China's Booming Telecommunications Market Could Lose Speed

Transcription

1 Market Analysis China's Booming Telecommunications Market Could Lose Speed Abstract: China has million fixed-line subscribers and is the world's fastest-growing telecommunications market. However, this growth is beginning to slow. By Evelyn Goh Strategic Market Statements China has achieved phenomenal fixed-line growth in the past decade, but this growth is beginning to slow down. Foreign investors should start looking beyond infrastructure investment in China and toward other services, such as content and value-added services. Foreign investors should start looking for potential local partners rather than competing with local players. Competition in the fixed services market has intensified, and the two larger operators, China Telecom and China Netcom, are moving into each other's service region, targeting corporate users. Long-distance call revenue has started to decline, and the addition of low-end users has resulted in low fixed-line average revenue per user (ARPU); in the short term, Chinese operators' focus will be on the faster-growing data communications and new services. Fixed-line subscriber growth is under threat from mobile services, and mobile communications is expected to overtake fixed-line as the key communications medium in China in Publication Date: 4 February 2003

2 2 China's Booming Telecommunications Market Could Lose Speed Status of the Fixed-Line Market China's telecommunications market grew at a phenomenal pace in the past two decades. Since 1978, the fixed-line market has sustained double-digit revenue growth (an average of 36 percent from 1989 through 2001). After the installation of China's first telephone in 1882, the number of telephone subscribers took 110 years to grow to 10 million at the end of But in just six years (1992 to 1998), the number of subscribers grew to 87 million. And in three years, the number of subscribers more than doubled to 185 million at the end of China has the largest fixed-line subscriber base in Asia/Pacific and is likely to overtake the United States as the largest in the world in Gartner Dataquest has forecast the number of fixed-line subscribers to reach million by the end of According to the Ministry of Information Industry (MII), by the end of November 2002, there were million fixed-line subscribers, which is close to our forecast. Fixedline penetration has risen from 0.98 percent in 1989 to 16.5 percent in November However, fixed-line growth started to slow down after Fixed-line subscriber growth in the next few years is likely to be boosted by Personal Access System (PAS), a wireless local loop service that is offered by China Telecom and China Netcom. Gartner Dataquest estimated there would be 11.3 million PAS subscribers at the end of 2002 and has forecast this number to grow to about 47 million at the end of 2006, accounting for approximately 13.9 percent of total public switched telephone network (PSTN). The total switching capacity for local telephones has grown to million lines, and the long-distance automatic switching capacity totals 5.52 million circuit ends. Intelligent network has covered most areas of the country and provided for new services such as the caller identification, call forwarding and conference calling. There has been extensive local-access network rollout in many cities and even rural villages. Recent developments in the fixed-line market include upgrading local access lines using digital subscriber line (DSL) technology, development of a wireless local loop (personal access system) network for wireless local telephone service to supplement fixed-line access and installation of wireless localarea networks (LANs) in airports and commercial centers to provide business travelers with broadband access. Fixed-Line Operators in China Despite the breakup of China Telecom in 2000, the fixed-line operator's business is still a Goliath to battle. The breakup resulted in the establishment of China Unicom, Ji Tong and China Netcom, but these operators have not become meaningful contenders to China Telecom. Gone are the days when China Telecom was the monopoly player in the fixed-line market. China Telecom was split into two regional companies in May 2002 one in the north and one in the south to create more competition among the local players. China Netcom, a startup Internet

