Broadband Boom in China - World’s Number One Market by 2007, says Ovum
by Ken Wieland | September 5. 2006
[FAC: Despite the huge CAGR numbers being posted in the deployment of broadband in China, some truly bizarre circumstances stand in the way of multimedia convergence anytime soon. For example, the two ministries that regulate telecoms and cable (see details below) are in conflict with one another, since each actually owns shares in the companies they are charged with regulating!. Note below the absence of any mention of FTTH or FTTP, but, instead, the presence of "FTTX + LAN", which signifies the presence of a "fiber to the building" (or curb) design. In such designs, fiber is run from the central office or field regeneration unit to a building's IEEE-type LAN Switch. The switch usually resides in an equipment closet at the center of the structure's network center, by which I mean that it is sited at a point that is equidistant from the extreme reaches of the structure (or section of a structure), in order to minimize cable lengths that shouldn't exceed 100 meters. From the switch, 10/100/1000 Mbps _SYMMetrical_ access links are distributed via unshielded twisted pair (UTP) to each subscriber's residence.]
telecommagazine.com
Buoyed by higher income levels in China’s main cities, the country’s broadband market is on course to be the largest in the world – in terms of subscribers – in less than a year.
According to figures released by the Ovum consultancy firm, there were 45 million broadband subscribers in China by the end of June 2006, which represents a CAGR (compound annual growth rate) of 79 percent over the last three years.
The US, currently the world’s largest broadband market with 46 million subscribers, is now within touching distance and will soon be toppled from top spot.
With a broadband penetration of only 3.4 percent of the population, fast-paced growth is set to continue in China. Ovum calculates that China’s broadband market will grow by a CAGR of 75 percent through to 2010 to reach 139 million subscribers (93 million using DSL connections).
A number of factors have combined to boost China’s broadband standing, says Ovum, including the fact that Beijing will host the Olympics in 2008. China’s second largest fixed-line operator, China Netcom, is dedicated to rolling out a ‘broadband Olympic Society’ in cooperation with the National Olympic Sports Centre.
Other broadband stimulants include an increased PC penetration. With PC shipments growing at three percent a year, around 20 percent of households in China – according to Ovum – now possess their own computer. New applications, such as VoIP and online gaming, have further boosted the appeal of broadband in China.
As for IPTV, although it has the potential to be a broadband stimulant, Ovum says that the market has been stifled by regulatory conflict between the telecom and TV sectors.
The Chinese telecom/media regulatory framework comprises the MII (Ministry of Information Industry) on the one side and SARFT (State Administration of Radio, Film and TV) on the other. MII protects the interests of the telecom industry (it is the largest shareholder in China Telcom) and has been known to stop cable TV companies from offering Internet and telecom services.
SARFT, on the other hand, does not allow telecom providers to offer video content without its approval. As such, IPTV has largely been restricted to trials, although commercial service is available in Harbin and Shanghai Telecom (a subsidiary of China Telecom) is scheduled to launch a service in parts of Shanghai this month. Ovum calculates there were around 350,000 IPTV subscribers in China as of May 2006.
The dominant broadband technology in China is DSL, accounting for 70 percent of the connections. FTTX + LAN (26 percent) and cable (nearly 4 percent) make up the rest.
However, China Telecom and China Netcom enjoy a de facto monopoly of broadband access services as they have combined market share of around 87 percent and, with the exceptions of the Shanghai and Guangdong provinces, operate in different regions.
Given the country’s compratively low GDP, lack of competition has led to ’excessive’ broadband prices in ‘Tier One’ cities compared with other developed markets, says Ovum. In the Guangdong province, for example, a 2 Mbps ADSL connection is priced at RmB200 (US$25.00) per-month.
Greater competition should be introduced into China’s telecom markets as part of its entry into the WTO. Restrictions on direct foreign investment are scheduled to be relaxed in 2007, which will allow up to 49 percent foreign equity in Chinese companies. |
