Executive Summary

The telecom market in China continues to exhibit dynamic characteristics, often out of step with what is happening in other parts of the world. Telecommunications development figures prominently in the nation’s priority scheme as China readies itself for the 2008 Beijing Olympics.

The buzz in early 2005 around the eventual issuance of Third generation (3G) licences has been that the government would restructure the major telcos, with the most likely scenario being that China Unicom would be merged into China Telecom and China Netcom, leaving China Mobile as the only unaffected operator of the Big Four telcos.

Into 2005, the four major Chinese telecom players - China Telecom, China Netcom, China Mobile and China Unicom - are facing declining growth in the maturing high-end user market, as well as from the reduction or end of network acquisition opportunities from their parent companies.

In preparation for the 2008 Beijing Summer Olympics, China is busy building what will be the world’s largest network capacity for fixed-line phones. The Chinese voice market is enormous; China has the largest number of fixed-line subscribers and Voice over Internet Protocol (VoIP) users in the world.

China Mobile is the world’s largest mobile operator by number of subscribers. China Telecom and China Netcom pose a serious threat to China Mobile and China Unicom with their Little Smart PAS services and pending 3G licences.

China’s embrace of SMS makes it the world’s top user of this technology. Due to the shear size of the country, China is likely to become the global leader in the use of several mobile services.

China is the country with the second most broadband lines after the USA. Amazingly, penetration remains comparatively low, meaning there is still much room for growth. The Chinese broadband market is expected to eventually become the world’s largest broadband market.

China has the largest cable TV network in the world. Industry restructuring has seen the Ministry of Information Industry (MII) take over regulatory and management responsibility for cable TV (CATV). Digital cable TV has been languishing in China, but an initiative to provide free digital cable TV decoders may well see a rapid increase in subscriber numbers.

China’s terrestrial TV services reach approximately 95% of China’s households. Digital TV in China is on the rise, and the government intends to end analogue broadcasts by 2010. In August 2004, four digital TV licences were issued to break China Central Television’s monopoly on digital television. Concerning satellite TV in China, the Chinese government plans to transition from analogue to digital broadcasts via satellite in key urban areas by 2005. This has signalled a major push forward for the heavily regulated satellite TV market.

China has been able to build a substantial national telecommunications infrastructure, with fibre optic cables criss-crossing the nation, though there is still much need for expansion and improvement. It is forecast that China will install more access lines than any other country over the years leading up to the Olympics. China Netcom plans to use around 50% of the proceeds from its November 2004 IPO toward infrastructure.

