By Felda Chay

THE Chinese government's control of Internet access on the mainland is well known and requires little elaboration. But what is interesting is how it has allowed a Singapore-based company to set up shop as a network provider in the country.

Since June last year, NetPower International has been operating a broadband network called NetZone in China in collaboration with local company Great Wall Broadband Network Service Company (GWBN), an arm of the China Great Wall Computer Group Cooperation.

China Great Wall Computer Group is touted as the largest broadband network service provider in China excluding infrastructure operators, with a network that serves about 2.5 million subscribers in 30 large cities.

NetPower's pilot project with GWBN has seen a take-up rate of about 11 per cent in the Chang Qing Gardens residential district in Wuhan, where the network - similar to those offered by SingTel's SingNet BroadBand and StarHub's MaxOnline in Singapore - covers about 8,000 households. The take-up rate is expected to hit at least 20 per cent in Chang Qing Gardens by next year, says NetPower's co-founder Leonard Chong.

The numbers may sound impressive but the road to becoming a network provider in China was not easy, says Mr Chong. While NetPower won the US$150 million contract to build what could be China's largest wireless local area network in 2005, it first had to raise funds to build the network, which it did not have at that time.

Thankfully for NetPower, organisations such as Spring Singapore stepped in to provide funding.

Spring invested in the company through its Spring Startup Enterprise Development Scheme (Spring Seeds) - which provides Singapore-based start-ups a matching dollar for every dollar an investor puts into a business, up to $1 million.

This funding problem was not the only difficulty encountered by NetPower after it was set up in 2004 by Mr Chong and Australian counterpart Alan Matthews, who has since left the company. Both of them worked at Australian-based IT networking firm IntraPower.

'I wanted to work on a technology which I thought back then had a lot of potential,' says Mr Chong.

Driven by an entrepreneurial streak, the two set up NetPower. At that time, becoming a network provider was not what the company wanted to be at all. The technology that Mr Chong and his partner originally wanted to roll out was called NetRoam - a global roaming and clearing house solution for wi-fi networks that would allow users to roam across various networks that signed up to NetRoam and receive just a single consolidated bill from their chosen service provider regardless of the number of networks they accessed data from.

The end-user would also enjoy the convenience of using a username and password provided by their home-based service provider to access networks - as opposed to having to use prepaid cards or remote Internet access providers such as iPass.

But funding issues plagued NetRoam. While most investors the firm spoke to were interested in the idea, they wanted the solution developed first before putting their money in.

'We had to go through the pain of talking to people to sign up to the idea,' says Mr Chong. 'Yes. The people we spoke to liked the idea but were unwilling to put in money because it was just a concept.'

Also, setting up your own business meant taking a 'massive paycut', says Mr Chong. 'Whatever you put in your pocket, you're taking away funds from the company.'

Their funding woes meant that the launch of the service had to be delayed. And even now, NetRoam is yet to be launched - though the solution has been developed and proved. Instead, the company has chosen to sidetrack and focus on providing broadband services.

The sidetrack, however, has proved to be worthwhile. For one thing, NetPower is looking to raise capital to expand its network - a clear indicator of how well it is doing. It is currently in talks with venture capitalists and a European-listed company to seek working capital for network expansion. 'What attracts them is our footprint in China,' says Mr Chong.

The firm is also looking to provide value-added services and is in talks with content providers that want to extend their reach to mainland Chinese users.

NetPower has signed a deal with a listed company in France that will give it a 10 per cent cut of the revenue the French company earns from providing its content to users of NetPower's network.

'Now that we've built the roads, we want to tap into the market further by providing value-added services down the road,' says Mr Chong.

The company will focus on providing its network and other value-added services to Central China, in particular the provinces of Hubei, Henan, Hunan and Jiangxi, home to China's numerous second and third-tier cities.

'There is enough money to be made there,' says Mr Chong. 'The big cities have providers like China Telecom, and it's hard to compete with them. But in the second and third-tier cities the potential for growth is very high as people start to go online.'

While the broadband services business has taken off, Mr Chong has not given up on rolling out NetRoam. 'It's the baby,' he says. 'We put so much effort into it. It would be a waste to just abandon it like that.'

He hopes that NetRoam will be available to end users of member networks by the second quarter of 2010. The company is currently in 'advanced' talks with major Chinese telcos to sign up as members of NetRoam, he says. 'If all goes well, we hope to position NetRoam as the Visa of credit cards - where individuals associate the brand with the service.'

This article was first published in The Business Times.