BEIJING, March 6 /Xinhua-PRNewswire/ -- CCID Consulting announced today a report on China's Communications Market 2006-2007. The report reviews the Current status of the communication services market and outlines the main market development trends:
1. Current status of the communication services market
In 2006, various telecom enterprises in China successfully completed their strategic transformation. The communications industry experienced a year of harmony and change, seeing in 2006 the rise of production value, changes in competition pattern, penetration of mobile communications, and advancement of the Village Connected Project and consumers' deepening understanding of communication services. The fast growth of China's communications industry has mainly benefited from the rapid growth of the national economy, the implementation of the Strategy of Using IT Applications to Spur Industrialization and the adoption of a series of robust and practical development policies for the industry. In addition, while deepening internal reforms, changing operational mechanisms and improving services quality, operation enterprises have also enhanced their marketing efforts to tap market potentials, innovate operation models, which effectively stimulated demand and activated the market.
In the first three quarters of 2006, nationwide fixed assets investments in communications amounted to 144.31 billion Yuan, up 17.7% year-on-year. Fixed assets investments in telecommunications amounted to 142.48 billion Yuan, up 17.7% year-on-year. There are many factors that determine changes in such investment in China. These include enterprises' adjustment of investment structure and directions. Increased investments in communications have promoted network building and business development. Given that business revenues are slowing down at present, the action that communications enterprises increase investment not only accords with the rule of the market economy and belongs to normal structural adjustment, but also reflects that enterprises are now being more pragmatic and practical in their operations and investment.
During the same period, mobile communication revenues in China grew by 18.3%, accounting for 47.1% of the total telecom business revenue. This accounted for the steady growth of telecom business revenue. The number of mobile users in China reached 443 million, maintaining steady growth. In the same period, the number of mobile grouping data users reached 117.207 million. The percentage of the total mobile users was up to 26.4% in September from 19.10% in January. In the mobile communication field, mobile data businesses grew rapidly, accounting for 21.0% of the mobile communication business revenue. There was a negative growth in the fixed local call volume, down 2.9% year-on-year. However, mobile local call duration was up 33.6% year-on-year, showing that mobile local call services have a strong effect of substitution for fixed local services.
Percentages of fixed local call and long-distance call business revenues among the total revenue dropped by 2.49% and 1.06% respectively, while mobile communication and data communication business revenues saw a rise of 2.89% and 0.71% among the total revenue respectively. Among the fixed local call volume, percentage of wireless local calls rose to 25.7% from 24.9% year-on-year. The growth rate fell rapidly to 0.2% from 25.3% year-on-year, showing a weakening trend in its role in driving up fixed local call volume.
In the first three quarters of 2006, the number of broadband users in China grew by 11.226 million, bringing the total to 48.576 million, with the number still growing fast. Broadband users in China are expected to reach 51 million by the end of this year. Developments in broadband services in China can be attributed to the penetration of Internet applications, the continuous drop in broadband fees rate and the persistent efforts of fixed operators. With the continuous expansion of certified equipment for WiMAX, granting of permit to frequency resources and gradual solution of the chip bottleneck problem, more and more operators have also taken part in the industrialization of WiMAX. Overall the Chinese market responded to the globally WiMAX trend actively in 2006.
Data communication revenue grew by 22.2% year-on-year, twice the growth of main telecom business revenue. In 2006, data communication made major progress in China and showed strong growth potentials among the various telecom services. As fixed operators lost their advantages in voice services, to ease business pressures, broadband was chosen as the key business for development, with more new broadband applications invested and developed. Developments in 2006 included H.264, which gradually became the mainstream IPTV business standard in 2006, and that China's own standard AVS won strong support from China Netcom. By the end of December, IPTV users in China reached 550,000, up 106% year-on-year. Meanwhile, in an effort to change current business structure, mobile operators have further raised the percentage of data services, of which the revenue accounts for 20% of their mobile communication business revenues. In the third quarter of 2006, SMS volume reached 107.44 billion, up 35.6% year-on-year. With the continuous introduction of new applications such as mobile phone TV, mobile phone media and mobile phone advertisement, the number of mobile grouping data users are expected to grow steadily.
