12 Apr 2012China Broadband Overview

The telecoms market in China was monopolised and regulated by the Ministry of Posts and Telecommunications (MPT) until 1993 when liberalisation was introduced by the Chinese government. As part of the government’s initiative to improve market competition in the country, China United Telecommunications Corporation (China Unicom) was founded. During the institutional reform in 1998, the Ministry of Information Industry (MII) was established to replace its predecessor MPT as the new regulator. Furthermore, China Telecom, which used to be part of the MPT, was launched as a separate entity.

Until 2008, the major players in the telecommunications sector were China Telecom, fixed line operator China Netcom, and the two mobile operators China Mobile and China Unicom. In October 2008, China Unicom merged with China Netcom, forming China Unicom (Hong Kong) Ltd.

The number of fixed line telephony users in the country keeps falling, reflecting the difficulty of constructing fixed line infrastructure in rural areas. While this is a barrier for fixed broadband development, it is a golden opportunity for the mobile broadband market. Following the award of 3G licences in early 2009, 3G investment and network construction in China has been breaking world records. By the end of 2011, China Telecom alone had over 36 million 3G customers, with their number having tripled from end-2010. The total number of 3G subscribers in the country was approaching 130 million at end-2011. The trend is likely to continue, with mobile broadband connections growing faster than fixed broadband lines and exceeding the latter in the next 2-3 years.

In an attempt to stimulate the economy during the global recession, China’s state council approved a stimulus plan in February 2009. This plan included the investment of about RMB 600 billion in the promotion of 3G mobile communication services, digital TV sets and next generation broadband. In line with the plan, China continued upgrading its telecoms infrastructure. In April 2010, the government released a notice requiring telecom operators to speed up the construction of fibre networks in order to provide speeds of at least 2 Mbps in rural areas and 8 Mbps in urban areas.