Agreements”).
In the event CCLX fails to promptly and fully return the Equipment in good operating condition and
the related software and documentation to CCT Shanghai in its sole determination, such event shall
be an equipment return default (“Equipment Return Default”), and CCT Shanghai shall be entitled to
immediately avail itself of any and all legal actions and proceedings to recover the Equipment
and/or to foreclose upon the Pledged Collateral pursuant to each of. the Pledge Agreements.




     Section 1.4 Rights to Use Equipment and Software. CCT Shanghai
hereby
grants to CCLX the non-exclusive, non-transferable right to use all Equipment and software
provided by CCT Shanghai under this Agreement solely in the conduct of the Business.



     Section 1.5 Warranty. CCT Shanghai warrants that the Services will be provided in a
good and workmanlike manner, exercising that degree of skill, diligence, prudence and foresight
which would reasonably be expected from a fully skilled, experienced and competent contractor
and/or operator engaged in the same type of undertaking under the same or similar conditions in
the same or a similar location. CCLX’s sole and exclusive remedy for breach of this warranty will
be the provision of replacement Services by CCT Shanghai. CCT Shanghai makes no other warranty,
express or implied, relating to the Services, ancillary Equipment, software, know how or other
things delivered under this Agreement.



ARTICLE II. COMPENSATION




     Section 2.1 Compensation. As compensation for the performance of the Services,
including the provision of ancillary Equipment, CCLX will pay to CCT Shanghai on the tenth
business day of each calendar month, in Renminbi and in immediately available funds in an account
designated by CCT Shanghai, service fees in an amount equal the difference between the total cash
revenue CCLX has received in the preceding month and CCLX’s cash paid out or allocated to pay for
the operating expenses (including without limitation cost reimbursements and taxes as contemplated
in Section 2.2 and 2.4) as agreed between CCLX and CCT Shanghai from time to time, for that
preceding month in amounts not exceeding the applicable monthly operating expenses budget in the
CCLX business plan approved by the Board of Directors of CCLX from time to time (“Service Fee”).



     Section 2.2 Cost Reimbursement. CCLX will, within 30 days of receipt of CCT Shanghai’s
invoice with reasonable supporting documentation, reimburse CCT Shanghai for all costs and fees
incurred in connection with the exportation, importation, shipping and delivery of the Equipment,
including, but not limited to, freight, customs duties, taxes, warehousing, and insurance costs.



2









 





     Section 2.3 CCT Shanghai Right to Decline Return of Equipment. CCT Shanghai may, from
time to time, subject only to applicable PRC law and to the terms of each of the Pledge Agreements,
elect to decline the return of any item of equipment (the “Transferred Equipment”) to CCLX and
cause Relinquishment (as defined in the Pledge Agreement). Upon receipt of notice of Relinquishment
(as specified below), the CCLX Shareholders shall assign, transfer and deliver to CCT Shanghai, or
its designated Affiliate (as defined in the Pledge Agreement) or third party, free from any
interest of the CCLX Shareholders all of their respective right, title and interest in and to the
corresponding amount of Ownership Rights (as defined in each of the Pledge Agreements) to be
transferred as set forth in the notice of Relinquishment. The CCLX Shareholders shall promptly take
all actions to execute any documents or instruments necessary to initiate and complete all
proceedings and procedures required to transfer their respective Ownership Rights. Such
Relinquishment, once effected, shall terminate CCLX’s obligation under Section 1.3 above to return
such Transferred Equipment to CCT Shanghai.



     CCT Shanghai will make such election by providing to CCLX a written notice of Relinquishment
together with a calculation of the average of the replacement cost of the Transferred Equipment
and the original cost of such Transferred Equipment (such average being the “Cost of Transferred
Equipment”) together with a calculation of the number of shares in CCLX which are of equal value
to such the Cost of Transferred Equipment, such •calculation to be made by dividing the net asset
value of CCLX (as determined by CCLX’s accountants based on CCLX’s books of the close of the most
recent calendar quarter increased by the Cost of Transferred Equipment), by the total number of
Ownership Certificates as of the close of the most recent calendar quarter. In the event CCLX
disputes in good faith any of the foregoing calculations, CCT Shanghai may retain an
internationally-recognized independent accounting firm selected by CCT Shanghai to make such
calculations and the Parties will be bound by the calculations of such accounting firm. CCLX will
pay for the services of the accounting firm if such firms binding calculations are no more
favorable to CCLX than CCT Shanghai’s calculations, which CCLX challenged, otherwise, CCT Shanghai
will pay for the services of the accounting firm.



     Section 2.4 Taxes. CCLX will pay all import duties, value-added taxes and business
taxes arising from the provision of Services and ancillary Equipment set forth in Appendices A and
B respectively.



ARTICLE III. TERM




     This Agreement will be effective upon its execution by the Parties and will continue for a
term of twenty years, provided that CCT Shanghai may terminate this Agreement without cause by
giving CCLX notice of termination no less than one year prior to the effective date of
termination.



ARTICLE IV. LIMITATIONS OF LIABILITY




     Section 4.1 Limitation of Liability. Notwithstanding anything to the contrary
contained in this Agreement, neither CCT Shanghai nor its shareholders, nor any of its or their



3









 




respective directors, officers, agents, or employees, nor any person or entity controlling any of
the forgoing will be liable to CCLX for any claim arising under or in connection with this
Agreement except claims for injury or death caused to persons or damage to tangible personal
property to the extent caused by CCT Shanghai and except for claims based on CCT Shanghai’s gross
negligence or willful misconduct in the performance of its obligations hereunder. No act or
omission which may be the result of an error of judgment or mistake made in good faith will be
considered gross negligence or willful misconduct. Notwithstanding anything to the contrary
contained in this Agreement, CCLX will have no right to recover indirect, special, incidental,
consequential, or punitive damages or damages for loss of profits that may result from any action
or inaction of CCT Shanghai in connection with this Agreement.




     Section 4.2 Force Majeure. Failure of either Party to perform any obligations
hereunder will be excused (except that any obligation to pay money will not be excused) to the
extent such failure is attributable to events which are beyond the control of the defaulting Party
including, without limitation, earthquakes, typhoons, flood, fire, war, or the action or inaction
of any governmental authority (events of “Force Majeure”). A Party claiming the event of Force
Majeure will notify the other Party within fifteen (15) days,
explaining the nature of such event of Force Majeure, the anticipated duration and actions required by the affected Party to correct
the deficiencies resulting from such event. Upon an event of Force Majeure, the Parties will
immediately consult with each other to find an equitable solution and will use -commercially
reasonable efforts to mitigate the consequences caused by such event.



ARTICLE V. ADMINISTRATION




     Section 5.1 Representative. Each Party will, by notice to the other Party, appoint one
individual who will represent the appointing Party in all matters relating to this Agreement.
Either Party may change its representative at any time by notice to the other Party.



     Section 5.2 Right to Inspect. CCLX will have the right, at its reasonable request and
expense, to inspect any Service or ancillary Equipment provided under this Agreement and to
inspect any records kept by CCT Shanghai as required by this Agreement.



     Section 5.3 Employees. All personnel used by CCT Shanghai in the performance of this
Agreement will be employed or otherwise retained by CCT Shanghai and will not be deemed employees
of CCLX. CCT Shanghai will be responsible for supervising such individuals, for paying all salaries
and benefits and for meeting all government liabilities with respect to such individuals.



