China largest broadband market by 2007

Stuart Corner
Monday, 04 September 2006 18:49

IT Industry - Strategy

According to research company, Ovum, China will next year overtake the US to become the world' largest broadband market in 2007and  by 2010 will have 139 million broadband subscribers.
This will be music to the ears of senior Telstra executives: the company last week shelled out $334 million for 51 percent of leading online real estate web site SouFun.

According to Ovum, "China’s broadband sector has been growing dramatically at a compound annual growth rate (CAGR) of 79 percent over the last three years. The strong growth will continue to boost the broadband market, which will reach 79 million subscribers by 2007. But the growth opportunity is still huge. With a penetration rate of only 3.4 percent of the population, broadband penetration in China is well behind many countries in the Asia-Pacific region."

China Telecom and China Netcom are the dominant providers of broadband with a combined market share of 87 percent, China Tietong, China Unicom, cable and miscellaneous other operators account for the remainder. DSL dominates with a steadily growing market share of 71 percent and 32 millions subscribers by June 2006. It is followed by ethernet-based LAN access in high-density areas with a market share of 26 percent.

Despite widespread cable coverage and 128 million cable TV service subscribers in China, cable operators have made few inroads into the growing broadband market, Ovum says. It attributes this to "regulatory barriers, fragmented ownership structure and a lack of expertise [that] have seriously undermined cable operators’ competitiveness against DSL providers...in stark contrast to the North American market."

According to Ovum, wireless broadband in China is still immature but the emergence of VoIP is giving operators new hope for seeing returns on their wireless local area networks.

Ovum says prospects for further broadband development in China are bright, but significant uncertainties remain. “China needs to restructure the telecoms industry and it needs to reform the regulatory policy for broadband and IPTV. The possible entry of foreign players in line with WTO commitments could also complicate the development of the competitive situation."