3 3 Protocol (IP) carrier, was merged with 10 of China Telecom's northern provinces to form the China Netcom Communications Group. China Netcom Communications Group is commonly referred to as the "Big" Netcom, while the original China Netcom is referred to as the "Small" Netcom. The differentiation shows the size of the original Netcom and, in some sense, the strength of the original Netcom. Under the restructuring plan, most of the telecommunications assets previously owned by China Telecom were divided between the new China Telecom Group and the new China Netcom Group, based on their geographic locations. An exception to this restructuring plan was made in the allocation of nationwide interprovincial optic fibers in which China Telecom Group and China Netcom Group now own 70 percent and 30 percent, respectively. Overnight, China Netcom became a sizable competitor to China Telecom. Before the merger, the "Small" China Netcom constructed several regional broadband networks offering competitively priced data services. China Telecom Group controls 21 provincial (municipal and autonomous region) telecommunications corporations, of which four would come under a listed company. Part of China Telecom was listed in October 2002 with the service regions of Shanghai, Guangdong, Jiangsu and Zhejiang. China Telecom Group and China Netcom Group are permitted to operate nationwide fixed-line telecommunications networks and provide nationwide services. Of the four fixed-line operators, only China Unicom has a mobile license. But it also has the smallest local access network. Since its establishment in 1994, China Unicom has focused on developing Internet, Voice over IP (VoIP) and mobile business. Thus, its local call service is limited to three provinces (Chongqing, Chengdu and Tianjin), each with about 600,000 subscribers. However, its long-distance call service is available in 319 cities nationwide. Although China Unicom has a relatively significant base it has no long-term strategy or focus on the development and growth of its fixed-line business. However, China Railcom, the latest addition to the fixed-line market, was not new to telecom operations. Even before it was given a telecom license in 2000, China Railcom was already offering telecom services to its railway workforce and families living along or near the railway lines for about 50 years. China Railcom has a fairly extensive national long-distance network reach; its services cover some 500 cities with more than 1,100 switching centers. In addition, Railcom has 400,000 long-haul lines and 120,000 kilometers of trunk lines (including 70,000 kilometers of fiber-optic backbone and 12,000 kilometers of digital microwave links). Despite this, China Railcom's service regions are not in major business or residential districts, making it difficult for it to expand its subscriber base. China Railcom also has no clear strategy. It has also started to experiment with PAS.

4 4 China's Booming Telecommunications Market Could Lose Speed China Telecom and China Netcom have a monopoly over the fixed-line market. This scenario is unlikely to change in the near term. China Unicom is too caught up in the mobile market, especially with growing its code division multiple access (CDMA) subscribers, while China Railcom has no capital resources to further expand into local network infrastructure. However, China Railcom's long-distance assets may be a potential candidate for merger or foreign investment. Information on the fixed operator coverage and subscriber base in China is shownintable1. Table 1 Fixed Operator Coverage and Subscriber Base Operator China Telecom China Netcom China Unicom China Railcom Subscriber Coverage Shanghai, Zhejiang, Jiangsu, Jiangxi, Anhui, Hunan, Hubei, Sichuan, Chongqing, Fujian, Guangdong, Guangxi, Yunnan, Guizhou, Hainan, Tibet, Shaanxi, Gansu, Ningxia, Xinjiang and Qinghai Beijing, Tianjin, Heilongjiang, Jilin, Liaoning, Hebei, Shanxi, Shandong, Henan and Inner Mongolia Chongqing, Chengdu and Tianjin Along all railway lines throughout China except in Tibet Source: Gartner Dataquest (January 2003) Subscriber Base (Millions) Subscriber Market Share (%) Telecommunications Revenue China's telecommunications players contributed billion yuan (US$55.3 billion) in China Mobile has overtaken China Telecom as the major revenue generator, with revenue of billion yuan (US$20.7 billion), about 37.4 percent of the total revenue. In the first quarter of 2002, the revenue contribution from mobile communications, local calls and long-distance calls was 49 percent, 31 percent and 12 percent, respectively. The remaining 8 percent came from data communications, international communications, paging and satellite services. The fastest-growing segments are the data, mobile and local call markets, while paging and international revenue continues to fall. The bulk of the fixed operator's revenue is derived from the fixed call services, especially local call services. While the data segment (including Internet) is a bright spot and is forecast to grow during the next five years, it only accounted for 14.9 percent of the total fixed-line revenue in Local call revenue continues to increase as the subscriber base expands. The prosperity of the nation and rising affordability has encouraged more usage. Unlike the long-distance call market, local calls are not under the