     Section 5.4 Exchange of Information and Confidentiality. The Parties will exchange
information as may be reasonably necessary to implement this Agreement. Each Party will maintain
in confidence and will use solely for the purposes of this Agreement all information disclosed by
the other Party in a writing marked “Confidential” or “Proprietary” provided that:



     a. The receiving Party may disclose such information in compliance with any requirement of any
governmental authority, provided that the receiving Party uses best reasonable efforts to afford
the disclosing Party notice and an opportunity to object to such disclosure;



4









 





     b. The receiving Party may disclose such information to its agents or employees
who have a need to know such information and who have agreed in writing to protect such
information from further disclosure on terms substantially similar to the terms of this
Section 5.4; and



     c. The receiving Party may disclose such information if such information has
entered the public domain (other than through the unauthorized disclosure of the receiving
Party).



ARTICLE
VI. MISCELLANEOUS




     Section 6.1 Authority. Each of the Parties hereby represents and warrants to the
other Party that each has the power to execute and perform this Agreement; and that this Agreement
upon execution will constitute the valid, lawful, binding and enforceable obligations of each
Party.



     Section 6.2 compliance with Law. The Parties will comply with all laws in the
performance of this Agreement and their respective business activities. Without limiting the
foregoing, CCT Shanghai and CCLX agree not to pay or promise to pay or give or promise to give
anything of value, either directly or indirectly, to an official of the Chinese or any other
government for the purpose of influencing an act or decision of any such government or its
officials in connection with the performance of this Agreement and their respective business
activities.



     Section 6.3 . Relationship of Parties. The Parties will perform their obligations
under this Agreement as independent contractors. Nothing in this Agreement will render the Parties
hereto liable as partners, associates, or joint venturers or to create a partnership, joint
venture or association.



     Section 6.4 Governing Law; Dispute Resolution. This Agreement will be governed by, and
construed in accordance with, the laws of the PRC. The Parties will use their best efforts to
resolve all disputes arising in connection with this Agreement promptly through friendly
negotiations. In the event that no settlement is reached within thirty days following notice by one
Party to the other of the occurrence of a dispute, the dispute will, at the request of either
Party, be referred to and finally resolved by arbitration in Beijing at the China International
Economic and Trade Arbitration Commission (“CIETAC”) in accordance with its Rules then in effect
(which Rules are deemed to be incorporated by reference into this section). Such arbitration will
be conducted in the English and Chinese languages by a panel of three arbitrators. Each of CCLX and
CCT Shanghai will appoint one arbitrator. The third arbitrators will be mutually agreed upon by
CCLX and CCT Shanghai. In the event CCLX and CCT Shanghai fail to agree within 20 days, the third
arbitrator will be appointed by CIETAC pursuant to its Rules within 30 days from the date of
receipt of notice to make such appointment. If selected pursuant to the immediately preceding
sentence, the third arbitrator must be chosen from among the CIETAC panel of arbitrators from one
of the following countries: Australia, Canada, Germany, Hong Kong Japan, Singapore, Sweden,
Switzerland and the United States. The arbitrators will decide in their award the allocation of
costs, including the arbitrators’ fees and all other costs to which the dispute may give rise. The
award of the arbitrators will be final and without appeal. Any



5









 




competent court may enforce such award.




     Section 6.5 Language. This Agreement is written and executed in both the English and
Chinese languages, each of which will be of equal force and effect.



     Section 6.6 Amendments. This Agreement and its provisions may be amended,
interpreted, waived, discharged or terminated only by a writing signed by each of the Parties
hereto.



     Section 6.7 Notices. All notices and other communications required or permitted
hereunder shall be in the English language, in writing and shall be (i) mailed by registered or
certified mail, postage prepaid; (ii) sent by facsimile or electronic mail with electronic
confirmation of receipt; or (iii) delivered by hand or by an internationally-recognized overnight
courier with written confirmation of receipt, addressed (a) if to a party hereto, at such Party’s
address set forth below, or at such other address as such Party shall have furnished to the other
Parties in writing:



	 	 	 	 	 
	If to ChinaCast Technology (Shanghai) Limited:
	Address:	 	8th Floor, Tianjin Building

167 Connaught Road West

Hong Kong
	 

	 	Attn:
	 	Mr Ron Chan
	 

	 	Tel:
	 	852 2811 2389
	 

	 	Fax:
	 	852 2811 2973
	 

	 	E-mail:
	 	ronchan@chinacast.com.cn
	 
	 	 	 	 
	If to CCLX:
	 	 	 	 
	Address:	 	15th Ruoy Chai International Building

No. 8 Yong An Dong Li

Jian Guo Men Wai Avenue

Beijing 100022

PRC
	 

	 	Attn:
	 	Mr Yin Jian Ping
	 

	 	Tel:
	 	86 10 6566 778
	 

	 	Fax:
	 	86 10 8528 8366
	 

	 	E-mail:
	 	yinjp@chinacast.com.cn
	 
	 	 	 	 
	If to CCL:
	 	 	 	 
	Address:	 	15th Ruoy Chai International Building

No. 8 Yong An Dong Li

Jian Guo Men Wai Avenue

Beijing 100022

PRC
	 

	 	Attn:
	 	Mr Yin Jian Ping
	 

	 	Tel:
	 	86 10 6566 778
	 

	 	Fax:
	 	86 10 8528 8366
	 

	 	E-mail:
	 	yinjp@chinacast.com.cn






6









 






	 	 	 	 	 
	If to LW:
	 	 	 	 
	Address:	 	15th Floor, Ruoy Chai International Building

No. 8 Yong An Dong Li 
Jian
Guo Men Wai Avenue 
Beijing
100022 
PRC
	 

	 	Tel:
	 	86 10 65667788
	 

	 	Fax:
	 	(86) 10-8528 8366
	 

	 	E-mail:
	 	wei.li@chinacast.com.cn





Each such notice or other communication shall for all purposes of this Agreement be treated as
effective or having been given (x) in the case of personal delivery or delivery by facsimile or by
electronic mail, on the date of such delivery, (y) in the case
of an internationally-recognized overnight courier, on the fifth business day after the date when sent and (z) in the case of
mailing, on the tenth business day following that on which the piece of mail containing such
communication has been deposited in a regularly maintained receptacle for the deposit of mail,
addressed and mailed as aforesaid.




     Section 6.8 Further Assurances. CCT Shanghai and CCLX each agree to execute and
deliver such additional documents and to take such additional actions as may be necessary or
appropriate to effect the provisions of this Agreement and all transactions contemplated hereby.



     Section 6.9 Severability. In the event that any provision of this Agreement becomes
or is declared by a competent authority to be illegal, unenforceable or void, this Agreement
shall continue in full force and effect without said provision, and the Parties shall promptly
negotiate in good faith (such negotiations to be subject to the arbitration clauses of this
Agreement) a legal and enforceable replacement provision which as nearly as possible puts the
Parties in the position in which they would have been were such provision not declared illegal,
unenforceable or void.



     Section 6.10 No Third Party Beneficiary. Nothing in this Agreement, express or
implied, is intended to confer upon any Person other than the Parties hereto and their
respective permitted successors and assigns any rights, benefits, or obligations hereunder.



     Section 6.11 Remedies Cumulative. Subject to the limitations set forth in Article
IV hereof, the rights and remedies available under this Agreement or otherwise available will be
cumulative of all other rights and remedies and may be exercised successively.



     Section 6.12 CCLX Shareholders. CCL and LW jointly and severally agree to the
terms and conditions of this Agreement and shall take any and all action to ensure the due and
prompt performance of this Agreement by CCLX and each of the CCLX Shareholders.



