Thursday, April 24, 2003

13 million China broadband users by year-end

Telecom TVU.S. analyst firm Parks Associates said in a new report that it anticipates a thriving market for broadband services in China, estimating the number of users will grow to 13 million by the end of 2003. Broadband users in China grew from 2 million in mid-2002 to 6.6 million at year-end 2002, a 230% growth rate in six months. Moreover, the recent commercial launch of a new broadband service based on powerline communications technologies may further expedite the development of China’s broadband services market, it said.

“Important drivers of the market include the decreasing price of broadband equipment and services, the continuous growth of PCs and Internet users, more appealing Internet content including pirated movies, and heavy promotions from service providers,” said Yuanzhe Cai, an analyst for Parks Associates. “Also, new service offerings such as PLC services from non-telco competitors can increase the intensity of competition and boost the take rate of broadband services.”

Chinese telcos currently dominate the broadband market, with China Telecom in the top spot. These companies offer a variety of access methods, including ADSL, cable modem, Ethernet + LAN, and Wi-Fi. ADSL, currently with more than 3 million users, has the majority of the market and the best near-term growth prospects.

In comparison, FibrLINK Networks Co., a broadband services provider controlled by the State Power Telecommunications Centre, had just finished PLC field tests in two Beijing residential buildings before launching its PLC commercial services on April 7, 2003.

“Besides the strong background of FibrLINK, PLC services also have technological merits,” Cai said. “PLC technologies use the existing power grid to transmit voice, video, and data at high rates and could become a viable alternative for high-speed Internet service because of the ubiquity of power outlets and the no-new-wires advantage. But in order to compete with telcos’ ADSL services, FibrLINK has to offer comparable bandwidth and value-added services at reasonable price points. It must also devise effective marketing campaigns to increase consumer awareness.”

Parks said FibrLINK is off to a good start. Its services are offered at a price comparable to telcos’ ADSL services. Users pay US$36 for PLC modems, and $12 monthly for broadband Internet access with bandwidth between 512 kbps and 1.6 Mbps.

From the article "13 million China broadband users by year-end," by CommsDay Asia.

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