China adds more broadband lines

COMMNUNICASIA, SINGAPORE--China was the main source of new fixed broadband subscriptions for the first quarter of 2010, accounting for 45 percent of the 14 million lines added worldwide during the period, according to new figures from the Broadband Forum.

In a press conference held here Wednesday at CommunicAsia 2010, the industry group's COO, Robin Mersh, said broadband growth has continued to grow globally, not just in emerging markets but also in countries with high penetration such as the United States, Germany, Japan and South Korea.

Commissioned by Broadband Forum and conducted by Point Topic, the study estimated that the total number of fixed broadband lines has hit 484 million globally--a 3 percent growth over the previous quarter, and 12 percent over the same quarter last year.

China retained its position as number one market with the most number of broadband subscribers. Last year, its subscriber base clocked at 93 million, with the U.S. in second place at 80 million.

China's growth of 21 percent in the first quarter of 2010 over the previous year, to reach a total of 112.6 million subscribers, pushed it further ahead of the U.S. which had 87 million subscribers.

Noting the growth of the Chinese market, Mersh said: "Don't expect China to get knocked off [the top spot] at any point soon." He added that the bulk of China's new lines are DSL (digital subscriber line), although fiber is likely to be more popular in greenfield deployments.

This does not mean, in the case of DSL setups, that the quality of connectivity or usage would be inferior, Mersh insisted. He said Internet service providers' decision to deploy fiber or DSL in certain areas is probably due to the demographics and geography of each location, such as how far away subscribers might be from the Central Office facility.

"China is a very dynamic broadband market, especially now that IPTV (Internet Protocol TV) is taking off there, which wasn't so a few years back," he said.

According to the survey, IPTV grew the fastest in China where subscriber lines reached 5.7 million in the first quarter, from 2.8 million in the same quarter last year. The country was third behind the U.S. and France, which had 6 million and 9 million lines, respectively.

Overall, IPTV adoption grew 46 percent between the first quarters of 2009 and 2010, said Mersh. This equates to 11.4 million new subscribers globally and represents the most rapid growth in any 12 month-period measured for the service thus far, he said.

With IPTV penetration reaching 7.7 percent of total broadband lines, its presence is significant enough to expect more aggressive IPTV service offerings from providers, he noted.

Making money off broadband
While Asia continues to grow in broadband subscriptions, revenue opportunities for telcos lie in the quality of subscriptions, not quantity, said Peter Watson, a member of the advisory board to Altimo, a private telecoms investor.

Watson, who was a speaker at the summit, said broadband penetration in the region is likely to continue rising over the next few years, but telcos will need to concentrate on making money off the services provided to each subscriber, rather than increasing their subscriber base in absolute numbers.

"There are already signs of value added mobile services making money in China." he said.

There is also great opportunity to deliver value added services over Internet lines in countries where broadband and wireless Internet services are being rolled out faster than traditional copper-line phone infrastructure, he noted.

Telcos can use this to push voice and data transmission services, to users as well as small and midsize businesses (SMBs), over Internet connections, said Watson.

Larry Socher, global lead at Accenture's networking offering group, offered some points on how telcos can make broadband profitable.

Socher, who was also a speaker at CommunicAsia, said telcos should raise broadband rates or restructure their service plans.

Using the U.S. as an example, he said AT&T was struggling to keep up with heavy users of its all-you-can-eat broadband plans. Rival market player, Verizon, took advantage of the situation and raised prices for its services but in return for assured connection quality. AT&T later offered a tiered structure, allowing it to ensure quality to higher paying customers, he noted.

Socher added that telcos can introduce services that ride on growth areas. One is in mobile devices, such as Amazon.com's Kindle, he said. The cost of having to download books from the online store into the e-book is not borne by users but by Amazon, which pays Sprint for the wireless connection, he explained.

The rise of connected devices for the home also spells future similar opportunities that telcos should take advantage of, he said.

Another potential lies in better integration with businesses, where services can be customized for industry verticals, he said. For example, the insurance industry can identify a vehicle's location using GPS technology, which then helps insurers offer distance-based policies.