     Section 6.13 Counterpart Execution. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original but all of which together will constitute
one and the same instrument.



7









 





     IN WITNESS WHEREOF, the Parties and the CCLX Shareholders hereto have caused this Agreement to
be executed and delivered as of the date first written above.



	 	 	 	 	 
	 

	 	CHINACAST TECHNOLOGY (SHANGHAI) LIMITED	 	 
	 
	 	 	 	 
	 

	 	By:
/s/ Chan Tze
Ngan

Name: Chan Tze Ngan

Title: Director

	 	
	 
	 	 	 	 
	 

	 	CHINACAST LI XIANG CO LTD	 	 
	 
	 	 	 	 
	

	 	By:
/s/ Yin
Jian Ping

Name: Yin Jian Ping

Title: Director
	 	 
	 
	 	 	 	 
	 

	 	CHINACAST CO., LTD.	 	 
	 
	 	 	 	 
	 

	 	By: 
/s/ Yin Jian Ping

Name: Yin Jian Ping

Title: Director

	 	
	 
	 	 	 	 
	 

	 	LI WEI	 	 










8









 






APPENDIX A 




SERVICES




Statement of Work

For Technical Goods and Services To

ChinaCast Li Xiang Co Ltd from

ChinaCast Technology (Shanghai) Limited




1. INTRODUCTION



This Statement of Work (“SOW”) describes certain technical services and other advice, consulting,
and services, and the provision of ancillary Equipment, Software and Know-How (individually and
collectively “Services”) that ChinaCast Technology (Shanghai) Limited (“CCT Shanghai”) will
provide to ChinaCast Li Xiang Co Ltd (“CCLX”) in conjunction with CCLX’s 3 primary areas of
business, being;





	1.	 	Turbo 163 via DirecPC
	 
	2.	 	Digital Data Network (DDN Enhancement)
	 
	3.	 	Cablenet




These businesses are described in greater detail below.




1.1 DirecPC Services



CCT Shanghai will provide Services as specified in this SOW to support CCLX’s provision to its
customers (CCLX’s customers are referred to as
“Customers”) of high speed broadband services via
satellite (“Turbo 163 via DirecPC”).



CCT Shanghai and CCLX expect that the Services to support the provision of Turbo 163 via DirecPC
service will include advice, related technical and other consulting and services in connection
with (i) the supply, operation and maintenance of a DirecPC Network Operations Center (“NOC”);
(ii) the supply, installation and maintenance of service access kits for Customers (“DAKS”); and
(iii) the payment of the space segment bandwidth fee and of sales, marketing, fulfillment, billing
and Customer care services. CCLX will be responsible for the operation and maintenance of the NOC
and will own and sell DAKS.




1.2 DDN Enhancement Services



CCT Shanghai will provide Services as specified in this SOW to support CCLX’s provision to China
Telecom of high speed broadband services and facilities to enhance the availability and geographic
coverage of China Telecom’s Digital Data Network (“DDN”).


CCT Shanghai and CCLX expect that the Services will include advice, related technical and other
consulting and services in connection with the installation, operations and maintenance of a main
NOC in Beijing and approximately 30 interconnection facilities locations throughout the PRC. CCT
Shanghai would also provide high speed back up channels and VSAT terminals at Customer sites
requiring high speed service.




9









 





1.3 Cablenet Services



The Cablenet business can be described as 3 different services;





	1.	 	TV Distribution — CCLX provides facilities for the delivery of up to 100 channels of
TV content to cable Multi-System Operators (“MSOs”) throughout China.
	 
	2.	 	One Way — CCLX provides facilities for the delivery of high speed internet data
through one-way cable plant in China. The return channel is via the China Telecom
“163” service. This business is essentially the “Turbo 163 via DirecPC” service
delivered via cable.
	 
	3.	 	Two Way — CCLX provides facilities for high speed and interactive TV services via
2-way cable plant in China.




The various service offerings of the Cablenet business will allow MSOs to leverage their
respective infrastructures to deliver high-bandwidth interactive data services. Cablenet will
provide to MSOs a turnkey solution, which includes a technology platform and a brand as well as
ongoing marketing, customer service, billing and product development support. The MSOs bear the
cost of maintaining their cable systems, distributing required subscriber equipment, installing
the broadband services in subscribers’ homes.




1.3.1 Cablenet TV Distribution



The objective of the TV Distribution service is to centralize the distribution of content so as to
provide an aggregate of 100 video channels to be offered to MSO’s throughout China. The service
delivery is based on satellite so as to provide efficiency in the transmission of content. The
initial service will start with approximately 8 channels but will expand over time as the number
of video channels increase.



While SARFT will be active in the aggregation of content it is envisioned that CCLX, with the
support and assistance of CCT Shanghai, will expand its services to include content aggregation
and generation. As these additional services are to be developed in the future they are not
described in this SOW.



In support of the TV Distribution service, CCLX, with the technical support and assistance of CCT
Shanghai, will do the following:





	•	 	Establish a central TV uplink facility
	 
	•	 	Obtain satellite space segment sufficient to support the transmission of the TV content
throughout China. CCT Shanghai will support and assist CCL by defining
requirements and negotiating relevant contracts and agreements. CCL will execute
contracts and agreements and will be responsible for payment and other obligations
thereunder.
	 
	•	 	Market the TV delivery facilities to various cable MSO’s throughout the PRC
	 
	•	 	Supply, install, commission and operate receiving equipment at enlisted MSO
headend facilities





1.3.2 Cablenet Two-Way Data



The Two-Way Data service is a broadband service which provides for both high speed data delivery
as well as interactive TV to cable subscribers. The Two-Way Data service requires




10









 




advanced cable infrastructure like Two-way hybrid fiber-coaxial. Currently only 5% of cable
systems in China are Two-Way capable but this percentage is forecast to grow rapidly as the
existing cable plant is upgraded to two-way capability. To support the Two-Way services Cablenet
will introduce a “platform” consisting of head-end equipment which will enable to provision of
advanced services.



With the TV programming/ Internet content synchronization function installed, subscribers would be
able to experience an unprecedented multimedia experience. Subscribers will be able to view linear
content and simultaneously tap the resources of the Internet to drill down more detailed
information to interact at any number of levels including e-commerce.



CCT Shanghai will provide technical support and assistance to CCLX in the following activities
relating to the Cablenet business:





	•	 	Marketing support for various MSOs as “resellers” or “distributors” of the Cablenet
service
	 
	•	 	Working with SARFT and other PRC governmental organizations to establish the
necessary regulatory approvals for content and technology supporting the Cablenet
service business
	 
	•	 	Establishment of the network infrastructure to support the provision of the various
Cablenet services
	 
	•	 	Installation, commissioning and technical support, advice, services and consulting in
connection with the operation and management of the network facilities used to
provide the Cablenet services at various MSOs.





1.3.3 Cablenet One-Way Data



As noted above the One Way Data service entails the provision of DirecPC services to subscribers
via a one way cable infrastructure. With the exception of the distribution and fulfillment of
subscriber equipment all aspects of the operation of this service are substantially the same as
described in the “Turbo 163 via DirecPC” service. In the Cablenet business the MSOs will be
responsible for the distribution and fulfillment services associated with the subscriber
equipment. Consequently the remainder of this document focuses only on the TV Distribution service
and Two Way Data service of Cablenet. It is envisaged that in 5 years, the One-Way service will be
phased out slowly as the cable plant of various MSO’s are upgraded to support two-way digital
operations.