5 threat of VoIP; thus, revenue growth is still healthy. However, local call charges in China are low, which moderates overall revenue growth despite the soaring subscriber numbers. Domestic and international longdistance call revenue faces intense competition from VoIP calls. This segment is also under threat from the mobile operators that offer VoIP calls. Information on the fixed operator market share revenue in China is shown in Table 2. Table 2 Fixed Operator Market Share by Revenue Operator Revenue for First Eight Months of 2002 (Billions of Yuan) Market Share (%) China Mobile China Telecom China Netcom China Unicom China Railcom and China Satellite Total Source: MII and Gartner Dataquest (January 2003) 5 Penetration and Growth of Fixed Line in China Despite China's impressive fixed-line growth, the national fixed-line penetration is only 17.4 percent. This level is below many other developed markets in Asia/Pacific and around the world. However, fixed-line penetration in some cities such as Shanghai and Beijing is as high as 41.6 percent. This clearly shows the uneven distribution of fixed-line growth in the country. China suffers from a huge divide in terms of telecommunications infrastructure development and wealth. Despite efforts by the government to populate the West with more telephones, the fixed-line penetration in some regions is far below the national average. Table 3 shows the fixed-line penetration by region. Table 3 Regional Fixed-Line Penetration Region Fixed-Line Penetration (%) East 21.6 Central 13.2 West 9.9 Countrywide 16.0 Source: Gartner Dataquest (January 2003) According to MII's statistics, only 38 percent of the total fixed line in the country is installed in the rural villages, where 62 percent of the population lives. The average fixed-line penetration in the city was about 24 percent as of October In the past, there was always a waiting line

6 6 China's Booming Telecommunications Market Could Lose Speed when a customer applied for a fixed-line telephone, and it would take a long time before they received one. However, this won't happen today because supply is able to meet demand. As of October 2002, fixed-line capacity use in the country was 96.7 percent, according to MII. Currently, fixed-line capacity in western China is about 20.2 percent of the total capacity compared with only 16.2 percent in China has done well in narrowing the divide between the rural and urban dwellers. Since 1994, the rural vs. urban fixed-line penetration gap started to narrow as the takeup rate of telephony in the rural areas increased. However, this phenomenon is starting to fade away, and the gap has started widening once again. In the first half of 2002, rural telephone growth slowed. This could be because many peasants in rural areas live in sheer poverty. Also, China Telecom cut its investment and development of the telecommunications infrastructure and services in the rural areas late last year. The rural areas are likely to be developed under a universal service obligation (USO) fund planned by the government. Table 4 shows the foreign investment schedule in fixed services after China's entry into the Word Trade Organization (WTO). Table 4 Foreign Investment Schedule in Fixed Services With China's Entry Into the WTO Facilities-Based Fixed Line Services (Domestic and International Services) percent foreign equity limit. Local services limited to Beijing, Shanghai and Guangzhou. National long-distance limited to services among the three cities. Resale of local voice services permitted. Source: Gartner Dataquest (January 2003) 25 percent foreign equity limit 35 percent foreign equity limit. Coverage extended to 14 other cities: Chengdu, Chongqing, Dalian, Fuzhou, Hangzhou, Nanjing, Ningbo, Qingdao, Shenyang, Shenzhen, Taiyuan, Wuhan, Xiamen and Xian 49 percent foreign equity limit with no geographic restriction However, China tabled the foreign investment schedule at the end of 2001 on its accession to the WTO. Three cities will initially be opened for foreign investment in 2005, followed by another 14 cities in This includes three municipalities and 14 other cities in 10 provinces. With a population of 1.2 billion and fixed-line penetration of only 17 percent, the opportunities and growth look bright. However, with China's massive geography and a huge proportion of its population living in the rural regions, will the fixed-line market continue to grow at previous growth rates? For the purpose of this document, Gartner Dataquest will attempt to identify where the PSTN deployments are, what is driving and inhibiting growth, and where the future growth opportunities are in the fixed-line market for carriers and vendors. We will focus on the cities that had been designated for foreign investment in the WTO agreement. Table 5 highlights the provinces, where one or more cities will be opened to competition under the WTO agreement, which was tabled by China.

