By 2011, China will surpass Japan as the world's second-largest broadband market after the US with revenues of more than $19bn and four times the subscribers of its Nippon neighbour, says market research firm Global Insight.
But Bill Gates already thinks China is the leading broadband nation, so we're not sure who to believe. His enthusiasm for China is catching although his recent pronouncement, that China has already surpassed the US in the number of broadband users, is suspiciously light on data.
What is clear, however, is that China will outpace all other major developed and developing markets in terms of broadband growth. According to Global Insight, more than one third of the more than 350m new broadband subscribers predicted globally for the next five years will live in China.
But what do the numbers really mean? Well, they show that the death of wireline industry has clearly been exaggerated, particularly if you are an equipment supplier with good contacts in China.
Second, despite the world's current obsession with China's mobile telecoms market, the fixed-line market is going to throw up many opportunities for broadband services. And, unlike mobile, where the hot potato of 3G licences continues to act as a roadblock on service development, in the fixed network, broadband technologies can be deployed today.
EBT Mobile, the London-listed retailer with a growing network of mobile-phone shops in China, believes there could be opportunities in China's fixed-line telecoms market. It recently set up a JV with a dealer representing one of China's fixed-line operators to “explore business opportunities in the fixed-line arena”. See this story for more.
While the trend to make more mobile calls and less fixed ones — fixed-mobile substitution (FMS) — is taken as a given by the telecoms industry, Global Insight's research shows that disparate local regulatory, competitive, and economic conditions will mean that the pace of substitution will vary greatly across the 20 markets analysed.
Indeed, traditional telcos in developed markets are already trying to counter the FMS effect with new converged services like IP TV or Fixed-to-Mobile Convergence (FMC). T
he jury is still out on whether these efforts will be sufficient to counter the inexorably drop in revenues produced by FMS but I suspect that if it any country can find new mass-market applications for fixed network it will be China, where a increasingly affluent urban population and the high population densities in cities create the optimum conditions for deploying new broadband services.