1.4 Service Overview



CCT Shanghai will provide technical advice, consultation and services in connection with DirecPC,
DDN and Cablenet Services and CCLX will accept and pay for the following technical advice,
consultation and services to support CCLX in:





	1.	 	Complete NOC operation support, consisting of 24-hour per day, 365-days per year
technical support services, network supervision and control, and trouble reporting,
isolation and resolution.
	 
	2.	 	Installation services for Customer premise equipment (“CPE”) including Head-end
Equipment, DAKs and/or VSATs, including planning and scheduling and assistance
in securing permits and approvals when required.




11









 






	3.	 	Procurement support, including traffic analysis and planning, of Internet bandwidth
sufficient to support the network and its growth to maintain the network performance
	 
	4.	 	Space segment bandwidth and support, including the planning of satellite transponder
capacity required to support CCLX’s network and its growth, and technical support
and assistance in procurement of such satellite transponder capacity.
	 
	5.	 	CPE maintenance, including 8:00 a.m. to 6:00 p.m., Monday through Friday service
coverage, trouble reporting, remote service dispatch, problem isolation and resolution,
and supplementary maintenance and repair or replacement services when required.
	 
	6.	 	Monthly reports and other information listing data on installation schedules and
service outages.
	 
	7.	 	Program Management, including network planning and implementation of Service.
	 
	8.	 	Provision and maintenance of terrestrial communications between Customer premises
and service nodes as required. In the case of the DirecPC service, CCLX will be
responsible for the provision and maintenance of terrestrial communications between
the China Telecom 163 internet backbone and the NOC.
	 
	9.	 	Sales and Marketing Support — This includes sales collateral material, white papers,
marketing seminar support, PR/promotions support, etc.
	 
	10.	 	Customer Care/Billing Platform Support.
	 
	11.	 	Administrative Support — Accounting/finance and legal support.
	 
	12.	 	Research & Development/Engineering Support — Product and service development
and engineering support.





2. ANCILLARY EQUIPMENT PROVIDED



To the extent of CCLX’s requirements, and incident to its provision to CCLX of technical advice,
consultation and services, CCT Shanghai will provide CCLX ancillary equipment including, but not
limited to the following types:





	•	 	Hughes Network Systems DirecPC NOC hardware and software
	 
	•	 	Hughes Network Systems ISBN/PES hardware and software
	 
	•	 	Hughes Network Systems TRES hardware and software
	 
	•	 	Hughes Network Systems Bandwidth On Demand software
	 
	•	 	Intel Digital Architecture (IDA), a two-way cable network infrastructure consisting of
various hardware and software systems
	 
	•	 	Video Uplink Facility including video retransmission equipment
	 
	•	 	Radio Frequency Transmission (RFT) facility at the Beijing NOC sufficient to
support the traffic for this site
	 
	•	 	Customer Care Platform to support the recording and tracking of customer contact
information including billing
	 
	•	 	Head-end Video down-link





12









 






	•	 	Two-Way Cable Head-end equipment
	 
	•	 	Test equipment
	 
	•	 	Spare parts
	 
	•	 	Office supplies
	 
	•	 	Tools





2.1 Use of Proprietary Domain Names



CCT Shanghai or its affiliate will provide CCLX the non-exclusive use of the following proprietary
domain names.




www.turbo163.net

www.turbo163.com

www.direct163.com



CCT Shanghai will formulate the domain name strategy for the various CCLX business and
provide the necessary domain names for CCLX’s non-exclusive use.




3. NETWORK OPERATIONS




3.1 Space Segment



CCT Shanghai will provide advisory support services to assist CCLX to comply with PRC regulatory
requirements and to use satellite transponder capacity in an effective manner. CCT Shanghai will
provide technical support to CCLX for the purpose of generating accurate forecasts for transponder
capacity requirements. While CCLX will enter into contractual arrangement with satellite
transponder provider, CCT Shanghai or its parent company would pay for the satellite transponder
capacity sufficient to meet service demand.




3.2 Program Team



In order to ensure the smooth, timely provision of technical advice, consultation and services and
that work proceeds at the planned rate, CCT Shanghai will put into place a program team consisting
of experienced professionals in the various areas of expertise required. This team will be headed
by a Program Manager to coordinate all CCT Shanghai resources required for the successful conduct
of the support services and work, and to ensure that required coordination takes place between CCT
Shanghai and CCLX personnel.



Tasks to be performed by the program team shall be in the areas including:





	•	 	Schedules
	 
	•	 	Pricing
	 
	•	 	Agreement negotiations
	 
	•	 	Status reporting
	 
	•	 	Staffing
	 
	•	 	Subcontractor interface
	 
	•	 	Specification compliance
	 
	•	 	Space segment technical support
	 
	•	 	Selection of technical staff
	 
		 	




13









 





	•	 	Regulatory agency support
	 
	•	 	Test plans
	 
	•	 	System reliability
	 
	•	 	Network analysis
	 
	•	 	System configuration
	 
	•	 	NOC site survey
	 
	•	 	NOC installation specification
	 
	•	 	Acceptance test procedures
	 
	•	 	Remote installation specification
	 
	•	 	Onsite installation and test of the NOC earth station and baseband equipment
	 
	•	 	Documentation preparation





3.2.1 Progress Reports and Program Status Review



At least once a month, appropriate CCT Shanghai and CCLX personnel will meet to discuss issues
affecting the provision of the services including such key issues as the schedule of network
deployment, network configurations, the manufacture and.installation of products, development and
implementation of new and improved technologies and procedures. As part of such meetings and at any
other mutually agreeable times senior account management personnel will meet to discuss;





	(i)	 	Forecasts for the following quarter for the number of Subscribers so that CCT
Shanghai can anticipate demand for manufacture and installation and provision of the
services;
	 
	(ii)	 	any additional services that may be requested or required, and
	 
	(iii)	 	any changes to CCLX deployment plan for the services, including, among other
things, procurement of additional Internet bandwidth, leasing of
transponders and
service in extended geographical areas.




For such period of time as CCT Shanghai and CCLX mutually agree, operational personnel from both
CCT Shanghai and CCLX will meet in person or by conference call at least once every two weeks to
discuss operational, day-to-day issues that may arise in connection with the provision of the
services.




3.3 System Analysis And Support



CCT Shanghai will provide system analyses of the network to estimate overall system capacity,
traffic capabilities, satellite resource requirements, and the specific network configuration
required to support CCLX’s identified traffic. Furthermore, CCT Shanghai will make available, for
the term of this Agreement, systems analysis services to assist CCLX in determining future
optional expansion requirements.



CCT Shanghai will also assist CCLX in planning for such things as antenna sizes and/or RF power
sizes for CPE sites based upon the specific space segment selected and CCLX specified
requirements, such as availability and video capability. CCT Shanghai will provide necessary
satellite link budgets.




3.3.1 System Analysis Reports



CCT Shanghai will periodically provide the results of system analyses of capacity, traffic




14









 




capabilities, satellite resource requirements, and network configuration.



CCT Shanghai will make the results of CPE antenna size and/or SSPA size analyses available within
thirty (30) days after the specification of the space segment and the appropriate CPE sites.




3.3.2 Regulatory Agency Support



CCT Shanghai will provide technical support and consultation in support of CCLX’s applications for
any relevant licenses from local regulatory authorities. CCT Shanghai technical support includes
implementation planning, interface investigation and specification, and detailed satellite link
engineering. As part of this activity, CCT Shanghai will prepare the technical documentation
required to support the required filings for the network operating license.




