Publication Overview

This report provides a comprehensive overview of trends and developments in China’s telecommunications market. The report analyses the mobile, internet, broadband and converging media sectors. Subjects include:

• Market and industry analyses, trends and developments;
• Regional market comparisons - BuddeComm's Telecom Maturity Index
• Major players;
• Market statistics, including for operators;
• Industry and regulatory issues;
• Infrastructure;
• Broadband (FttH, DSL, cable TV, wireless);
• Convergence and Digital Media;
• Forecasts to 2024 for mobile, mobile broadband and fixed broadband.

Executive Summary

China a world leader in 5G services rollout

The Chinese telecom market is the largest in the world in terms of subscribers. China's telecommunications development has generally been driven by investments from government-allied entities and features a strong industrial policy.

As the market approaches saturation, there has been a shift of emphasis in China's broadband policy from infrastructure build-up and service provision to application creation and user demand stimulation.

The Chinese telecommunications market is undergoing a rapid transition, and this is driving a fast-developing data centre market. The Chinese data market has been driven by multinational enterprises and international service providers seeking to establish a presence there. However, the country remains largely untapped by private operators and external hyper-scale providers such as Google and AWS.

China’s fixed-line market is in decline due to voice to mobile substitution. Fixed line penetration has dropped significantly over the past five years from 18% in 2014 to 12% in 2019. This trend is predicted to continue over the next five years to 2024 driven by the growing adoption of mobile broadband.

China’s government is aiming for universal and affordable broadband coverage through investment and competition as specified in policies: Private investment in state-controlled industries, Broadband China, and Internet Plus.

Unlike the US market, where cable internet access plays a prominent role in developing the fixed broadband market, DSL was the initial driving force behind fixed broadband growth in China, followed later by EPON fibre and now GPON fibre.

Fixed broadband penetration in China has grown strongly over the past five years. Fibre broadband continues to be the fastest growing broadband segment, as DSL and cable modem access will continue to decline as customers migrate away from these platforms in favour of fibre broadband. Moderate growth is predicted over the next five years to 2024.

China’s mobile market is moving into a new stage characterised by low subscriber and profit growth. This is reflected in the slower growth in China’s overall subscriber base and falling margins as China’s three big operators resort to price competition to grow the number of subscribers or to respond to competitive threats.

By 2019, the number of mobile subscribers had reached over 1.5 billion However, growth is expected to be relatively slower due to a saturated and mature market over the next five years to 2024.

The MIIT has awarded commercial 5G licences to the country’s three mobile network operators (MNOs) – China Mobile, China Unicom and China Telecom. China Mobile brought forward plans to launch 5G services commercially, announcing that the service will go live in 50 cities by the end of 2019.

Mobile broadband has seen very strong growth in China over the past five years. Proliferation of LTE and improving affordability of smartphones is driving growth both in mobile broadband subscribers as well as the amount of traffic used per subscriber. The mobile broadband market will be driven by increasingly faster speeds offered by the mobile operators as they roll out their 4G and 5G networks and improving tariffs due to strong competition.

China has emerged as one of the most aggressive countries promoting 5G and is predicted to be one of the top four of markets that will drive the growth of 5G in Asia, and is projected to become the world’s largest 5G market by 2025.

BuddeComm notes that the outbreak of the Coronavirus in 2020 is having a significant impact on production and supply chains globally. During the coming year the telecoms sector to various degrees is likely to experience a downturn in mobile device production, while it may also be difficult for network operators to manage workflows when maintaining and upgrading existing infrastructure. Overall progress towards 5G may be postponed or slowed down in some countries.

On the consumer side, spending on telecoms services and devices is under pressure from the financial effect of large-scale job losses and the consequent restriction on disposable incomes. However, the crucial nature of telecom services, both for general communication as well as a tool for home-working, will offset such pressures. In many markets the net effect should be a steady though reduced increased in subscriber growth.

Although it is challenging to predict and interpret the long-term impacts of the crisis as it develops, these have been acknowledged in the industry forecasts contained in this report.

The report also covers the responses of the telecom operators as well as government agencies and regulators as they react to the crisis to ensure that citizens can continue to make optimum use of telecom services. This can be reflected in subsidy schemes and the promotion of tele-health and tele-education, among other solutions.

Key Developments

• The Chinese data centre market is undergoing a rapid transition.
• Fixed line penetration has dropped significantly over the past five years.
• China's government strengthens IOT policies to boost economic growth.
• Fixed broadband penetration in China has grown strongly over the past five years.
• Fibre has overtaken DSL to be the key fixed broadband technology platform.
• China is projected to become the world's largest 5G market by 2025.
• China is predicted to account for more than two-thirds of all 5G connections by 2025.
• Assessment of the global impact of COVID-19 on the telecoms sector.

Key companies mentioned in this report:

China Mobile; China Telecom; China Unicom, Alibaba, JD.com, Baidu, Tencent