China's Broad Band Industry at Crossroad

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Last updated at: (Beijing Time) Friday, December 28, 2001

China's Broad Band Industry at Crossroad

The year 2001 has brought more frustration than excitement to China's broad band service suppliers, since most users-to-be have watched their efforts to expand businesses indifferently. Currently, only one percent of Chinese households are connected to a broad band network. Even in prosperous Shanghai the figure is only two percent.

China still lags behind

With the concept of "broad band" sweeping through China, many domestic companies, including China Telecom, China Netcom and the Great Wall Company, rushed into this new market at the beginning of the year.

However, their enthusiasm for building broad band networks could not change the fact that China is still backward in this field.

Statistics show that at the end of October, one-third of Beijing residential communities had contracted to lay broad band cables, but only one percent had begun operations.

Suppliers fail to provide satisfied service

Another problem is that few residents want to pay the fee for the newly-installed cables since the majority have been used to broad band networks being supplied free of charge.

Experts consider the suppliers' extensive operations the main reason for the setback in the broad band industry in China. Xie Wen, chairman of China Internet Laboratory, said, "Many developers talk a lot about the concept of broad band, but later cannot provide customers with practical facilities of the required standard."

"Some companies have received a huge number of letters of complaint because they have failed to offer the necessary services after opening the broad band network," said Xie.

The Great Wall Company, an unknown in China's broad band industry, has been through the typical ups and downs experienced by this sector.

By June, it had signed up 15 million clients in China's 60 cities, 60 of which were already using broad band networks.

However, the promising situation did not last long as the expansion of its business slowed down and continued to do so. Instead of the planned return of 2.5 billion yuan (301 million U.S.dollar) it brought in only 1.3 billion yuan (157 million U.S. dollars).

China Telecom originally planned to supply 1.5 million users but dropped out halfway, causing the retreat of many other broad band service providers.

Difficulties

Xie Wen said the development of broad band networks is affected by the information technology, the market, management, policies and the economic environment. However, most companies did not do their research and take these factors into account.

However the professionals think it is understandable that China's broad band industry has encountered difficulties since it's still at an elementary stage. Statistics show that even in the United States where the information industry is the most developed worldwide, only 10 percent of the population use broad band networks and in European countries only five percent do.

China still has hopes

Experts point out that there still is great hope for China's broad band markets.

Since June, trial operations of broad band networks have been carried out in 13 major cities, including Beijing, Shanghai and Chengdu.

In September, the establishment of the CCID-Times Company with an input of 140 million yuan (16.9 million U.S. dollars) brought hope to the domestic broad band industry by promoting simple constructions into profitable operations.

CCID-Times president Li Zhu said the operation of broad band networks must have a "chain" to link suppliers, receptors, facilitators and estate agents so operation costs and profit can be shared.

Professionals consider the emergence of a group of companies offering "chains", like CCID-Times, will help China's broad band industry change from the current chaotic situation into an orderly one.

Broad band operators increasing

Analysts also point out optimistically that new broad band operators are still growing.

Following the cooperation between China Telecom and Xinhua News Agency as well as Sina.com and SunTV, a company under the State Administration of Radio, Film and Television will soon become another top broad band service supplier after purchasing all China's cable TV networks with a credit loan of 40 billion yuan (4.8 billion U.S. dollars).

Experts predict that China will become the world's largest market for broad band products by 2005. Now, the suppliers are shifting their focus and working on the contents transmitted through broad band networks.

China Sets the Pace in Broadband Technology

China is rapidly expanding its broadband communications network, a trend that will continue for the next 10 years. By 2001, China will have invested $2.5 billion to develop its broadband infrastructure, and plans to invest $2.4 billion over the next five years.

An overall Internet transmission system project (OITS), which is one of the key projects in the March 1986 Program undertaken by Fenghuo Telecommunication Technology Company, has recently passed the appraisal in Wuhan, therefore making it a breakthrough in China's broadband technology.

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