3.4 Network Operation



CCT Shanghai-will provide resources to support the.operation of the CCLX NOCs 24 hours per day,
365 days per year. CCT Shanghai will provide qualified engineers and operations center personnel
as required to adequately monitor the system as mutually agreed by CCT Shanghai and CCLX. CCT
Shanghai will make available personnel at the NOC to provide technical advice, consultation and
network control services, consisting of monitoring, configuration management, and troubleshooting,
including field dispatch. NOC personnel will also provide technical assistance for onsite
management and maintenance of the NOC facilities themselves. CCT Shanghai will provide technical
advice, consultation and support for all aspects of NOC operation including the following:





	•	 	Staffing
	 
	•	 	Preventive Maintenance
	 
	•	 	Reports
	 
	•	 	Record Keeping
	 
	•	 	Trouble-shooting
	 
	•	 	Traffic analysis
	 
	•	 	System expansion





3.5 Business Planning



Once per quarter representatives from CCT Shanghai and CCLX shall meet to conduct business
planning for the following quarter. In the fourth quarter of every year a full business budget
for the following year will be developed.




3.6 Redundancy and Backup



Ancillary Equipment will include redundancy of critical NOC and NOC RF components on a 1:1 basis.
All other traffic carrying NOC components are redundant on a 1:N basis. This redundancy will
assure availability in spite of occasional failures of such
components.




3.7 Internet Backhaul Connection



CCLX will provide necessary data circuits between China Telecom Internet exchange and the




15









 




NOG facility. CCLX will be responsible for the cost and performance of these circuits. Unless
otherwise agreed by CCT Shanghai and CCLX, all Customer connectivity to the Internet will be
effected through these circuits connected to the China Telecom Internet exchange. CCLX will be
responsible for the monitoring and maintenance of these Internet backhaul connections.




3.8 Information Monitoring



CCT Shanghai will provide, on a monthly basis, such ongoing and updated information regarding the
performance of the network service as the parties will agree.




3.9 Service Level Quality Control and Measurement



CCT Shanghai will monitor the quality of Services on a continuing basis and will
report to CCLX reasonable measure of the quality of Services and
Equipment. CCT Shanghai will also
establish and implement reasonable programs for the continuous improvement of Service quality and
performance.




3.10 Security



CCT
Shanghai will work to ensure that CCLX’s Subscribers’ privacy and security are protected over
the services by using a Conditional Access System and Digital Encryption Standard (DES 128K)
security algorithm.




3.11 Turbol63 Dial-up Connectivity




4. FULFILLMENT SERVICES



CCT Shanghai is responsible for the shipment, installation and commissioning of Head-end equipment
ordered by MSOs.



The nature of the Cablenet business is such that CCLX’s Customers will be the cable MSO’s in
China. The MSO’s will be responsible for the distribution, installation and maintenance of
end-user equipment to individual subscribers. CCT Shanghai will be responsible for the
distribution of the end-user equipment to the MSO’s.




4.1 Permits and Approvals



CCT Shanghai will provide CCLX with assistance and support in order to obtain and maintain the
relevant government approvals required for CCLX. CCT Shanghai will also assist and support CCLX to
obtain landlord approvals and will determine if construction permits or zoning variances are
required and, if so, assist and support CCLX in obtaining such permits at the time the site survey
is performed. After all permits and approvals have been obtained, CCLX will authorize CCT Shanghai
to schedule and perform site preparation and installation of the equipment.




16









 





4.2 Planning and Scheduling



CCT Shanghai will installation Equipment according to a schedule to be provided and maintained by
CCT Shanghai, with the cooperation of CCLX.



CCT Shanghai will endeavor to complete installation within sixty (60) days of notification of need
to install a site. CCT Shanghai and CCLX agree, however, that additional time may be required if
CCT Shanghai encounters delays in obtaining any necessary permits or variances, or if nonstandard
installations (as defined herein) are required.




4.3 Site Preparation



The site survey report, if required, will identify technically suitable locations for installing
the indoor and outdoor CPE (including Head-End equipment) and cables.



For sites identified as requiring preparation by CCT Shanghai, CCT Shanghai will perform the
following tasks:





	1)	 	Provide necessary independent contractor for structural or electrical work, as
required, at additional cost.
	 
	2)	 	Construct a standard antenna mounting point of the standard type
	 
	3)	 	Provide suitable access for the connecting cable from the exterior of the building to
the interior and through any concrete, masonry, or fire barrier walls between the
indoor and outdoor units.





4.4 Maintenance Services





	A.	 	CCT Shanghai will provide maintenance services to CCLX to ensure the availability
of the service NOC 24 hours per day, 365 days per year by single nationwide number
telephone access for resolution of problems with the Turbo 163 via DirecPC, DDN
and Cablenet services. The NOC will provide a single point of contact for the
origination, administration, and tracking of Customer trouble reports, CCT Shanghai
personnel contact names, telephone numbers, and other trouble reporting and
escalation procedures. CCT Shanghai will provide a NOC technical support
document detailing these procedures will be provided to CCLX after execution of this
Technical Services Agreement.
	 
	B.	 	Corrective Maintenance — CCT Shanghai will provide corrective maintenance for the
various ancillary equipment provided by the CCT Shanghai in support of the CCLX
businesses. CCT Shanghai will restore ancillary equipment to good working condition
by performing the following corrective maintenance as required:






	 	1)	 	Diagnostic testing to determine the existence and cause of the malfunction

	 
	 	2)	 	Removal and replacement of any malfunctioning Field Replaceable Unit
(FRU)
	 
	 	3)	 	Reorientation (re-pointing) of the antenna subsystem
	 
	 	4)	 	Repair or replacement of interconnecting cables
	 
	 	5)	 	Reloading initializing instructions and re-commissioning




17









 






	 	6)	 	Verification of proper operation and completion of service report
	 
	 	7)	 	Notification to the NOC and the Customer host that Equipment has been
restored to operational status






	C.	 	Service Coverage and Response Times
	 
	 	 	Service coverage hours, including related travel, will be selected on a site-by-site basis
from the coverage available for that site. The available coverage plans are:






	 	1)	 	Normal Service Coverage (8:00 a.m. to 6:00 p.m., local time, Monday through
Friday, holidays excepted)
	 
	 	2)	 	Continuous Service Coverage (24 hours per day, 365 days per year).
	 
	 	At certain sites only Normal Service Coverage is available.
	 
	 	CCT Shanghai will use reasonable efforts to ensure that within sixty (60) minutes of a
request for maintenance, the NOC personnel will determine the problem and isolate the
fault. CCT Shanghai and CCLX acknowledge, however, that such maintenance response time
represents a target and failure to meet such maintenance response time target shall in no
event be construed as a breach of this Technical Services Agreement. Upon determining the
problem and isolating the fault, the NOC personnel will authorize field Service dispatch,
and the Customer Service Representative (CSR) will be onsite at Customer’s premises,
according to the maintenance response time table given below, from the time of
authorization by the NOC.
	 
	 	Maintenance Response Time Table (Targets)








	 	 	 	 	 
	 	Distance from Service Office	 	Response Time	 
	 	  0 - 50 miles
	 	12 hours
	 
	 	  51 - 100 miles
	 	24 hours	 
	 	101 - 150 miles
	 	24 hours	 
	 	151 - 200 miles
	 	24 hours	 
	 	Over 200 miles
	 	48 hours	 







	D.	 	Spare Parts Support
	 
	 	 	Spares will be provided as part of this Agreement. An inventory of spare parts (typically
5% of installed hardware) will be pre-positioned at CCT Shanghai-designated local
maintenance facilities for support of all CPE supported by that office.
	 
