China Cable and Communication, Inc., a China-based cable TV company, today announced it has entered into an agreement to acquire, in a number of phases, from Beijing Zhongminjing Technology Development Co., Ltd., through an arms length commercial transaction, a two core fiber optic backbone network covering 410 cities nationwide with a total physical length of 34,800 kilometers (approx. 20,880 miles) in China.

This backbone network covers all 23 provinces, 5 autonomous regions, and 4 centrally administrative municipalities. Completion of this transaction is subject to due diligence and third party determination of the values upon which the purchase price will be based.

The total physical length of 34,800 kilometers optical fiber was laid and passed the acceptance tests set out by the Ministry of Information Industry (MII) in November 2000. The acceptance license was issued by MII in the same year. This fiber optics backbone network is not yet equipped with a transmission and switching system. China Cable and Communication will undertake, or will provide leases to service providers, to fully equip systems for this backbone network in order to provide support to a wide range of communication protocols and services capabilities. The construction cost of the Network is estimated at CNY2 billion (approx. US$235 million). The final contract purchase price of this fiber optic backbone network will be based on the appraised value determined by internationally renowned valuation experts.

China Cable and Communication has also been selling Set Top cable boxes in China. The fiber optic backbone, added to the current business model, is intended to put China Cable and Communication in a new league of convergent players.

As an indication of what's going on in the world of broadband convergence, TiVO recently announced it has plans to bring streaming media from the internet to the house using its set top box and technology, which is nearly ready for market. This will give the consumer a broader choice of programming and will open up the portals of convergence, using a TV as a form of communication. Giants like Microsoft are also getting in the game. They recently announced the formation of Microsoft TV as a new company at the CES show in January 2004.


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