7 Here, we have divided China into six regions. Seven of the 17 cities slated for the WTO agreement are in the richer eastern region, while the other 10 cities are spread throughout the country. For example, in Guangdong, only Guangzhou and Shenzhen will be opened for foreign investment, and in Sichuan, it's the city of Chengdu that will be opened for foreign investment. Table 5 Provinces With Cities That Will Be Opened to Competition Combined Penetration of Fixed and Mobile (%) Annual Urban Income (US$) Annual Rural Income (US$) Region Province Fixed-Line Penetration (%) Urban Population (%) East Shanghai , Low East Fujian , High East East East Middle South Middle South (Fuzhou, Xiamen) Jiangsu (Nanjing) Shandong (Qingdao) Zhejiang (Hangzhou, Ningbo) Guangdong (Guangzhou, Shenzhen) Hubei (Wuhan) 7 Fixed-Line Growth Potential Medium Low , High , High Low North Beijing , Low North North East North West Shanxi (Taiyuan) Liaoning (Dalian, Shenyang) Shaanxi (Xian) Low Low Low South West Chongqing Low South West Sichuan (Chengdu) Low Source: MII and Gartner Dataquest (January 2003) Beijing had a fixed-line penetration of 41.6 percent at the end of This is much higher than Thailand (13 percent) and Malaysia (20 percent). It is comparable to Japan (40.5 percent) but slightly lower than South Korea (45 percent). In contrast, fixed-line penetration in Sichuan is only 8.9 percent. However, fixed-line penetration must be discussed with the context of user affordability. For example, Beijing's urban income is only US$1,398 a year or US$117 a month, which is low even by Asian standards. Rural income in Beijing is even lower at US$616 a year or just US$51 a month. In contrast, average annual income in Malaysia is approximately US$3,400 or US$283 a month.

8 8 China's Booming Telecommunications Market Could Lose Speed Sichuan'surbanincomeisjustUS$768ayearorUS$64amonth,whichis only slightly higher than Beijing's rural income. Sichuan's rural annual income is US$240 or US$20 a month. The income levels indicate that Chinese users spend a disproportionate amount on basic telephony. For example, in Beijing's urban area, based on an average monthly bill of US$4, spending on basic telephony is approximately 3.4 percent of monthly income. However, in Sichuan's urban area, this would be almost 6.25 percent of the monthly income. In contrast, average spending on basic telephony in developed countries such as Singapore is less than 1 percent of monthly income. Nevertheless, averages can be misleading in China. The income divide in China is large compared with developed countries. For example, in Beijing, a handful of people will have an income far exceeding the average, while a large pool of people will be significantly lower than the average. The income divide is progressively worse in the less-developed cities. From these factors we draw our conclusion that the addressable market is perhaps significantly lower because there is also an income divide within the urban population. When evaluating the potential growth of fixed-line penetration, it is also important to view the split between the urban and rural population. Again, the rural vs. urban gap in China is wide compared with many Asian countries. Beijing's urban population is 69 percent while its fixed-line penetration is 41 percent, indicating a lot of room for growth. Similarly, Sichuan's urban population is 26.4 percent while its fixed-line penetration is 8.9 percent. But as with the average income level, such comparison is misleading. As discussed earlier, the big income divide means that it is highly unlikely that Beijing's fixed-line penetration will increase rapidly. There is also a need to factor in the robust growth of China's mobile sector, which has displaced fixed telephony to a great extent in China. In Beijing, the combined fixed mobile penetration is 77.5 percent, larger than its urban population. Because mobile takeup is strongest in the cities, it is a reasonable assumption that mobile has to some extent fulfilled the need of those in the city without basic fixed telephony. This pattern can also be seen in Sichuan where the combined penetration is 26.7 percent, almost equivalent to its urban population. In the compilation of these data, Gartner Dataquest decided to estimate the growth potential of the fixed-line market for each province/municipal, based on the key criteria we discussed earlier fixed-line penetration, urban and rural incomes, urban and rural population, and fixed mobile substitution. We have established the time frame for accessing the fixed-line growth opportunity for the next five years. The main objective is to uncover the potential for local carriers and foreign investors that are keen to enter the local market according to the WTO timetable. As a point of reference, we decided to use the penetration in Beijing and Shanghai as benchmarks on what's achievable, rather than base it on experiences in other countries where the market dynamics are totally different.

