Internet to boost China's mobile revenue

Increased high-speed Internet access is expected to allow the country to capitalize on growing mobile revenue this year.

The growth of high-speed Internet connectivity is expected to drive China's mobile revenues this year.

A statement released by research firm, In-Stat, predicts a number of next generation network deployments rolling out this year will enable operators and vendors to benefit from the sale of new devices as well as applications such as mobile video and advertising.

Backed by the Chinese government and China Mobile, the country's home-grown 3G standard, TD-SCDMA will be rolled out to 20 more cities this year--adding to the 20 last year--ramping up subscription numbers to 3 million.

In-Stat said this is "a significant opportunity for China to establish a global communications standard" and expects the country to enjoy lower manufacturing costs and royalty fees from its ownership of the intellectual property rights to the technology.

The Chinese government's delay to finalize the standard is said to be hampering investment by cautious industry players.

Another next generation standard, FTTH (fiber to the home) is expected to kick off this year, too. In-Stat's forecast for the fiber-optic communication network is optimistic--it expects over a million FTTH lines to ship this year, with costs driven down by carriers' large scale deployments.

Additionally, digital cable subscription numbers are expected to double this year to hit some 45 million households. Digital cable companies are expected to compete head-on with the telecom companies by offering cable broadband services more aggressively, to take advantage of this wave, said In-Stat.

The result of this influx of broadband connectivity will lead to the commercialization of the applications running on it.

In-Stat predicts HSDPA handsets to start making their debut in the Chinese market this year. Alongside, mobile TV is expected to take off both on cellular network TD-MBMS and television broadcasting channels, "strongly driven" by the Beijing Olympics.

Also pushed by the Olympics, the research firm expects mobile Internet devices (MIDs) to crack the consumer market this year.

"In an era where people can't live without the Internet, accessing the Internet via a handheld is obviously the next big thing," said In-Stat.

MIDs pose opportunities both to handheld manufacturers and Internet players in capturing the mass market's first foray into the Internet experience, leading to "more competition and integration in the industry value chain", said In-Stat.

Along with growing mobile and Internet penetration, operators will be able to capitalize on mobile marketing and advertising. In-Stat pegs the market at US$20 million, with SMS expected to be the main channel of delivery.