	 	 	Spares for the CPE antenna subsystem, including reflectors, mounts, anti-icing equipment,
modems, and if applicable, certain video equipment will be centrally stocked at a
designated location in China.
	 
	 	 	Malfunctioning Equipment will be replaced on a one-for-one exchange basis by a functionally
equivalent spare part.





18









 






	E.	 	Remote maintenance does not include any of the following services;






	 	1)	 	Maintenance, repair, or replacement of parts damaged or lost through
catastrophe, accident, lightning, theft, misuse, fault, or negligence of CCL, or
causes external to the Equipment, such as, but not limited to, failure of, or
faulty, electrical power or air conditioning, operator error, failure, or
malfunction of data communication Equipment not provided to CCL by CCT Shanghai, or
from any cause other than intended and ordinary use
	 
	 	2)	 	Changes, modifications, or alterations in or to the Equipment other than
approved upgrades and configuration changes
	 
	 	3)	 	De-installation, relocation, or removal of the Equipment or any accessories,
attachments, or other devices





4.5 Remote Reports and Other Information



CCT Shanghai will provide CCLX with the following standard reports on a monthly basis:





	A.	 	Chronological list of trouble reports summarizing determined problem(s) and resolution(s) at
remote site(s) with timed duration of remote site outage, Service availability for the
preceding month will also be provided,
	 
	B.	 	A summary report showing all open (with days to completion) and completed work orders for
new and existing CPE locations during the preceding month.





5. SALES AND MARKETING



CCT Shanghai shall provide technical advice, consultation and services in connection with the
management of sales and marketing for the following businesses:





	1.	 	Turbo 163 via DirecPC
	 
	2.	 	DDN
	 
	3.	 	Cablenet





5.1 Management



CCT Shanghai will support and assist CCLx in the sales and marketing of the DDN service to
potential end users. This will include providing sales collateral material, white papers, marketing
seminar support, PR/promotions support, etc. It is envisioned that the following personnel will
initially be required for the sales and marketing of the various services:





	A.	 	Vice President, Marketing
	 
	B.	 	Manager, Public Relations (minimum 4 PR events/year)
	 
	C.	 	Market Research Specialists (4)
	 
	D.	 	Channel Support Specialists (10)
	 
	E.	 	Regional Sales Managers (5)
	 
	F.	 	Sales Executives (25)
	 
	G.	 	Manager, Sales Administration
	 
	H.	 	Sales Administration Support (10)





19









 




The organization of the direct sales force is represented by the following diagram;








The VP of Sale/Marketing will be responsible for oversight of all sales/marketing activities.



The Manager of Marketing will be responsible for the following key areas;





	•	 	Product Marketing
	 
	•	 	Direct Marketing
	 
	•	 	Web Based Marketing




The Regional Sales Managers are responsible for the oversight of the direct sales staff. 


5.2
Turbo 163 via DirecPC and DDN Sales



CCT Shanghai will make available personnel and assist CCLX to maintain a sales force to handle
direct sales targeting the following (but not limited to) market segments;





	•	 	Internal Trade
	 
	•	 	Coals and Mines
	 
	•	 	Agencies and entities under the Economic and Trade Commissions
	 
	•	 	Telecom and Communication Industries
	 
	•	 	Multi-National Corporations
	 
	•	 	Education





5.2.1 Channel Management For Turbo 163 via DirecPC



CCT Shanghai will provide technical assistance in connection with the set up of various sales
channels for the Turbo 163 via DirecPC service. These sales channels will be “Value Added
Resellers” (VAR) who will be responsible for certain targeted market segments. The VARs may
include the following;





	•	 	IBM — targeting the banking and finance sectors
	 
	•	 	IBM — targeting the intelligent building sector
	 
	•	 	Infobank — targeting the banking and finance sectors
	 
	•	 	Blueexpress — bundled Turbo 163 and PC services
	 
	•	 	China Telecom — sales to consumers for Turbo 163 service
	 
	•	 	Existing 163 service resellers




CCT Shanghai is responsible for enlisting and maintaining the VARs. Support activities include
product and market training, support of product demonstrations, provision of collateral materials
and other informational materials. CCT Shanghai sales staff will also accompany VARs on visits to
key accounts as well as host customer visits to the NOC facility.




20









 





5.3 Cablenet Sales



There are approximately 1300 cable operators (MSOs) in China. The main focus of the
sales and marketing activities of the Cablenet business group is to sign-up as many of these
1300 cable operators as possible as “subscribers” to the various services supported by the
Cablenet business. In fact, the MSOs will essentially act as “distributors” of these services
and resell the content or access to their own customers.



The sales effort to reach these MSOs will be though direct access utilizing sales staff employed
by CCT Shanghai. Distribution channels will not be utilized in support of this effort.



CCT Shanghai will assist CCLX in the sales and marketing of the Cablenet services to potential
MSOs. This will include providing sales collateral material, white papers, marketing seminar
support, PR/promotions support, etc. It is envisioned that the following personnel will
initially be required to support the sales and marketing of the Cablenet service:





	A.	 	Vice President, Marketing
	 
	B.	 	Manager, Public Relations (minimum 4 PR events/year)
	 
	C.	 	Market Research Specialists (2)
	 
	D.	 	Sales Executives (5)
	 
	E.	 	Manager, Sales Administration




The VP of Sale/Marketing will be responsible for oversight of all sales/marketing activities.




5.4 Publicity Campaign



CCT Shanghai will be responsible for implementing a China-wide publicity campaign to highlight the
service availability. Various forms of PR events are necessary to influence the major ISP/lCPs in
China and well as Internet users.



PR events mainly include: promotion, press/products releases, expositions, technical seminars,
speeches and consultations, annual reports, charity and donations, sponsoring, community
persuasions, signal publicity, company’s periodicals, news creation etc.




5.5 Market Analysis and Service Tariff Structure



In support of the marketing efforts for the various CCLx businesses, CCT Shanghai will conduct
the relevant market analysis. These activities will include the following;





	•	 	Competitive analysis
	 
	•	 	Identification of target market segments
	 
	•	 	Identification and development of “value added” services
	 
	•	 	Service tariff modeling and analysis





5.6 Collateral Materials




21









 




CCT Shanghai will generate the collateral material required to support the sales and
marketing efforts. These materials will include the following;





	•	 	Product brochures
	 
	•	 	Application white papers
	 
	•	 	Packaging materials
	 
	•	 	Advertisements
	 
	•	 	Web based materials
	 
	•	 	Customer gifts
	 
	•	 	Customer deliverable marketing CD-ROM
	 
	•	 	User handbook and operating procedures





5.7 Advertising Campaigns



The CCT Shanghai will be responsible for conducting a variety of advertising campaigns designed to
raise awareness about CCLX’s services and to attract and retain subscribers to CCLX’s services. It
is anticipated that CCT Shanghai will utilize different types of media as follows: Plane
media:50%, Television: 20%, Billboards: 25%, Web: 5%. CCT Shanghai will be responsible for
advertising content generation as well as placement.




6. ADMINISTRATION



CCT Shanghai will provide consulation and advice to CCLX in connection with human resource
management, bookkeeping, accounting, financial planning, legal and corporate strategic planning
services.




6.1 Accounting



CCT Shanghai will provide advisory services relating to the administration of all accounting
operations of CCLX in support of the service. This includes administration of accounts receivable,
accounts payable, payroll and other accounting related services.



