Investment in the China's broadband market is estimated to soar 67 per cent to 4.5 billion yuan (US$542.1 million) this year, driven by dramatically-increasing demand, said a telecom analysis Monday.

With prices of broadband service dropping into a competitive range in comparison with traditional dial-up Internet access, Beijing-based Norson Telecom Consulting forecast that broadband subscribers in the mainland would reach nearly 21 million by 2005, or two times the projected figure for the end of this year.

By then, about 76 per cent of the subscribers will use ADSL (asymmetrical digital subscriber loop) technology for broadband access, said the analysis.

ADSL service is controlled by the country's two fixed-line carriers, China Telecom and China Netcom, and the technology is convenient and cost-effective to upgrade from the existing fixed-line infrastructure.

Norson figures showed that 65 per cent of broadband subscribers were DSL users with the vast majority using ADSL technology at the end of June.

LAN (local area network) trailed DSL at a distant second, accounting for roughly 30 per cent of the market.

Norson forecast that LAN, which is common in new "intelligent" residential developments and in downtown office areas, would hold a steady second position in the broadband market through 2005 because of its faster speed and greater bandwidth.

Great Wall Broadband, China's third-largest broadband operator, relies heavily on LAN installations, while the fixed-line operators are putting more of their investment into cheaper ADSL upgrades, said Norson.

China Telecom, which accounts for nearly two-thirds of total mainland broadband subscribers, has set an aggressive target of reaching 6.5 million connections by the end of 2003.

According to the company, broadband users increased by 65 per cent to about 2.28 million in the first five months of this year.

While Cable TV tends to be a major competitor to DSL in developed markets, Norson pointed out that it has failed to grow fast on the mainland due to regulatory and industry barriers.

Under the current policy arrangement, Cable TV operators are not permitted to provide Internet access to end-users outside of Shanghai.

"Less than 5 per cent of China's broadband users are accessing the Internet via Cable TV, and prospects are unlikely to change drastically over the coming years," said the analysis.

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