The new center, in Zhangjiang Hi-Tech Park in Pudong, will provide high-speed Internet access and data storage for local enterprises.

AT&T has set up a US$25 million joint venture with Shanghai Telecom, which was the first such business to win approval to set up value-added telecom services.

AT&T, like other foreign telecommunications giants, is not allowed to tap into domestic telephony services such as long-distance calls.

In China, the total enterprise-managed service market is expected to top US$3.7 billion in 2006, according to research firm IDC, which forecasts that the American market this year will reach US$6.9 billion.

AT&T, which moved its Chinese headquarters from Hong Kong to Shanghai last year, said its revenue in China jumped 45 percent year-on-year in 2005 but declined to reveal detailed figures.

"We dream of expanding business nationwide but licensing is the issue. The business we can do is restricted by the government," said Sainti Li, AT&T China's general manager, in an earlier interview.

To gain a license in China for data services, foreign companies need a domestic partner and must pay US$250 million for a license, a high entry threshold for most foreign companies, industry insiders said.

"The government has blocked foreign firms from entering as home-grown firms are not strong enough to compete yet," Norson Telecom Consulting said in a statement.

Overseas firms, including AT&T, PCCW and Vodafone, have expanded in broadband TV, data transition and network operation services through strategic investments in China.

PCCW Ltd spent 318 million yuan (US$39.75 million) in March to establish a 50-50 JV with China Netcom.

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