CCT Shanghai Services will also cover CCLX’s:





	(i)	 	quarterly management accounts for the various businesses within 45 days after the
end of each fiscal quarter;
	 
	(ii)	 	monthly management accounts for the various businesses within 30 days after the end
of each month; and
	 
	(iii)	 	an annual budget for the various businesses within 30 days prior to the end of each
fiscal year.





6.2 Human Resources



CCT Shanghai will assist and provide advice to the human resources operation to support CCL’s
operation. CCT Shanghai will provide a headcount report to CCLX at the end of each month and will
assist and provide advice for the recruitment to support the Turbo 163 via DirecPC business.




6.3 Legal and Corporate planning




22









 




CCT Shanghai will assist and provide advice to support CCLX in working out a proper legal
structure for the Turbo 163 via DirecPC service. CCT Shanghai is also responsible for the
administration support and corporate planning of the Turbo 163 via DirecPC business.




7. EQUIPMENT AND SOFTWARE



In addition to the provision of services and technical know-how CCT Shanghai will provide to CCLX
all of the networking equipment required in support of the business plan for the Turbo 163 via
DirecPC, DDN and Cablenet services.




7.1 Turbo 163 via DirecPC Equipment Already Supplied



The following subsections describe equipment and software which have already been provided to CCLX.



7.1.1 Turbo 163 via DirecPC NOC Equipment And Software



The Turbo 163 via DirecPC business is supported by the following baseband hardware subsystems at
the NOC. The equipment and software listed below are fully described in the document “DirecPC
Technical Specification” published by Hughes Network Systems.




	 	 	 	 	 
	Foundation NOC
	 

	 	S/W
	 	Software License
	 

	 	SAGW
	 	Satellite Gateway
	 

	 	IF
	 	IF System
	 

	 	HM95
	 	Health Monitor
	 

	 	QAPC
	 	Quality Assurance Monitor
	 

	 	FRNTEND
	 	Subscriber Management Front End
	 

	 	RTR
	 	System Reuter
	 

	 	SWTCH
	 	Ethernet Switch
	 

	 	TOCS/COMS
	 	Dial in Communication Device
	 

	 	CNSL
	 	Monitoring Consele
	 

	 	CAC
	 	Conditional Access Controller
	 

	 	FRWL
	 	Firewall
	 

	 	HPRK
	 	Racks
	 

	 	SPAR
	 	NOC Spares
	 
	 	 	 	 
	Turbo Internet System
	 

	 	S/W
	 	Software License
	 

	 	TIGW
	 	Turbo Internet System(10 online 2 red 20000 subs)
	 
	 	 	 	 
	Package Delivery System
	 

	 	S/W
	 	Software License
	 

	 	PDSV
	 	Package Delivery Server
	 

	 	PDSV
	 	Package Delivery Scheduler
	 

	 	NFS
	 	Storage Device
	 

	 	PDMC
	 	Package Delivery Gateway






23









 






	 	 	 	 	 
	IP Multicast System
	 

	 	S/W
	 	Software License
	 

	 	PDMC
	 	IP Multicast Gateway
	 

	 	BCPC
	 	Broadcaster
	 
	 	 	 	 
	Webcast System
	 

	 	S/W
	 	Software License
	 

	 	WEBC
	 	Webcast System
	 
	 	 	 	 
	NewsCast System
	 

	 	S/W
	 	Software License
	 

	 	NEWS
	 	NewsCast System
	 
	 	 	 	 
	Autocommissioning System
	 

	 	S/W
	 	Software License
	 

	 	ACS
	 	Autocommissioning System
	 
	 	 	 	 
	Email Alert System
	 

	 	S/W
	 	Software License
	 

	 	EMAIL
	 	Email Alert System
	 
	 	 	 	 
	Dedicated Bandwidth System
	 

	 	S/W
	 	Software License
	 

	 	DBW
	 	Dedicated Bandwidth System
	 
	 	 	 	 
	Fair Access License
	 

	 	S/W
	 	Software License
	 

	 	FAP
	 	Fair Access License






7.1.2 NOC RFT Uplink Facility



CCT Shanghai has provided to CCLX Radio Frequency Transmission (RFT) equipment consisting of a
KU-Band 6.1 meter antenna and associated amplifiers, up/down converters, LNB and spare parts. In
addition, CCT Shanghai has installed and tested this equipment on the NOC facility of CCLX.




7.1.3 Turbo 163 via DirecPC CPE Equipment



The Customer Premise Equipment (CPE) provided to CCLX consists of quantity 3,000 DirecPC Access
Kits (DAKs). Each DAK consists of the following elements;





	•	 	Antenna
	 
	•	 	LNB




24









 






	•	 	PCI Card
	 
	•	 	DAK Client Software
	 
	•	 	Mounting hardware
	 
	•	 	Installation instructions
	 
	•	 	Packaging





7.1.4 System Integration



CCT Shanghai will perform integration and testing of the DirecPC and DDN systems. System
acceptance test has been conducted to verify that the delivered product meets the specification
requirements. These tests have been performed by CCT Shanghai with CCLX’s assistance. The
combination of the NOC earth station, baseband equipment, and DAKs meet the performance
requirements as outlined in the CCLX business plan.




7.1.5 Expansion of Network



To support the expansion of the Turbo 163 via DirecPC and DDN services CCT Shanghai will provide
to CCLX additional equipment and software licenses. It is anticipated that the following types of
equipment will be provided;





	•	 	Additional RFT uplink facilities to support the DDN business
	 
	•	 	Additional HNS DirecPC NOC equipment (as described above)
	 
	•	 	Additional HNS DirecPC DAK CPE
	 
	•	 	HNS TRES satellite modems and earth stations in support of the DDN business
	 
	•	 	HNS ISBN baseband equipment and software licenses in support of the DDN
business
	 
	•	 	HNS PES equipment in support of the DDN business




The functionality and performance of these systems are defined in the following documents;





	•	 	HNS DirecPC Technical Specification
	 
	•	 	HNS ISBN/PES Technical Specification
	 
	•	 	HNS TRES Technical Specification
	 
	•	 	HNS TRES BOD Technical Specification





7.2 Cablenet Equipment and Software



To support the Cablenet services it will be necessary to deploy a significant amount of network
infrastructure. This infrastructure will generally fall into three categories;





	1.	 	Network infrastructure
	 
	2.	 	Cable headend infrastructure
	 
	3.	 	Subscriber equipment





7.2.1 TV Distribution Service



The subsections below describe the equipment subsystems that are supplied in support of the TV
Distribution business.




