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Cloud Services

CenturyLink Goes Behind the Great Firewall

For many companies, China's difficult Internet and networking environment is a barrier to business. CenturyLink, though, has decided it's an opportunity.

The telecom and cloud services provider recently announced the launch of managed cloud and hosting services in China, partnering with local software and systems integrator Neusoft Corp. (See CenturyLink Opens Hosting Site in China.)

Brian Klingbeil, senior vice president for international development at CenturyLink Inc. (NYSE: CTL), says the company is being pulled into China by its customers, which want to do business in the world's most populous nation. "If I am honest they have been asking us for years."

He says that while business continuity and data sovereignty rules play a role in the decision to host in China, the biggest driver is probably the Great Firewall (also known as the GFW), the local term for China's vigorous internet censorship system. The system works on many levels, but includes deep packet inspection and filtering, and IP address blocking.

The result is increased latency and other variables. "You could find yourself being blocked accidentally, or on purpose for some reason," points out Klingbeil.

For a foreign firm trying to set up in the cloud or telecom market, the key rule is it can't own any hardware. In this case, Neusoft has bought the infrastructure and has the contract with local data center provider GDS Services in the new Shanghai free trade zone. There's also a telecom partner, Citic Telecom International, which has been CenturyLink's network provider in China for 10 years.

While CenturyLink has to share its revenues with its partners, Klingbeil insists the service and operations level are the same as anywhere else.

It is running teams in the US, India and China installing the new China accounts. Since starting service in late August two installations have been completed, with another 20 waiting to be connected.

But this is just the first phase: CenturyLink is eyeing Chinese domestic businesses in its next move. This is more complicated than setting up a hosting service in Shanghai and would require a partner for regulatory and practical reasons, Klingbeil admits.

Yet even if CenturyLink doesn't win contracts in China initially -- competing with local giants such as China Telecom Corp. Ltd. (NYSE: CHA) is challenging in the extreme -- it will have put its name in front of all manner of new potential business customers looking to expand internationally and which need support for their communications services requirements. "The momentum of multinationals is undeniable; that's really exciting. We could probably get market share over time equivalent to our US share," he says. "It will take time. But why can't [China] be as big as the US in 20 years -- or 10?"

— Robert Clark, contributing editor, special to Light Reading

R Clark 11/4/2014 | 10:46:35 PM
Re: Big market Yes, CenturyLink are definitely running against the flow. Foreign companies in China are feelilng they have a target on their back. But CL isn't a high-profile consumer brand, and they've got a Chinese partner, so maybe they can build a business there. There isn't a lot of regulatory certainty though.
danielcawrey 11/4/2014 | 10:34:20 PM
Big market Yes, China is a big market. But I don't think operating there is as easy as some may think. The oppotunity is gigantic, but as other foreign firms have found out it means operating with local partners. 

For many US companies, that may mean an entirely new way of doing business. Sure, when the dollars (or yuan) is there for the taking, you've got to go after it. But it isn't as easy as some may think it is. 
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