Executive SummaryThe telecom market in China continues to exhibit dynamic characteristics, often out of step with what is happening in other parts of the world.
Telecommunications development figures prominently in the nation’s priority scheme as China readies itself for the 2008 Beijing Olympics.The buzz in early 2005 around the eventual issuance of Third generation (3G) licences has been that the government would restructure the major telcos, with the most likely scenario being that China Unicom would be merged into China Telecom and China Netcom, leaving China Mobile as the only unaffected operator of the Big Four telcos.Into 2005, the four major Chinese telecom players - China Telecom, China Netcom, China Mobile and China Unicom - are facing declining growth in the maturing high-end user market, as well as from the reduction or end of network acquisition opportunities from their parent companies.In preparation for the 2008 Beijing Summer Olympics, China is busy building what will be the world’s largest network capacity for fixed-line phones.
The Chinese voice market is enormous; China has the largest number of fixed-line subscribers and Voice over Internet Protocol (VoIP) users in the world.China Mobile is the world’s largest mobile operator by number of subscribers.
China Telecom and China Netcom pose a serious threat to China Mobile and China Unicom with their Little Smart PAS services and pending 3G licences.China’s embrace of SMS makes it the world’s top user of this technology.
Due to the shear size of the country, China is likely to become the global leader in the use of several mobile services.China is the country with the second most broadband lines after the USA.
Amazingly, penetration remains comparatively low, meaning there is still much room for growth.
The Chinese broadband market is expected to eventually become the world’s largest broadband market.China has the largest cable TV network in the world.
Industry restructuring has seen the Ministry of Information Industry (MII) take over regulatory and management responsibility for cable TV (CATV).
Digital cable TV has been languishing in China, but an initiative to provide free digital cable TV decoders may well see a rapid increase in subscriber numbers.China’s terrestrial TV services reach approximately 95% of China’s households.
Digital TV in China is on the rise, and the government intends to end analogue broadcasts by 2010.
In August 2004, four digital TV licences were issued to break China Central Television’s monopoly on digital television.
Concerning satellite TV in China, the Chinese government plans to transition from analogue to digital broadcasts via satellite in key urban areas by 2005.
This has signalled a major push forward for the heavily regulated satellite TV market.China has been able to build a substantial national telecommunications infrastructure, with fibre optic cables criss-crossing the nation, though there is still much need for expansion and improvement.
It is forecast that China will install more access lines than any other country over the years leading up to the Olympics.
China Netcom plans to use around 50% of the proceeds from its November 2004 IPO toward infrastructure.