China Plans Sustainable Growth in Fiber Optic Broadband

Chinese government plans to invest more than 182 billion US dollars to speed up the internet services. This investment will keep the communication sector active and maintain the level of growth for many years to come, hopes the telecommunication strategists in the country. China has shown high rate of growth in telecommunication infrastructure development especially focusing on next generation network deployment. Investments in telecom sector boosted manufacturing industries as well. The current investment plan is a move towards a more service-driven economy to boost growth.

Telecom analysts were looking at China’s move as there was a concern in the future steps in Chinese telecom sector. Industry experts estimated that the growth in Chinese telecom sector will stop and start decline from 2017 – 2018. The decline in Chinese market will lead to excess production of fiber optic products, which will bring the global market prices down, thereby creating revenue losses to many of the product suppliers where manufacturing cost is higher. China has the distinction of being one of the low cost manufacturing center and Chinese companies have been taking advantages of the price factor.

Chinese State Council announced that the government investment would be more than 69.3 billion US dollars in 2015 for network construction. The following two years would witness an investment worth 112.8 billion US dollars to accelerate the development of fiber optic broadband and high speed 4G mobile services. The news appeared in government website is encouraging to the telecom industry, specifically to fiber optic sector.

China claims around fifty percent of the total optical fibers consumed globally in the cable. China is home to the leading fiber optic cable manufacturers such as FiberHome, Hengtong, ZTT, YOFC, Futong etc. The sum total of cable production of these five Chinese cable manufacturers comes more than 30 percent of the cable production worldwide. China ranked 82nd in the world for average Internet connection speed, slower than Malaysia, Thailand and Taiwan, according to cloud computing services provider Akamai’s State of the Internet report for the fourth quarter of 2014.

Improving the slower speeds of internet is crucial for the world’s second largest economy, which is experiencing the slowest growth in decades and is seeking to diversify away from low-tech manufacturing and development. Chinese government unveiled vision for the future economic development that focuses on developments in space technology, e-commerce, green energy and bio-engineering.

Major telecom service providers such as China Mobile Ltd, China Unicom (Hong Kong) Ltd and China Telecom Corp Ltd declared their plans to cut mobile data prices and boost data speeds this year, potentially spurring a mass migration of customers to more lucrative 4G contracts. It would be worth to note that these three giants together consumed around 39 percent of the total optical fibers consumed globally. That shows the massive deployment these telecom carriers carry out in China. It is important for China to keep this pace of development to maintain growth in telecom sector and accelerate overall economic development.

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Author: James

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