DSL Growth Slows In China
For 1H 2008, China's DSL users
have numbered 60.237 million, up 25.7% YOY. China's DSL equipment revenues
reached 3.204 billion Yuan, up 2.4% YOY. CCID Consulting projects that by
the end of 2008, China's DSL users will reach 68 million, and DSL equipment
revenues will reach 6.3 billion Yuan. However, growth is slowing for DSL
users and especially for DSL equipment revenues as prices continue to drop.
China's DSL user growth has been driven by
China's overall efforts of informatization, and in particular, the
government's Rural Information Broadband Coverage Project, DSL and related
technology maturity, and decreases in broadband products and taxes.
Broadband and the Internet has improved China's business efficiencies and
impacted people's lives. As DSL becomes more widespread in China, so does
the increase in demand for DSL equipment.
To meet user demand, China's telecom
operators will need to buy and upgrade their DSL equipment, while vendor
seek to meet telecom needs, but with more competitive pricing.
Evolutionary network upgrades is a key
factor in DSL equipment growth over optical.
Optical access and FTTH has started its
large scale deployment in China. Nonetheless, FTTH will help drive, rather
than completely replace, DSL technologies.
- While China has started optical
deployment, the user scale is still relatively small. It will take time
before large scale coverage is realized.
- DSL today can satisfy most of Chinese
users' daily broadband application demand.
- ADSL and FTTH are not mutually
exclusive. FTTH+ADSL deployment modes are forming, and enables telecom
operators a smoother evolutionary path.
- With over 60 million existing DSL
users, telecom operators need to be cautious of any technology migration
that would be too disruptive of the existing user base, while at the same
time, grow new DSL customers.
The key factor: High FTTH comparative
cost over DSL.
High FTTH deployment cost has been a
barrier to its more widespread adoption. In China, total FTTH cost is 2,500
– 3,000 Yuan per home. However, the upgrade cost for ADSL from 1MB to 4MB
rate is less than 500 Yuan. Moreover, ADSL price-performance ratio will only
improve with more technological and standards maturity, service/equipment
performance improvement, and increasingly less expensive costs.
Looking to 2H08: Telecom operators will
have customized needs which DSL vendors should fulfill.
China's telecom operators face
infrastructural differences due to China's varying regional development and
operators' own network deployment staging. China's urban regions are far
more developed than the most rural regions. Therefore, equipment needs and
compatibility addressing these varied requirements is paramount. At the same
time, China's telecom operators need to consider a consistent and unified
management of DSL, FTTH, WLAN, and the evolution to FMC (fixed-mobile
Given that China's telecom operators
comprise over half of DSL equipment vendors' demand, it is important that
vendors address the specialized needs of operators and to help operators
achieve a good rate of return. Huawei,
are good examples in doing just that. Moreover, in 1H08, Huawei, ZTE and ASB
have been strong in the central office DSL equipment category, while
Star-net and TAYA has been strong at the user-end.
For more information
contact us for these and
other China-related data, information and products.
Unless otherwise specified,
all information provided is sourced from CCID Consulting.