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Press Releases
China, 17 July 2007 -- The rate of broadband growth in China is slowing dramatically For Immediate Release. 12 July 2007. The rate of broadband growth in China is slowing dramatically; leaving a digital divide between city and rural areas of the world’s most populous nation, and challenging the operators to find new sources of revenue growth. After 114% in 2004, broadband growth slowed in 2005 and 2006 to 57% and 38% respectively. Ovum expects double-digit growth to continue for the next two years, but at lower rates than we have seen before. Although Ovum still expects China to surpass US in terms of broadband subscribers in 2008, this leaves a large proportion of the market untapped. “Household broadband penetration in China stood at 13% by Dec 2006”, Kevin Lee, Ovum analyst based in Hong Kong said. “We forecast that the steady broadband growth will push household penetration to 21% by 2010, equivalent to 106 million subscribers. This is nowhere near market potential”. “The slow-down will entrench a digital divide, because broadband is approaching maturity in the big cities while the rural markets remain almost untapped”, added Lee. Kevin Lee believes that slower broadband revenue growth also leaves China’s fixed operators vulnerable to ongoing PSTN revenue losses caused by fixed-mobile substitution. Unless growth can be maintained, these operators will see their total revenues shrink. Kevin said, “The lack of competition between the main operators is a major factor, because it keeps prices higher than necessary”. Higher prices mean lower uptake. Despite the booming Chinese economy, increased Internet and PC population and emerging applications such as peer-to-peer and operators’ push for IPTV will continue to boost demand for broadband. Cable operators and other broadband providers do not have the coverage, financial power and international gateways needed to compete with these operators. Regulatory issues also play a part. Lack of clarity on spectrum policy blocks the wireless broadband option. Conflict between the two powerful regulatory agencies is a barrier to the deployment of IPTV services over broadband networks. In response, Ovum advises carriers to expand their networks in second and third-tier cities to maintain growth in broadband connections. Ovum also advise them to ramp up product development activity around content services and in the longer term, triple-play. The popularity of peer-to-peer content sharing exposes untapped demand for content, and the operators need to offer attractive new content services to their existing customer base in the cities in order to grow new revenue streams. About Ovum: Ovum's primary activity is providing value-added advisory services and consulting to retained and project clients. The company acts as a well-respected and trusted source of industry data, knowledge and expertise on the commercial impact of technology, regulatory and market changes. Ovum engages in continuous research and industry analysis to determine market dynamics in its specialist sectors. Ovum has developed long-standing relationships with many of its corporate clients, which include major international blue-chip companies such as Alcatel-Lucent, AT&T, BT, Cable & Wireless, Cisco Systems, Deutsche Telekom, Fujitsu, HP, IBM, Microsoft, Telstra and Vodafone. Ovum is part of the Datamonitor Group. Media Contacts: Tanisha Kuckreja Tel: +61 3 9601 6723 Email: Note To Editors: Fact Facts: Broadband subscriber (in 000s) in China Subscribers 2006 2007 2008 2009 2010 Total broadband 56,228 67,978 80,954 93,816 106,325 Source: Ovum Submitted by Tanisha, ovum on Tuesday, 17 July 2007 at 9:25 AM Category: Others & Oddities |
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