2. Main market development trend
In 2006, China's communications market continued to maintain a growth momentum. Facing rapid data services growth and a slowing basic voice service business, telecom operators, value-added services providers and communication equipment vendors are all reorienting themselves for business transformations. These include:
-- Transformation towards total service operators. Until now
Chinese telecom operators have all built their businesses upon
their own network advantages and resources and expanded into
other fields in their actual operations in various localities.
In 2006, the operators were moving from specialized operations
to total services operations, with all four major telecom
operators developing towards providing total service. After fixed
network operators were granted mobile 3G licenses, mobile operators
were expected to obtain the right to operate fixed network
services. By then, developing comprehensive services will become a
natural choice for telecom operators in China. Under total
services operations in the future, all major telecom operators are
expected develop various integrated services.
-- Extension to the upstream and downstream of the industry chain. In
addition to supporting broadband value-added services
providers, fixed network operators in China have started developing
their own fixed network's value-added applications (including fixed
voice's value-added applications and broadband's value-added
applications). Meanwhile, fixed network operators will also bundle
sell broadband access services, fixed line services and all kinds
of fixed network's value-added services to get greater synergic
effect. For example, to build its VNET into a unified Internet
value-added services platform, China Telecom needs to have a
technical platform and also needs to establish a rational value
allocation model and strengthen its ability of coordination of SPs
and CPs. Mobile operators also encounter similar issues. China
Mobile has started to revamp its Monternet and rebuild its industry
chain from the aspects of cooperation evaluation system, operation
supervision and assessment system and strategic cooperation system.
China Unicom will build a solid wireless Internet ecological
environment and an industry value chain system as its key future
directions.
-- Development towards integrated technologies/services. With the
increase of the number of competitors in the market and the
growing substitution of mobile communication for fixed line
services, fixed network operators have started to expand to the
upstream, technical information and services field to get relative
technical advantages and great synergetic effects. Currently,
China Telecom has set the strategic goal of transforming into an
integrated information services provider, while China Netcom has
also put forward a strategic goal of transforming towards "a
broadband communication and multimedia services provider". More
competitors on the industry chain are bound to lead to a problem of
integration of their relationships. The competition pattern then
will no longer be competitions between fixed network operators but
between the IT application industry chains. Only fixed network
operators that have effectively integrated more external resources
will become the final winners. In addition, those who truly
dominate in the industry chain can often get the information system
engineering link, while other competitors can only play the role of
supplementary technology and services providers. This is also
precisely the central reason why fixed network operators hope to
raise their integrated technical services ability.
-- Expansion to broader overseas markets. The Chinese market does
have huge potentials and a big room for growth. However, in a
situation of global economic integration, confining to the market
in one country alone can no longer guarantee telecom enterprises'
long-term interests. To strengthen their competitiveness and raise
their rankings through strength, Chinese telecom operators must
take the road of internationalization and pay attention to
nurturing their abilities of international expansion. Companies
such as BT, NTT, and other top-ranking telecom enterprises have
become telecom giants that operate cross-country telecom services.
Such operations can avoid risks while having the advantage of
guaranteed revenues, improved management and promotion of business
development. The internationalization strategy has now become one
of the important directions for Chinese telecom operators to expand
their markets. But, how to effectively seize opportunities is no
easy task. Chinese telecom operators have accumulated rich
experiences in market expansion and business management as
well as solid funds in their long operations. These are what
telecom operators in many developing countries do not have. These
elements are all important advantageous resources for China's
telecom operators to expand the overseas markets.
For more information, please contact:
Grace Gao
Tel: +86-10-88559020
Email: gaojie@ccidconsulting.com
