An Economic Boost

Business opportunities

With Huawei, ZTE and other Chinese telecom terminal manufacturers trying to enter the huge U.S. market, some U.S. telecom companies, such as Cisco, Oracle and EMC, have gained a share in China. The Broadband China strategy will offer opportunities to all companies competing here.

According to implementation plans, China will encourage private investors to participate in broadband network construction and operations, ensuring fair access at residential communities, airports, expressways and subways. It will also promote fair and open market competition.

China Telecom Inc. may benefit the most from the plan because it now operates the country's largest broadband network ChinaNet, which is also the largest cable broadband network in the world in terms of size and number of users.

In the past 15 years, China Telecom has increased the speed of its broadband three times—in 1999, 2011 and in August this year. It is building broadband networks that can reach up to 100 Mbps.

The Ministry of Industry and Information Technology estimates that by 2015, China's investment in broadband network infrastructure will total 1.6 trillion yuan ($260 billion), of which 570 billion yuan ($93 billion) will be for broadband access. Every yuan of direct investment in broadband infrastructure will bring 3-4 yuan of investment in related industries. Therefore, by 2015, the Broadband China strategy may encourage more than 4.8 trillion yuan ($780 billion) of investment in related industries.

To telecom carriers and terminal manufacturers, this will be a huge cake. A report from CITIC Securities Co. Ltd. says when implementing the Broadband China strategy, what China should be concerned about is not lack of investment, but excessive competition among manufacturers, which will hurt profits.