In less than twelve months, China will overtake the US to become the world’s biggest broadband market, According to analyst firm Ovum.

Compared with slow growth in the fixed telephony market, China’s broadband market has taken off dramatically since 2002. After experiencing considerable annual subscriber growth of 71 per cent and 114 per cent in 2003 and 2004 respectively,

China’s broadband sector maintained its strong momentum in 2005, at a growth rate of 57 per cent, adding another 14 million subscribers. Ovum says the strong growth will continue to boost the broadband market and predicts the country will reach 79 million subscribers by 2007. American broadband subscriptions rose 33 per cent last year to 50.2 million lines, according to the Federal Communications Commission.

The analyst group says the growth opportunity in China is “still huge” as the country has a penetration rate of just 3.4 per cent of the population, well behind many countries in the Asia-Pacific region.

“We believe China’s broadband development will continue to benefit from a booming economy, growing incomes, expanding PC penetration and new applications such as VoIP and IPTV. The Olympics will provide another boost,” says Ovum senior analyst, Kevin Lee.

Ovum predicts China’s broadband will grow by a CAGR of 75 per cent to reach 139 million subscribers by 2010.

China Telecom and China Netcom are the dominant providers of broadband access services in China, with a combined broadband market share of 87 per cent of subscribers. The remainder is accounted for by China Tietong, China Unicom, cable and miscellaneous other operators.

DSL is the fastest growing access technology. It dominates with a steadily growing market share of 71 per cent and 32 millions subscribers by June 2006. It is followed by Ethernet-based LAN access in high-density areas, which has a substantial market share of 26 per cent.

“DSL technology will be the key driving force for broadband growth”, says Lee. “Operators are progressively upgrading the network using higher speed technology such as ADSL2+ and VDSL to meet increasing bandwidth demands.”

Growing IPTV deployment is expected to encourage broadband uptake in China., Ovum says. The two DSL operators rolled out extensive IPTV trials over 2005 in collaboration with the IPTV licencees Shanghai Media Group and CCTV. Following Harbin, Shanghai will be the second city to begin commercial service by the end of September 2006.

Ovum forecasts that prospects for further broadband development in China are bright, but significant uncertainties remain. “China needs to restructure the telecoms industry and it needs to reform the regulatory policy for broadband and IPTV. The possible entry of foreign players in line with WTO commitments could also complicate the development of the competitive situation,” says Lee.