Although the Chinese fixed broadband market is the world's largest in terms of number of subscribers, household penetration in China is still very low, reaching only 10.6 percent, according to analyst firm, Ovum.
China ranks 34th in the world in terms of household penetration and there is still plenty of room for broadband growth in the country, said Ovum in a new report.
"The Chinese government's national convergence plan is designed to accelerate broadband market growth, principally by raising the level of competition in the broadband market," said Jane Wang, Ovum's senior analyst and author of the report.
"In particular, cable operators and China Mobile will be allowed to break the broadband monopoly held by the two major fixed broadband telcos, namely China Telecom and China Unicom, in their respective territories. To maintain their competitive advantage, China Telecom and China Unicom have been increasing their investments in fibre infrastructure since 2010 and are committed to increasing fixed broadband network investment in the next three to five years."
The report highlighted that while xDSL is still the dominant Internet access technology in China, it is being challenged by FTTx.
xDSL is the term for the broadband access technologies. Fibre to the x (FTTx) is a generic term for broadband network architecture using optical fibre in telecommunications.
FTTx to overtake xDSL in 2016
According to the report, the year-on-year growth rate of FTTx connections was far greater than for ADSL connections in 2011, and it is forecasted that investment by China Telecom and China Unicom will expand China's FTTx subscriber base to more than half of the worldwide total by 2015.
"The number of FTTx connections in China is expected to overtake the number of xDSL connections in 2016. However, ADSL will not disappear completely, especially in rural areas where more time will be required to roll out FTTx," added Wang.
Ovum forecasts that China's FTTx subscriber base will reach 76.5 million in 2015, representing more than 50 percent of the worldwide FTTx subscriber base.
According to their most recent annual reports, China Telecom and China Unicom will spend more than half of their capex on FTTx infrastructure in 2012, said the report writers. "ADSL will not disappear quickly, especially in the rural areas where more time will be needed to roll out FTTx. FTTx rollout will start from major cities and new buildings, from communities that have strong demand for high-speed broadband networks, and from areas where it is relatively easy to upgrade the existing network," said Wang.
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