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China’s Great Broad Band [24.09.07]

“Broadband development in China has had significant growth,” said Mr. Chongjian Zhang, Chairman of the Board and President of China Netcom Group, opening the Broadband Asia Forum 2007 in Beijing.  “We have over 20 million broadband users,” added Zhang, “and we are ready to make an even bigger leap.  We are taking part in several large government-backed projects, one of which is the infrastructure support for the Beijing Olympics, where China Netcom Group was chosen as an official partner.” 

According to Zhang, in 2006 China Netcom Group launched its new web-site СNC Маx and offered the first broadband content to Chinese subscribers.  “ITU expressed its gratitude to China Netcom for development of broadband communication in China,” Mr. Houlin Zhao exclaimed.

As of June 2007, there were over 137 million Internet users, including 97 million broadband users, which represent over 67% of all users, noted Mr. Jiang Yaoping, Deputy Minister of Communications.   Mr. Zu Qin, General Director of the China Commission for National Development and Reforms, said that “China follows right after the United States in terms of development of broadband communication in terms of connected subscribers.”

Mr. Zuo Xunshen, Executive Director of China Netcom, shared his concerns about P2P-related challenges.  He explained that, in particular, “popular Р2Р traffic takes up a significant part of the broadband channel. Therefore, the open platform makes operators divert from traditional model of development.  We have to either limit this kind of traffic or close it completely,” Zuo vented his frustration. 

“Just in the first quarter of 2007, the number of broadband technology users in China reached 56 million, of which 33 million belong to China Telecom. 80% of new revenues are brought by broadband communication.  IPTV will become a new hit, a strategic zone of acquiring new profit, but only after deregulation of the industry happens,” said Wei Leping.

Nevertheless, the situation is changing for the better. Thus the government approved the IPTV technology in six Chinese cities.  210,000 IPTV users of Сhina Тelecom, of which the lion’s share belongs to Shanghai (150,000).  The main and most popular services are yellow pages information about restaurants, shopping, banks and entertainment spots.

“I continue to insist that IPTV is the KILLER application of broadband,” exclaimed Wei Leping. China Telecom chose that path and we “decided to transform our company from telephony operator to full scale service operator.”

However, “those who really make money now on broadband are the Internet companies,” asserted Wei, because “we, the operators, don’t get anything from them in exchange for the use of the pipeline and I believe that it is not fair, as we are building the infrastructure, invest huge money in to the pipeline development while the construction of the network should be the joint task for all market participants, including operators of the network and content providers,” complained Wei. 
“And the most correct way is to shift to IMS,” he continued.  “This technology will let us reach real convergence.  Building a harmonious environment and marketing and integration is the key to success.  A China Unicom representative agreed with him, saying that “if in the past DSL was true hit, then now all the dreams are connected with wireless BWA.”

At the same time Robin Mersh, DSL Forum COO, said at the Broadband Asia Forum 2007 that “the number of DSL connections in Asia surpassed 200 million. The largest chunk of it is taken by China.”  Thus, in May 2007 over 43 million Chinese broadband subscribers used DSL, and this is 21.7% of all DSL subscribers in Asia.

All this growth is due to government initiative to offer communication services to the entire population of the country.  It is important to note that such new services as IPTV are becoming increasingly popular. Mersh explains that  “only China Telecom in 2006 modernized about 1.2 million of DSL lines to ADSL2+ to broadcast IPTV and other broadband applications.”

“Broadband is certainly our future.  Our future vision is convergence of telecom and broadcast and computer networks,” proclaimed a China Unicom executive. 

Record Traffic Consumption: Asia Beats the World

According to Mr. Bill Barney, Asia Netcom President, the Asian traffic market is growing fast. He cites two reasons for this: growing traffic consumption and availability of broadband. The average user shifted from 14.4 Kbps to 1 Mbps.  “At the Beijing Olympics in 2008, everyone expects revolutionary traffic explosion, as thousands of reporters and journalists will be able to send their pictures or videos ‘live’.  This didn’t happen even in Athens!”

Asia Netcom is dealing both with retail and bulk traffic sales.  The broadband revolution is initiating significant ISP traffic growth and this trend will remain in the future, said Barney.   Finally, significant investments from Fortune 500 companies into Asian region raise the corporate value of this segment.  Asia Netcom has excellent WAN and MPLS.

According to BDA, China has seven large carrier networks, including:

�� ChinaNet - China Telecom and China Netcom
�� GBNet/China 169 - Jitong, now belonging to China Netcom
�� CERNet – Education Ministry
�� CSTNet – Chinese Academy of Science
�� CNCNet - China Netcom
�� UNINet - China Unicom
�� CMNet - China Mobile

In the end of 2006, Verizon Communications Inc. announced that along with its five Asian partners, China Telecom, China Netcom, China Unicom, Korea Telecom and Chunghwa Telecom, the operator will invest USD 500 million to build a high speed fiber optic network.  According to Telecom Asia, the new undersea cable capacity is up to 62 million phone lines simultaneously.