9 9 We divided the growth opportunities into three categories: High (more than 10 percent growth) Medium (between 5 percent and 10 percent growth) Low (less than 5 percent growth) For Beijing, we believe the opportunities for fixed-line growth is low. As previously discussed, fixed-line penetration is comparable to developed countries; combined penetration already exceeds that of its urban population; and urban income is low by Asian standards and has a great disparity in income levels. All these factors suggest that fixed-line penetration is not expected to grow rapidly. Despite low fixed-line penetration, we estimated the fixed-line growth opportunity in Sichuan would be low. The combined penetration is equivalent to the urban population, suggesting a possible fixed mobile substitution situation in the cities. Urban income is low even when compared with Beijing, which is already low. In Guangdong, fixed-line growth opportunity is expected to be high because fixed-line penetration is low compared with Beijing. Although combined penetration is almost equivalent to the urban population, the relatively high average income shows the affordability potential in Guangdong. Overall, based on current market factors, the fixed-line market potential is surprisingly low, with only four high potentials and one medium potential out of 13 provinces. The market potential largely depends on how fast China Telecom and China Netcom move. It may be possible that within the next five years, the two operators could saturate the market; and there may not be much left to build by the time WTO agreement takes effect. However, this may not be bad. Foreign investors can still look into investing in the two carriers with a view of profits from services, rather than focusing on infrastructure investment. The price of doing this may be higher but returns could also be faster. However, it is important to note that our data show provincial- and municipal-level information; hence, cities such as Guangzhou and Shenzhen may actually have higher fixed-line penetration and a higher urban vs. rural population compared with Guangdong, which includes other cities such as Dongguan and Zhuhai. Competitive Landscape The year 2002 has seen dramatic change in the competitive fixed-line landscape, though many of the benefits have yet to materialize. China Telecom, once the national Goliath, has been split in two. The new China Telecom and new China Netcom were given a mandate to compete with each other across the entire country. The two are quickly deploying point of presence (POP) in areas outside those given to them as a result of the split. In major cities such as Beijing and Shanghai, they will soon own

10 10 China's Booming Telecommunications Market Could Lose Speed competing metro infrastructure. China Telecom has started building its own Beijing network. Its seems unlikely, given the costs, that these two operators will become local-access competitors across the entire country but rather in the long-distance, IP transit and corporate data services areas, where increasing competition is likely. China Netcom was created in 1999 as a broadband data carrier, thus its focus has been on building high-speed Internet backbone. Its business was more of a "carrier's carrier," a wholesaler for the high-speed data network it was building rather than a retail player. But it has shifted its focus to corporate data services. China Netcom's merger with China Telecom has not only made it a larger competitor, but it also has immediate subscriber base and reach to end users. Before the merger with China Telecom's 10 northern provinces, China Netcom already had significant broadband business in China's southern provinces, and this will provide a platform for it to expand into China Telecom's service area. China Netcom's recent acquisition of Asia Global Crossing (AGC), an undersea optical network operator, for US$270 million also allows China Netcom to gain competitiveness in the region. China Unicom is the smallest player in the fixed-line market in terms of subscriber base and local network access reach. It is the only provider in China that is allowed to offer a full range of telecom services. The focus of its business has so been limited to mobile communications and VoIP phone service. However, it has built one of the world's largest VoIP networks, connecting 327 cities throughout China. Although its local call service is limited to three cities Tianjin, Chongqing and Chengdu it is able to offer long-distance service to most cities using China Telecom's long-distance network. The bulk of its fixed-line revenue comes from its lease-line and VoIP business. A key advantage for China Unicom is that it is able to price its services up to 10 percent lower than the government's fixed tariff. However, this preferential term will become ineffective as the government moves toward a policy of tariff relaxation, allowing the market to set its own price. China Railcom, on the other hand, entered the market at the wrong time. Its debut coincided with MII's decision to cancel the installation charge for new customers, making its entry to the basic service even tougher. It introduced a number of new services, such as VoIP and broadband, after its entry. It has also started looking at mobile technologies in hopes of obtaining a mobile license when the government decides to increase the number of mobile players in China. China Railcom faces serious challenges of competing with more savvy and established competitors, such as China Telecom and China Netcom. It is also laden with a huge legacy workforce (about 70,000) resulting in low labor productivity. Despite receiving two loans of 15 billion yuan from the State Development Bank to roll out its backbone infrastructure and services, it is likely to continue to suffer from a funding shortfall because of the large amount of resources required to enhance its current network and push out new services. In view of current competition and possibly the future entry of foreign players, it will not be an easy task for China Railcom to repay its