1. EXECUTIVE SUMMARY
2. KEY STATISTICS
3. TELECOMMUNICATIONS MARKET
3.1 Overview of China’s telecom market
3.2 Analysis – China, the re-emerging superpower – Paul Budde
3.3 Analysis – ICT industry will have to lower its costs – Paul Budde
3.4 Analysis – tips for overseas investors and suppliers – Paul Budde
3.5 Analysis – Will China’s economic boom last? – Paul Budde
3.6 China’s Tenth Five Year Plan
3.6.1 Budget for information and communications technology (ICT)
3.7 Convergence / triple-play developments
3.8 Preparations for the 2008 Beijing Summer Olympics
3.9 Market highlights and analysis – 2004
3.10 Market highlights and analysis – 2005
4. REGULATORY ENVIRONMENT
4.1 Overview
4.2 The regulator – Ministry of Information Industry (MII)
4.2.1 State Telecommunications Management Commission
4.3 Competition
4.4 Liberalisation
4.4.1 Qualified Foreign Institutional Investor (QFII)
4.5 Restructuring of the telcos in China
4.5.1 China Telecom split
4.6 World Trade Organization (WTO) accession
4.6.1 Analysis – WTO impact on the telecom sector in China
4.6.2 Final concessions
4.6.3 Implementation schedule
4.7 Telecom regulations of 2001
4.7.1 Role of the MII
4.7.2 Operators
4.7.3 Foreign participation
4.7.4 Private Bank Exchange (PBX) operators
4.7.5 Service quality and universal service
4.7.6 Service charges
4.7.7 Other issues
4.8 Reduction in call charges
4.9 Calling-Party-Pays (CPP)
4.10 Telecom equipment market regulations
4.10.1 Telecom equipment Network Access Licence
4.11 Reorganisation of fee structures
4.12 Internet regulations and censorship
4.13 Yearly summaries of major regulatory developments
4.13.1 Year 2001
4.13.2 Year 2002
4.13.3 Year 2003
4.13.4 Year 2004
4.13.5 Year 2005
5. MAJOR TELECOMMUNICATIONS PLAYERS
5.1 Overview of major players
5.2 China Mobile
5.3 China Netcom (CNC)
5.3.1 Analysis – China Netcom and PCCW
5.4 China Satcom
5.5 China Telecom
5.6 China Tietong (Formerly China Railcom)
5.7 China Unicom
6. TELECOMMUNICATIONS INFRASTRUCTURE
6.1 National networks
6.1.1 Overview
6.1.2 The grand telecommunications plan
6.1.3 Tenth Five-Year Plan
6.1.4 Overview of high-speed networks
6.1.5 Synchronous Digital Hierarchy (SDH)
6.1.6 Hybrid Fibre Coaxial (HFC) systems
6.1.7 Dense Wave Division Multiplexing (DWDM)
6.1.8 Data and Multi-Media Communications Network
6.1.9 National Internet backbone networks
6.2 International networks
6.2.1 Regional / international fibre optic cable projects
6.2.2 Fibre optic Link Around the Globe (FLAG)
6.2.3 SEA-ME-WE3
6.2.4 Trans-Asia-Europe (TAE)
6.2.5 Rostelecom and China Telecom Russia-China cable
6.2.6 China-Southeast Asia Cable (CSC)
6.2.7 Asia-Pacific Cable Network 2 (APCN2)
6.2.8 C2C cable network
6.2.9 China Unicom
6.2.10 China Netcom
6.3 Satellite networks and operators
6.3.1 Market overview
6.3.2 Asia Satellite Telecommunications Company (AsiaSat)
6.3.3 APT Satellite Holdings Ltd (APT) / Apstar satellites
6.3.4 China Satellite Communications Group (China Satcom)
6.3.5 PanAmSat / Galaxy satellites
6.3.6 Sino Satellite Communications Co Ltd (SinoSat)
6.3.7 Emergency satellite communications network
7. FIXED NETWORK AND NETWORK OPERATIONS
7.1 Fixed-line market overview
7.2 IP telephony / Voice over Internet Protocol (VoIP)
7.2.1 TOM-Skype
8. DATA MARKET
8.1 Public data networks
8.2 Data and multi-media communications network
8.2.1 ChinaDDN
8.2.2 ChinaNet / ChinaNet Next Carrying Network (CN2)
8.2.3 ChinaPAC
8.2.4 ChinaFRN
8.3 Network developments
8.3.1 Guangdong
8.3.2 Guangxi
8.3.3 Shanghai
8.3.4 Shandong
8.3.5 Jilin
8.3.6 Shenzhou Great Wall / Longteng
8.4 Public telephone data access
8.5 Integrated Services Digital Network (ISDN)
8.6 Asynchronous Transfer Mode (ATM)
8.7 IP-Virtual Private Network (IP-VPN)
8.7.1 2003 Yankee Group analysis of IP-VPN market in China
8.8 The Golden Projects / Value-Added Networks (VANs)
8.9 Very Small Aperture Terminals (VSATs)
9. INTERNET MARKET
9.1 Market overview
9.2 Analysis – slowdown of Internet growth in China – January 2005
9.3 Analysis – Internet and broadband drivers – Paul Budde
9.4 Promotion of Internet access
9.4.1 Internet via TV / Set-top Boxes (STBs)
9.5 Internet statistics
9.5.1 International Internet connectivity
9.6 IPv6
9.7 Internet regulation
9.7.1 Censorship issues
9.7.2 Domain name registration
9.7.3 Asian Domain Name Dispute Resolution Centre
9.8 Internet cafes / wangba
9.9 ISP market and networks
9.9.1 ChinaNet
9.9.2 China Education and Research Network (CERNET)
9.9.3 UniNet
9.9.4 ChinaGBN
9.9.5 CNCnet / China Netcom
9.9.6 CMNet
9.9.7 CSTNet
9.9.8 CPCNet
9.10 Internet portals
10. BROADBAND MARKET
10.1 Overview
10.2 Broadband service providers
10.2.1 China Telecom
10.2.2 China Netcom and China Online
10.2.3 China Energy Ventures Corp (formerly China Broadband Corp)
10.2.4 Great Wall Broadband Network Service (GWBN)
10.2.5 BT / ViaNet
10.2.6 SpeedCast
10.3 Broadband networks
10.3.1 Cable modems
10.3.2 Digital Subscriber Line (DSL)
10.3.3 Fibre optic
10.3.4 Powerline broadband / powerline communications (PLC)
10.3.5 Wireless broadband
10.4 Broadband services
10.4.1 Broadband video services
10.4.2 Voice over Internet Protocol (VoIP)
11. CONTENT AND E-SERVICES
11.1 E-commerce
11.1.1 Market overview
11.1.2 E-commerce development efforts
11.1.3 E-commerce payment gateway
11.1.4 E-commerce logistics
11.1.5 E-payment systems
11.1.6 E-commerce products
11.2 E-business and B2B e-commerce
11.2.1 IBM
11.2.2 Chinatradeworld.com
11.3 Online trading
11.4 E-government
11.5 E-entertainment
11.5.1 Online gaming
11.6 E-banking
11.7 E-medicine
11.8 E-advertising
11.9 E-services providers and Websites / portals
11.9.1 Overview
11.9.2 Sina.com
11.9.3 Sohu.com
11.9.4 NetEase.com
11.9.5 Alibaba.com / Taobao.com
11.9.6 EachNet.com / eBay
11.9.7 China.com (Chinadotcom)
11.9.8 TheChinaBridge.com
11.9.9 Mweb.com
11.9.10 China Netcenter portals / AOL and China Internet Corp (CIC)
11.9.11 Yahoo! Inc
11.9.12 Search engines
12. MOBILE COMMUNICATIONS
12.1 Market overview
12.1.1 Analysis of China’s mobile market fickleness – 2004
12.1.2 Forecast for China’s mobile market
12.1.3 Price war
12.2 Major mobile operators
12.2.1 Overview
12.2.2 China Mobile
12.2.3 China Unicom
12.2.4 Other mobile operators
12.2.5 Mobile multimedia alliance
12.3 Mobile networks
12.3.1 Market overview
12.3.2 Advanced Mobile Phone Service / Total Access Communication System (AMPS/TACS) networks
12.3.3 Global System for Mobiles (GSM)
12.3.4 Code Division Multiple Access (CDMA)
12.3.5 Personal Access System (PAS) / Personal Handy System (PHS)
12.3.6 Mobile handsets
12.4 Third generation (3G) mobile
12.4.1 Market overview
12.4.2 TD-SCDMA
12.4.3 WCDMA
12.4.4 CDMA2000
12.5 Fourth generation (4G) mobile
12.6 Mobile voice services
12.6.1 Prepaid cards (SIM and PIM cards)
12.6.2 Satellite mobile
12.6.3 Roaming
12.7 Mobile data services
12.7.1 Market overview
12.7.2 Short Message Service (SMS)
12.7.3 Multimedia Messaging Service (MMS)
12.7.4 Wireless Application Protocol (WAP)
12.7.5 General Packet Radio Service (GPRS)
12.7.6 Push-to-Talk (PTT)
12.7.7 Enhanced Data for GSM Evolution (EDGE)
12.7.8 Mobitex
12.7.9 Data Services based on CDMA2000 1x
12.8 Mobile applications
12.8.1 Market overview
12.8.2 Global positioning Systems (GPS)
12.8.3 M-commerce
12.8.4 Mobile Video-on-Demand (VoD)
12.8.5 Mobile gaming
13. BROADCASTING MARKET
13.1 Terrestrial TV market
13.1.1 Market overview
13.1.2 China Radio, Film and Television Group
13.2 Free-to-Air (FTA) broadcasting
13.2.1 China Central Television (CCTV)
13.3 Digital TV
13.3.1 Government plans for digital TV
13.3.2 Cost concerns over terrestrial digital TV in China
13.3.3 Digital TV trials
13.3.4 Shenzhen as DTV and HDTV base
13.3.5 Hong Kong’s concerns over mainland terrestrial digital TV
13.4 Satellite TV market
13.4.1 Market overview
13.4.2 Regulatory issues
13.4.3 Multichannel Multipoint Distribution Systems (MMDS)
13.4.4 Satellite broadcasters
13.4.5 Chinese satellite TV services abroad
13.5 Cable and pay TV
13.5.1 Market overview
13.5.2 Foreign investment in Chinese cable TV
13.5.3 Regulatory issues
13.5.4 Cable digital pay TV
13.5.5 Pay-per-view TV
13.5.6 Cable TV infrastructure
13.5.7 Selected cable TV operators
13.6 Interactive TV
13.6.1 Market overview
13.6.2 China Telecom
13.6.3 China Central Television (CCTV)
13.6.4 Sichuan Provincial Network
13.6.5 Shanghai
13.6.6 IDV-Global Media-On-Demand
14. GLOSSARY OF ABBREVIATIONS


