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China’s Broadband Market Faces Growing Digital Divide

6:00 am on July 16, 2007 | Category: Business, Internet, Telecom Services

Growth in China’s broadband market has been gradually slowing for the past two years, leaving the vast majority of Chinese citizens, especially those in rural areas, without high-speed internet access.

“The slowdown will entrench a digital divide, because broadband is approaching maturity in the big cities while the rural markets remain almost untapped,” commented Kevin Lee, a Hong Kong-based analyst with the research firm, Ovum.

China’s broadband market almost doubled in 2004, but the pace of growth tapered to just 38% last year, despite an overall penetration rate of less than 15%.

“Household broadband penetration in China stood at 13 per cent by December 2006,” Lee noted. “We forecast that the steady broadband growth will push household penetration to 21 per cent by 2010, equivalent to 106 million subscribers, but this is nowhere near market potential.”

Strict government regulation and the lack of competition between Internet Service Providers has driven up the price of DSL in China, significantly reducing broadband uptake, and slowing network expansion.

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