Catalysing China's e-generation
Despite being the world's largest broadband market, in terms of household penetration China ranks only 34th globally with a relatively low rate of 10.6 percent. Such a modest figure provides fertile ground for growth, however, and according to a recent re
Two core factors are expected to drive this expansion: increased market liberalization and technology.
As part of its policy initiative, Beijing is catalyzing competition in a way which will enable cable and mobile providers to break the existing monopoly held by the two dominant operators. Increased competition is expected to improve the choice of services for consumers, as well as providing more flexibility over pricing and network development. While this new policy direction is key, technology will play an increasingly significant role in expansion.
The vast majority of China’s existing broadband infrastructure uses ADSL technology which can provide download speeds of up to 8 Mbps in a cost-efficient manner. Speeds beyond that threshold are increasingly costly. In the past, 8 Mbps seemed unbelievably fast, especially when compared to the 56 Kbps afforded by old dial-up modems. However, the global average download speed is now just over 10.8 Mbps, according to July figures from Speedtest.net. Many regional markets are hovering around the 30 Mbps mark and the global best is in Hong Kong, at a touch under 40 Mbps. Clearly, as households and businesses consume more data, the maximum ADSL speed of 8 Mbps will be insufficient.
China’s major fixed broadband operators will need to upgrade their networks to a technology that can deliver faster speeds in a more cost effective manner. New entrants to the market will have the advantage of being able to focus entirely on the new technology and this is where things are getting interesting.
FTTx technology (which stands for fiber-to-the-home, -office, -building or –curb) uses fiber-optic cables instead of ADSL’s traditional coaxial copperline. Fiber has a practically limitless capacity and its installation right up to the point-of-use allows significantly faster download and upload speeds.
Very shortly we can expect to see investment by China’s major broadband players accounting for more than half of the world’s FTTx subscriber base. Ovum predicts the number of FTTx connections will surpass ADSL in 2016.
These developments will not only increase fixed broadband penetration in China, they will also establish an infrastructure that can be easily expanded and upgraded in terms of capacity. The economic and social benefits of such an infrastructure are significant.
Beijing is making clear its commitments to the connected generation, so what about Thailand?
Local fixed broadband penetration is a touch under 25 percent of the kingdom’s 19-million households. While higher than our northern neighbor the level is still low in comparison with other leading Southeast Asian nations.
Thailand’s government has put in place a nascent National Broadband Strategy, but with the 2015 formation of the Asean Economic Community looming, more political muscle is needed to transform these plans into action. We should be encouraged by the developments in China which show how well-implemented policies can work with support from the private sector. Perhaps it’s time Bangkok looked to Beijing for inspiration on how to stay connected.
