Information Technology Reference
In-Depth Information
3G wireless and data and broadband service from
January 2009. A decline in the number of licensed
carriers indicates that the government regulatory
initiatives and competition policy have failed to
address market concentration, which will have
an impact on competitive entry, investment and
innovation in broadband.
Digital subscriber line services and cable modem
services). Cable TV operators, who are regulated
by the State Administration of Radio, Film and
Television (SARFT), were not allowed to enter
telecommunications markets until a few years
ago. Despite widespread cable coverage and
over150 million cable TV subscribers in China,
the cable TV companies who operate locally
instead of nationally have difficulties to enter
broadband access markets due to lack of funding
and expertise to upgrade their networks to provide
broadband services. Cable TV companies provide
little competition to China Telecom and Unicom
in broadband services.
It is apparent that a well functioning and com-
petitive market in China's telecommunications
industry has not really developed. Indeed, the Chi-
nese broadband environment is characterized by:
Industry Structure and Broadband
Market Environment
The limited nature of competition in China has
often been attributed to industry structure is-
sues. As the result of the industry restructuring,
China Telecom and China Unicom currently have
control over key existing facilities and the local
access networks. The two companies dominate
the Chinese broadband services market, with a
combined market share of over 90%. Both China
Telecom and China Unicom are not only the ma-
jor backbone services operators at the wholesale
level but also the Internet service providers at the
retail level. As Budde pointed out, the vertically
integrated model protects the backbone providers
from competition, and it allows them to drive up
Internet access costs for other independent ISPs
(Budde, 2002).Consequently smaller ISPs are
not able to compete in the price and quality of
broadband services due to market dominance and
market power, and Chinese users have to access
to broadband services at lower connection speed
and higher prices. 86.6% of Internet users in China
are those whose monthly income is under $500
and they pay $25 per month for 1.5mbps broad-
band services. Apparently, the costs are too high
as a percentage of an average Chinese income.
In comparison, a monthly subscription fee for
broadband is about 2% of the monthly average
income of Australians.
China has a very low level of intermodal
competition. The government has focused on
promoting competition in the broadband mar-
ket within the existing telecom networks but
not between telecom and cable networks (e.g.
all basic service providers are state owned
and controlled by the government.
the broadband market is a largely duopoly
of China Telecom and China Unicom in
both the wholesale and retail market.
National Strategies, Funding
Programs and Broadband
Internet Access
The Chinese government has developed some
national strategies for ICT development since the
early 1990s. However, none of them specifically
address the challenge of promoting broadband
infrastructure development. Despite the fact
that the 2006-2020 National Informationization
Development Strategy set the priority areas for
broadband development (MIIT,2006), there were
no specific goals and action plans supporting the
rollout of broadband infrastructure and the range
of more affordable broadband services under
the strategy. The Chinese government's strate-
gies relying on the telecom operators to deploy
broadband infrastructure and deliver high capacity
bandwidth have failed to ensure that the benefits
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