Broadband in China

Broadband in China

China 's broadband market continued to grow in 2005. This is due to the booming economy, growing income of the population, expanding PC penetration and increasing number of Internet users, the national Olympics, new applications such as VoIP and IPTV, as well as the adoption of new technologies. Accelerating growth of the number of Internet users and low penetration renders an enormous potential for future broadband growth.

The de facto incumbents, China Telecom and China Netcom, are leveraging their strong fixed subscriber base to increase their dominant DSL broadband penetration. With their eye on the decreasing ARPU trend, operators are actively exploring new revenue sources such as content development and IPTV to maintain growth. The broadband business is already moving from a pure high-speed access to content development and triple play, representing a shift from predominantly price-based competition to bandwidth, price, content and services.

Broadband access, along with its extended value-added services and applications, has now become the most important growth driver for fixed operators. The dominance of the DSL operators is expected to continue as regulatory barriers continue to prevent cable operators from emerging as strong competitors in the broadband market.

While prospects for broadband in China remain bright in the coming future, uncertainties still prevail. Restructuring of the telecoms industry, changes in broadband-related and IPTV regulatory policy and entry of foreign players in accordance to the WTO commitment could have different effects on future developments.

This piece provides an in-depth analysis of the Chinese broadband market, and how we expect the market to evolve over coming years.

Table of contents

Huge potential ahead

Ovum view

Status of broadband in China

Figure 1 Broadband trend and penetration in China (2001-2005)
Figure 2 Dial-up versus broadband development
Figure 3 Broadband subscriber per 100 inhabitants in the Asia Pacific (2005)
Figure 4 Broadband technology split by subscribers at end 2005

Factors affecting broadband development

Market dynamics

Figure 5 Operator's market share for broadband in China (subscribers as of Mar 2006)
Figure 6 Subscriber growth for China Telecom and China Netcom
Figure 7 Broadband revenues and ARPU for China Telecom & China Netcom
Figure 8 Broadband revenues for major broadband operators
Figure 9 Comparison of technology used by major broadband providers

Key player's strategy

Market outlook