Broadband use in China to overtake the US within a year

China will overtake the US as the world’s biggest broadband market in less than a year, according to new research released today from analyst firm 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, the Ovum report said.

Ovum’s senior analyst Kevin Lee said with a penetration rate of only 3.4 percent of the population now, the potential for growth is huge.

“Broadband penetration in China is well behind many countries in the Asia-Pacific region,” he said. “We believe China’s broadband development will continue to benefit from a booming economy, growing incomes, expanding PC penetration and new applications such as VoIP and IPTV. The Olympics will provide another boost.”

Ovum forecasts for China’s broadband will grow by a CAGR of 75 percent to reach 139 million subscribers by 2010.

China Telecom and China Netcom are the dominant providers of broadband access services in China, with a combined broadband market share of 87 percent of subscribers. China Tietong, China Unicom, cable and miscellaneous other operators account for the remainder.

Lee said DSL dominates with a growing market share of 71 percent and 32 million subscribers by June 2006.

It is followed by Ethernet-based LAN access in high-density areas, which has a substantial market share of 26 percent.

“DSL technology will be the key force for broadband growth; operators are progressively upgrading the network using higher speed technology such as ADSL2+ and VDSL to meet increasing bandwidth demands,” Lee said, adding that cable modem, wireless technologies and others will make a much smaller contribution.

DSL speed and prices vary widely across China and between the two main DSL providers. Broadband prices (where China Telecom offers higher rates) are normally highest in major cities, but are more affordable in second- and third-tier cities.

Despite widespread cable coverage and 128 million cable TV service subscribers in China, Lee said cable operators have made few inroads into the growing broadband market.

Ovum believes that regulatory barriers, fragmented ownership structure and a lack of expertise have seriously undermined cable operators’ competitiveness against DSL providers. This is in stark contrast to the North American market.

As for wireless broadband, Lee says that it is still at an immature stage, but the emergence of VoIP is giving operators new hope for seeing returns on their WLANs.

He said growing IPTV deployment is expected to encourage broadband uptake in China.

“The two DSL operators rolled out extensive IPTV trials over 2005 in collaboration with the IPTV licensees Shanghai Media Group and CCTV. Following Harbin, Shanghai will be the second city to begin commercial service by the end of September 2006,” Lee said.

Ovum forecasts that prospects for further broadband development in China are bright, but significant uncertainties remain.

“China needs to restructure the telecomms industry and it needs to reform the regulatory policy for broadband and IPTV; there is also the possible entry of foreign players in line with world trade commitments,” Lee said.

From ComputerWorld

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1 Comment »

  1. Kev said,

    October 8, 2006 @ 4:18 pm

    I tested my bandwidth using this software on your site and found the results to be hysterical. Please don’t get me wrong, I am all for sites like this offering people the chance to check out the speed of bandwidth and then also going one step further but then failing dismally to have software that shows anywhere near accuracy.

    I tested my own connection for example and know it to be running at 8 meg with a true connection of 6.8 Your software clocked me as having a 512 connection!!!? Come on guys, hasn’t anyone reported your software as not working or malfunctioning? Your site is getting hits to the dozen from people curious as to your ranking with Alexa, don’t let yourselves down by offering anything less than the best!

    I found it ironic that the blogs on broadband were actually quite qualified yet not supported by the software you use? Am I being pedantic here? Please don’t take this as a criticism, I have nothing to gain here, but you could in reality send a whole lot of people running off to their ISP’s complaining of crap bandwidth when its actually your software that isn’t up to the mark at present.

    Take the comment as it is meant, as made in good faith to a site that I am sure means the same too,


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