11 11 debt and become profitable. China Railcom may become a target of a merger in the near future. China Telecom is still recognized as a strong brand name and an experienced operator. Because of this, China Telecom may be able to better utilize its market position to position itself in China and possibly make inroads into the international telecommunications market. The restructuring has released the company from its previous heavy obligation in providing universal services, and it can concentrate on developing new markets, especially in the northern regions. In November 2002, China Telecom launched an overseas initial public offering (IPO) in Hong Kong and New York to raise funds for the expansion of its telecommunications networks, enhance its services and develop new technologies. China Telecom's focus in the next two years will be on the high-growth data segment, but revenue from this segment is still small, and there will also be strong competition in this segment. China Telecom and China Netcom have built PAS systems (Little Smart) to provide limited mobility service in a number of cities. This is perhaps a strategy to capture subscribers and have a foot in the mobile market before its potential entry into the mobile business. Gartner Dataquest Perspective China's economy has grown rapidly in recent years, which has led to increases in the income level and a demand for more-advanced telecommunications services. According to the MII, in the first quarter of this year, the disposable income of the city dwellers increased by 16.1 percent. Although overall spending has decreased, telecom and healthcare are the two areas in which spending is still increasing. Telecom spending increased by 28.1 percent per person in the first quarter. However, telecommunications revenue is not growing in the same quantum. New subscribers are bringing in lower average revenue per unit (ARPU), which is limiting the revenue growth. This is the likely trend going forward unless operators are able to hit on new revenue streams. The long-distance market faces vicarious competition from the largest number of players, especially with the entrance of China Mobile. The competition is already tense and may grow even more competitive. Revenue from this segment started falling in 2001 because of the intensifying competition among the players, especially with IP calls. China Mobile is also a competitor in this segment and is believed to have captured close to 20 percent of the VoIP market. Some voice revenue has also been lost to the popular short messaging service (SMS). As we explained previously in this Perspective, although China's fixed-line market appears lucrative with a huge potential market, the actual growth is not expected to be phenomenal. A number of factors inhibit further growth, such as the issue of affordability, based on the huge percentage of the rural population in China and the overall income level of the country. There also is the issue of mobile substitution, especially with

12 12 China's Booming Telecommunications Market Could Lose Speed falling tariffs of mobile phones and services. Lastly, competition in the local loop is limited, and the fixed-line market is still monopolistic in China. Despite having completed the restructuring of China Telecom, many integration issues still exist at the operational level. The restructuring plan to allocate 70 percent of the nationwide long-distance network to China Telecom Group and 30 percent to China Netcom Group is another daunting task. China Netcom is also confronted with the challenge to merge the cultures of the three distinct companies. Competition in the fixed-line market has been limited. It is unclear whether there will be meaningful competition between China Telecom and China Netcom. Since the completion of the restructure, both operators have begun entering into each other's territory. However, given the fact that only one operator controls the local loop and the high cost of developing local access networks, competition in the basic service may not take place with significant magnitude in the near term. Because of the high cost and difficulties associated with constructing local network in each other's turf, the emphasis of their competition has been limited to wiring buildings with metro networks in major cities with fiber optic access, targeting corporate clients. Both operators have also set up subsidiaries in each other's service region. China Netcom's 10 northern provinces are populated by middle-income workers, while China Telecom's 21 provinces include the poorer western region where the cost of providing basic service is high. Thus, China Telecom may require more effort and resources to develop and expand these markets. China Telecom and China Netcom also face the daunting task of having to defend their home turf while creating new markets in its competitor's territory. China's telecom operators are new to competition. Most lack the knowledge of productivity, research and development (R&D), market segmentation and marketing to fuel their growth, having been under the control and guidance of the government. The regulatory environment for transparent and fair competition has not fully developed in China as recently shown by the MII unilaterally raising the settlement rates for international calls terminating in China. China has yet to establish an independent telecom regulator since its entry to WTO one year ago. If MII continues to hold back its regulatory reform and implements preferential policies to its local players, the whole system would pose a barrier to entry for many potential foreign players. Key Issue How will opportunities in the public network service market be affected by competition, technology and evolving user requirements?

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14 14 China's Booming Telecommunications Market Could Lose Speed This document has been published to the following Marketplace codes: TELC-WW-DP-0295 For More Information... In North America and Latin America: In Europe, the Middle East and Africa: In Asia/Pacific: In Japan: Worldwide via gartner.com: Entire contents 2003 Gartner, Inc. and/or its Affiliates. All rights reserved. Reproduction of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The reader assumes sole responsibility for the selection of these materials to achieve its intended results. The opinions expressed herein are subject to change without notice