China to lead the broadband world

China will overtake the US next year to become the world's largest broadband Internet market, analysts have forecast.

The number of broadband subscribers in China is growing at a staggering 79 percent annually, and will reach 79 million in 2007, consulting firm Ovum predicted in research released today.

Recent estimates from Leichtman Research suggest that the number of broadband connections in the US, currently the world's largest market, is around 51 million.

Ovum's predictions are in line with those from other researchers. In-Stat estimated recently that the number of broadband households in China will reach 130 million by 2010.

Ovum's estimates put the size of the market slightly higher, at 139 million. According to other researchers, this will be approximately half of Asia's entire broadband audience at that time.

"We believe that China's broadband development will continue to benefit from a booming economy, growing incomes, expanding PC penetration and new applications such as VoIP and IPTV. The Olympics will provide another boost," said Kevin Lee, a senior analyst at Ovum's Hong Kong office.

VoIP is of particular interest to China's nascent wireless broadband access market, Lee believes.

Other bandwidth-intensive applications are also helping to lure subscribers to broadband. More than 80 million Chinese internet users will be playing online games by 2010, China-based research firm Pacific Epoch predicted in June.

Unlike the US market, where cable internet access plays an important role, DSL technology will be the key driving force for broadband growth in China, according to Lee.

"Operators are progressively upgrading the network using higher speed technology such as ADSL2+ and VDSL to meet increasing bandwidth demands," he said.

Problems faced by cable operators show that, despite the Chinese market's great size, its immature nature gives cause for considerable uncertainty about the exact scale and timing of growth.

"China needs to restructure the telecoms industry and reform the regulatory policy for broadband and IPTV," said Lee.

"The possible entry of foreign players in line with World Trade Organisation commitments could also complicate the development of the competitive situation."