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China fiber market to surpass Japan in 2011

China will boast 25.9 million fiber access lines by next year and be on track to dethrone Japan as Asia's largest telecom services market by 2013, predicts research firm.
Written by Vivian Yeo, Contributor

Driven by strong direction from its government, China is projected to edge out Japan as Asia's largest fiber market by next year, according to a new report.

Pyramid Research said in the report released Wednesday that China will boast 25.9 million fiber access lines by end-2011, compared to 25.2 million lines in Japan.

Daniel Yu, senior analyst at the research firm, attributed strong commitment from the Chinese government as one of the key factors behind the rapid rise of fiber in the country. According to the analyst, China is expected to spend US$22 billion over the next three years to deploy a fiber network with up to 80 million ports.

"Migration to higher speed and thus higher-priced, fiber-optic connections, will ensure continued growth in China's fixed-service revenue," Yu said in the statement.

Last month, the Broadband Forum said China accounted for nearly half of the 14 million new broadband lines added globally during the first quarter of 2010. The majority of new lines added in China, however, were DSL--although fiber was said to be popular in greenfield deployments.

According to Yu, networks in the metro areas and newly-developed residential areas utilize FTTB (fiber-to-the-building) and FTTN (fiber-to-the-node) configurations, instead of the more costly FTTH (fiber-to-the-home) setup. On the whole, however, FTTx technology is still regarded as expensive in China, he said.

"As demand for high-speed access increases, economies of scale for both the equipment and the CPE (customer-premises equipment) costs will increase the affordability of the service," he noted. "FTTx will see its share of total broadband accounts rise from 14.8 percent at end-2010 to 30.9 percent at end-2015."

As fiber gains acceptance in the market, net additions to broadband subscription are also set to reach 19 million in 2010 and 24 million by 2015, he added.

Telecom services market to exceed Japan's
The world's most populous nation is also tipped to dethrone Japan in terms of telecom services revenue, though it will take longer than originally predicted, Pyramid said, noting that it had previously expected this to happen in 2011. The research firm said it now expects the Chinese market to reach US$168.1 billion in 2013, surpassing Japan's US$166.8 billion.

The delay compared to the fiber market is due to the appreciation of the Japanese yen against the U.S. dollar, explained the research firm.

The Pyramid report also indicated that China's telecom services market in 2010 will grow 8.7 percent over 2009, driven by rising adoption of fixed and mobile data plans in the country. Revenue for mobile data services, the No. 2 revenue generator after mobile voice, will increase at a compound annual growth rate (CAGR) of 14 percent between 2010 and 2015. During the six-year period, mobile data revenues will grow from US$20.8 billion to US$49.4 billion.

Pyramid added that broadband Internet service revenues will grow at a CAGR of 12 percent over the same six-year period. By 2012, the segment will overtake voice to become the largest revenue generator in the fixed line market.

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