Conclusion of China-U.S. Cable Network
Construction and Maintenance Agreement

NotificationDecember 12, 1997

KDD (Japan's Global Communications) signed a construction and maintenance agreement for the China-U.S. Cable Network with 50 telecommunications carriers from 19 countries and regions in Washington D.C. at 10 a.m. on December 11. President Tadashi Nishimoto signed the agreement for KDD.

The China-U.S. Cable Network is an optical submarine cable system that, when completed, will connect China, the United States, Japan, Korea, and Taiwan in a loop over a total distance of some 30,000 km. The cable system is slated to begin operation by the end of 1999. Total construction cost is expected to reach US$1.1 billion (approximately 136.8 billion yen). By improving existing WDM (wavelength-division mulitiplexing) technology, the cable network will have a total capacity of 80 Gpbs (equivalent to 967,680 telephone lines). In Japan, the cable will be landed in Chiba and Okinawa Prefectures.

KDD will land China-U.S. cable at Chikura Cable Landing Station in Chikura, Chiba Prefecture. KDD plans to connect the China-U.S. Cable Network to KDD's other international optical submarine cables such as the TPC-5 cable network and the SEA-ME-WE 3 cable via the JIH cable system. The JIH cable is a high-capacity optical submarine cable that will surround the Japanese archipelago in a loop when it is put into service (slated for March 1999).

KDD will invest US$62 million (approximately 7,700 million) in return for approximately 2.2 Gpbs (equivalent to 26,460 telephone lines) in the China-U.S. Cable Network to meet the soaring demand for multimedia-related uses such as the Internet.

The supply agreement for the China-U.S. Cable Network was signed on December 11. Under the agreement, KDD-SCS(main office: Tokyo, president: Yasuhiko Niiro), a wholly-owned subsidiary of KDD, and NEC Corporation (main office: Tokyo, president: Hisashi Kaneko) received a construction order from the consortium of fourteen carriers that have concluded the construction and maintenance agreement. The order, valued at approximately US$500 million (approximately 62,200 million yen), will call for the companies to construct the north side and west side segments (Shantou - Fangshang - Chongming - Pusan - Chikura - Bandon), or 15,000 km of the cable network.

Due to the rapid increase in communications traffic in the Pacific region, the demand for high-quality and economical communications network has soared. To meet this demand, telecommunications carriers in the region signed a memorandum on the construction of the China-U.S. Cable Network on March 31 this year, which led to the signing of this construction and maintenance agreement.

[Reference] Overview of the China-U.S. Cable Network

1. Service to begin: end of 1999

2. Capacity: 80 Gpbs (equivalent to 967,680 telephone lines)

3. Total length: approximately 30,000 km

4. Connected countries/landing points:

5 countries and regions/9 points
Japan (Chiba and Okinawa Prefectures)
United States (Bandon, San Luis Obispo, and Guam)
China (Chongming and Shantou)
Korea (Pusan)
Taiwan (Fangshang)

5. Total construction cost:

US$1.1 billion (approximately 136.8 billion yen)

6. The initial parties:

14 telecommunications carriers from 9 countries and regions
Japan: KDD and NTT Worldwide Network
United States: AT&T, MCI Communications, Sprint, and Teleglobe USA, and SBC Communications
China: China Telecom
Hong Kong: HongKong Telecom
Taiwan: Chunghwa Telecom
Korea: Korea Telecom
Singapore: Singapore Telecom
Malaysia: Telekom Malaysia
Australia: Telstra

Note: Besides the carriers above, 36 carriers will participate in the cable network as equity holders.

7. Course of events and schedule:

March 31, 1997 Memorandum on construction is signed.
December 11, 1997 Agreement on construction and maintenance and supply agreement to be signed.
End of 1999 Service due to begin.