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Declining PHS Growth Means Trouble for Chinaâ€™s Fixed-Line Industry

2:10 pm on March 31, 2006 | Category: Business, Telecom Services

Chinese research firm, Analysys International, says that with wireline phone adoption beginning to slow, fixed line operators in the worldâ€™s most populous country will face significant challenges in maintaining their subscriber bases.

Chinaâ€™s fixed-line industry continued to grow in 2005, to a penetration rate of 26.9%, but much of this growth came from Personal Handyphone Systems. These types of extended cordless telephones have had a burst of popularity for the past several years, but growth is beginning to slow as a result of quickly improving mobile phone coverage.

As mobile phones become mainstream in China, the 1900MHz PHS devices will gradually become obsolete, taking a major growth market away from fixed-line operators in the country. Traditional wireline subscriptions, meanwhile, have actually been declining since 2003.

“Currently, fixed-line telecom operators lack effective growth points. PHS has lost the momentum to drive rapid growth for fixed-line telecom business,” says Analysys International analyst, Qiu Lin. “It’s unpractical to expand market share solely depending on the growth of PHS. (The) fixed-line telecom market faces huge challenges.”

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