7.2.1.1 Uplink Facility



Satellite transmission will be used to efficiently distribute the aggregated video content to




25









 




cable MSOs throughout China. In support of this video distribution CCT Shanghai will provide
technical assistance and advice to assist CCLX in establishing an uplink facility consisting of
the following key elements;





	1.	 	RF Subsystem including a 6.1 meter KU band antenna and all of the attendant
electronics to provide fully redundant transmission to the satellite. Some of these
components include;






	 	•	 	Antenna tracking control unit
	 
	 	•	 	High power amplifiers
	 
	 	•	 	Low noise receivers
	 
	 	•	 	Frequency up converters
	 
	 	•	 	Frequency down converters
	 
	 	•	 	RF Management and Control subsystem
	 
	 	•	 	Redundancy switching equipment
	 
	 	•	 	Spare parts






	2.	 	MPEG2/DVB Encoder Modulation Subsystem consisting of the following key
elements;






	 	•	 	Variable rate modulators
	 
	 	•	 	MPEG/DVB Encoders
	 
	 	•	 	Switching equipment






	3.	 	DTH Receive Subsystem (Video Turn Around) consisting of the following
components;






	 	•	 	Antenna subsystem
	 
	 	•	 	Low noise receivers
	 
	 	•	 	Video receivers






	4.	 	Video Distribution Subsystem consisting of the following components;






	 	•	 	Audio and video monitors
	 
	 	•	 	Switching matrix
	 
	 	•	 	Studio quality recording equipment






	5.	 	Conditional Access Subsystem to provide secure control of the video signal.






7.2.1.2 Head-end TV Receiving Equipment



For each MSO subscribing to the TV distribution service CCT Shanghai will install a set of
equipment at the cable head-end which will enable to reception of the aggregated TV content that is
distributed over the satellite. The following will be the key components provided by CCT Shanghai
at the Head-end;





	•	 	Receive-only satellite antenna and receiver subsystem including LNA
	 
	•	 	TV Receiver for each video channel subscriber by the MSO. The TV receivers
include the necessary conditional access equipment to decode the signals.
	 
	•	 	Video distribution cabling to provide for interconnect of the downlinked TV content
into the MSO head-end.





26









 





7.2.1.3 Subscriber Equipment



Subscriber equipment will be provided by the Cable MSOs.




7.2.2 Two-Way Service




7.2.2.1 Network Infrastructure



The following schematics diagram represents what is expected to be the typical network
infrastructure at each MSO’s NOC.









27









 





7.2.2.2 Head-end Equipment



CCT Shanghai will provide technical services and advice in connection with the deployment of
the NOC for two way services. CCT Shanghai will be responsible for installing software onto the
NOC servers and integrate the NOC servers and software with other business system servers (such as
those for Turbol63). CCT Shanghai will provide technical service in connection with specifying and
installing the networking equipment in the NOC and will assist and support CCLX in managing the
NOC.



CCT Shanghai will also be responsible for the training of MSO personnel for local support.




7.2.2.3 Subscriber Equipment



CCT Shanghai will be responsible for identifying OEMs that are capable of building the Client Box.




7.2.2.4 Technical Support



Technical issues from End Users or MSO should first be escalated to CCT Shanghai’s level 1
(technical) support group. It is expected that CCT Shanghai’s level 1 support should be able to
handle about 90% of the calls that come in. They would be expected to be able to answer calls that
involved installation questions, or known problems that are listed in the Errata, Application
notes, Hints documents, Technical advisories, or CCT Shanghai’s technical database. If that group
can not solve the problem, then the issue should get escalated to CCT Shanghai’s level 2
(Engineering) support group.



CCT Shanghai’s level 2 support will continue to work the problem with diligence and try to provide
a resolution. It is expected that this group will be able to handle 90% of the issues that get
escalated from CCT Shanghai’s level 1 support. Issues that cannot be resolved by CCT Shanghai’s
level 2 support will be escalated to the attention of the equipment vendor’s Field Application
Engineer for who shall be located in Hong Kong. Before escalation to the equipment vendor, it is
expected that CCT Shanghai Product Support will verify the nature of the problem and further try to
isolate the cause of the problem if necessary. In order to facilitate swift and effective diagnosis
and resolution or errors, CCT Shanghai shall maintain the representative configuration(s) of each
system deployed for use as fault replication and defect isolation test beds.



One representative (along with one alternate) from CCT Shanghai’s level 2 Product Support Group
should be selected to manage the interface between CCT Shanghai and the equipment vendor’s Field
Application Engineer. The purpose of this single interface will be to make sure information
flowing from the equipment vendor to CCT Shanghai gets disseminated to the proper parties within
CCT Shanghai, and to set priorities of escalation flowing from CCT Shanghai to the equipment
vendor. CCT Shanghai will provide a list of contact names to the equipment vendor. Callers to the
equipment vendor’s Field Application Engineer who are not on this list of approved contacts will
be referred back to an individual on the approved contact list.



Upon escalation to the equipment vendor’s FAE, CCT Shanghai will submit a detailed technical
description of the problem as well as the details of CCT Shanghai’s efforts to




28









 




resolve it. Upon receiving this information, the FAE will first try and reproduce the fault
using CCT Shanghai’s fault replication and defect isolation test beds. If reproducible, it will be
entered on an internal the equipment vendor defect tracking database (Tracker) and assigned a
tracking number and severity level (as defined above). The equipment vendor’s FAE shall have
access to all appropriate systems and facilities as required to pursue correction of active
defects.



The status of each open issue reported by CCT Shanghai will be tracked and reported to CCT
Shanghai according to severity level as defined above.



It is expected that the equipment vendor’s FAE will be able to handle 90% of the calls that get
escalated to him/her. Issues that can not be resolved by the FAE will get escalated to the
equipment vendor’s Engineering Organization. It is expected that the equipment vendor’s
Engineering organization will be able to resolve 100% of the issues that get escalated to them
from the FAE.



It should be noted that in all cases above, resolution of a problem does not necessarily mean a
fix, but could mean a workaround or decision not to fix. The problem would then be documented as
an errata.




7.3 Inventory



In order to provide CCLX with adequate inventory to expand the service businesses CCT Shanghai
will supply a rolling 3 month inventory of equipment. The inventory will be determined by the
current business plans for the various services.




7.4 Shipment Schedule



Once every quarter CCT Shanghai will evaluate the inventory of equipment to determine what
replenishments or new stocking is required. The evaluation will use both the business plans as
well as marketing forecasts to determine the amount of inventory to be stocked. It is anticipated
that the lead time to supply CPE is typically 3 months while the lead time to supply NOC related
equipment is typically 6 months.




7.5 Customer Care Platform



CCT Shanghai will provide CCLX with a customer care and billing platform services. This includes
the provision of a call center, web-based customer support, problem tracking, problem escalation
procedures and monthly billing invoices.




8. CCLX OBLIGATIONS



To facilitate provision of the Equipment and Services by CCT Shanghai, CCLX will meet the
following obligations:





	A.	 	CCLX hereby grants CCT Shanghai and CCT Shanghai’ authorized representatives access, subject
to CCLX’s reasonable security restrictions, to Equipment and related locations and areas of
CCLX’s facilities and premises, and will arrange permitted access to areas of third-Party
facilities and premises for the purpose of CCT Shanghai




29









 






	 	 	performing the work required under this Agreement. CCT Shanghai will comply with CCLX’s
reasonable rules and regulations for access, a copy of which will be furnished to CCT
Shanghai by CCLX promptly after execution of this Agreement.
	 
	B.	 	CCLX will provide safe access to Equipment on CCLX premises and will maintain
the environment where the Equipment is located in a safe and secure condition.
	 
	C.	 	CCLX will provide CCT Shanghai with access to electrical power, water, and other
utilities as required for efficient Service.
	 
	D.	 	Procure and obtain any and all Government Approvals which may be required under
any applicable law for the operation and maintenance of the business services.




CCLX will reimburse CCT Shanghai for all costs incurred by CCT Shanghai as a result of CCLX’s
failure to meet such obligations.




30









 





APPENDIX B 




EQUIPMENT




Cisco2621 and accessories

Cisco3640, Cisco4700 and accessories

Datacom RF unit

Cyberstream broadcasting equipment

VZU-6994PC 550W KU

HP SE Base Model with One-Touch

HP Server for CAC

HP LH6000r & LP2000r Net server

DirecWay Shannon System





31