SPEAKING to Beijing's top telecommunications regulators at their offices last year, a Western executive searched the room for a telephone jack to plug in his laptop computer and demonstrate the wonders of the Internet. There wasn't one. Red-faced, his hosts scrambled to drop a line from the floor above and through the window so he could dial the net by calling outside China on his modem. Today, that office has dedicated data transmission lines. Officials at the Beijing Telecommunications Authority (BTA) and its parent, the Ministry of Post and Telecommunications (MPT), are overseeing the development of the Internet in China. There are two sources for Internet users. The China Educational and Research Network, or CERNET, links about 35,000 professors, researchers and students at 70 universities. Expansion to 100 universities is planned for next year. Users access it free of charge, but must apply for an account. CERNET administrator Wu Jianping said there was 'no control' on who got access. The second sphere, ChinaNet, is much smaller, but is generating most excitement because it is evolving into a commercial medium. Launched last May, ChinaNet is the public window to the Internet, serving government ministries, individuals and companies. John Savageau, Sprint Corp's director of operations for Asia, said ChinaNet 'was so popular in the first six months that they've already blown away their own network and need to expand quickly'. 'They're not deploying mid-range technology, they're deploying cutting edge stuff,' he said. 'Nothing old is going in.' In a deal worth about US$1 million signed last month with with BTA, ChinaNet's maximum capability in Beijing will double by the first quarter of 1996 to at least 5,000 users. A national Internet expansion programme linking existing phone lines in China's 30 provinces and autonomous regions also took a step forward last month when a US$2.1 million contract was awarded to Cisco Systems. William Messer, Cisco's managing director for North Asia, said the project would help expand ChinaNet beyond the country's major cities by next June. The switches to sort and route electronic mail (E-mail) will enable an exponential growth in the number of ChinaNet users, currently estimated to be about 2,000 in Beijing and 1,000 in Shanghai. Mr Messer said the real test for the net in China would be whether the MPT would allow small entrepreneurial companies, known as Internet service providers (Isps), to market, access and create new services as is the case in most countries. 'It will be sign of how aggressively China wants to enter the Internet business,' he said. 'The expansion depends entirely on the way it is marketed.' Although the Internet is just beginning on the mainland, many foreign companies in China are already integrating E-mail into their operations to save time and cut phone bills. A one-minute call to the United States from China costs about US$3, more than three times the rate from Hong Kong. About 30 companies in China are cutting communications costs by using E-mail services supplied by China Online, a Hong Kong-registered company. Marketing manager Keith Lau said the company, which planned to expand soon to Shanghai and Shenzhen, was focusing first on E-mail. Beijing-based computer consultant Stephen Guerin said foreign companies also were hopping on to ChinaNet, though it was usually individuals who took the initiative. 'Sixty per cent of what they want to do is communicate back home,' Mr Guerin said. His Redfish Consultants charges US$300 to get a company on-line and train its staff. Even casual users are using Netscape, the most popular browser for navigating the World Wide Web portion of the Internet, 'because they are in such an information vacuum here', Mr Guerin said. That is the way the Chinese Government likes it. The China Internet Corp, an Internet venture launched recently by the official Xinhua News Service, acknowledges that its business-oriented service will act as a 'gatekeeper' and delete information the government might deem sensitive. Chief executive James Chu said it would be available on the mainland next year. But several users of ChinaNet with point-to-point protocol (PPP) accounts reported they could usually get any information they wanted. Access to powerful PPP accounts used to be extremely tight. But as with many such rules in China, it was quickly undermined by the black market and permits can now be purchased for 50 yuan on the street. 'That's the last mechanism of control,' Mr Guerin said. 'Obviously, they don't want any dissidents using the system. But any politically correct person could get the account and a dissident could use it.' Mr Messer said the permit approach was consistent with other countries in the world which had tried to control access to the Internet rather than clean out dirt that could be discovered in the system's innumerable nooks and crannies. He said there may be an attempt to reassert control in the next few months, but he was not sure what form that crackdown might take. Another aspect of potential governmental interference that is difficult to gauge is whether E-mail is read as frequently and systematically as regular mail travelling in and out of China. 'First, it is illegal [to read people's mail],' an engineer at the BTA said. 'Second, it is [technically] not possible.' Beijing Ericsson operations director Phil Canfield, who recently went on-line to communicate with his mother and mother-in-law in the United States and to track the stock markets, said: 'It's difficult to imagine with all the stuff that goes that someone could actually monitor a conversation. But I can't be positive, so I'm more circumspect than I would be using E-mail elsewhere.' Such concerns aside, the Internet is gradually taking off in China. All E-mail sent from China today, including that addressed to another user on the mainland, is routed through huge telecommunication hubs in California, where it is sorted before being sent on to its destination. Such a system makes it difficult for Chinese authorities to monitor traffic. But that is changing. After China's Internet expansion is complete, it will have its own sorting and routing hubs. Mr Messer said China could build monitoring systems into its new Internet nodes which might improve its ability to watch who was doing what on the Internet. 'When you have a local China Internet, then you have the capability to monitor files after the fact,' he said.