China Broadband Numbers

China’s Broadband Growth Remains Strong
The Ministry of Information Industry (MII), the regulator of China’s telecom and IT industry, reported more than 37 million broadband subscribers at the end of November 2005. By the end of 2005, the number of broadband subscribers will for the first time exceed that of dial-up subscribers, which currently leads broadband subs by 0.07 million. Compared to the end of 2004 (23.85), broadband subscribers have grown by 55. xDSL is still the dominant access technology, with more than 27 million subscribers. Chinese operators are adding more than one million broadband subscribers per quarter. The leading operators are China Telecom (with more than 55% of the market) and China Netcom (with more than 22% of the market).
The MII does not break out the number for residential subscribers. I believe that commercial subscribers (companies, government agencies, Internet Cafés, etc.) account for about 20% of the total subscriber number. As more consumers sign up for broadband access, this percentage will go down. I think a reasonable estimate for EOY 2005 broadband households is 31 million. Considering that the majority of broadband households live in urban areas and that there are more than 130 million urban households (out of more than 370 million total households), the current broadband penetration of immediately addressable market is around 28%. Unless the Chinese government aggressively pushes broadband access into rural areas, market growth will be limited to urban areas. I believe broadband penetration in large cities such as Beijing and Shanghai will soon exceed 50%, thanks to the low monthly fee, rapid economic growth, and the Olympics Effect.