Exhibit 1 – China’s schedule for telecom liberalisation
Exhibit 2 – Major national backbones in China
Exhibit 3 – China Satcom satellite fleet
Exhibit 4 – ChinaDDN
Exhibit 5 – China’s schedule for Internet liberalisation




Table 1 – Mobile subscriber growth – 1995 - 2005
Table 2 – Country statistics China – 2005
Table 3 – Telephone network statistics – 2005
Table 4 – Internet provider statistics – 2005
Table 5 – Internet user statistics – 2005
Table 6 – Broadband statistics – 2005
Table 7 – Mobile statistics* – 2005
Table 8 – National telecommunications authorities
Table 9 – Fixed-line and mobile subscriptions – 1998 - 2004
Table 10 – Overview regional / international fibre optic cable networks
Table 11 – Fixed lines in service and penetration – 1998 - 2005, 2010
Table 12 – IP telephony growth estimates – 2005, 2010
Table 13 – Public data and multimedia users – 1998 - 2000, 2005, 2010
Table 14 – CNNIC Internet surveys – 2003 - 2005
Table 15 – Internet users – 1996 - 2005
Table 16 – Computers with Internet access (host computers) – 1997 - 2005
Table 17 – Distribution of bandwidth (Mb/s) – 2002 - 2004
Table 18 – Number of domain names registered under .cn – 2004 - 2005
Table 19 – Broadband subscribers in China – 2000 - 2005
Table 20 – Purchases* on e-commerce Websites – 2004 - 2005
Table 21 – Mobile subscribers by operator – 2004 - 2005
Table 22 – Mobile subscriber growth – 1995 - 2005
Table 23 – China population distribution forecast – 2003, 2007
Table 24 – Overview of cable TV market* – 2005
Table 25 –Cable TV households – 1996 - 2005