Seven Castles

OneWave- -

                                      

Report featuring market analysis of deployment of CATV-based broadband metropolitan area network in China 2001

Contents
Introduction
1. A macro-view of rollout of CATV-based broadband networks in China
1.1 Predicted growth of Internet users in China
1.2 Predicted growth of CATV-based broadband network subscribers
1.3 Predicted growth of ITV subscribers within 5 years
1.4 Predicted ITV market size
1.5 Predicted broadband macro-market size (based on the number of subscribers)
1.6 Predicted broadband macro-market (based on investment involved)
1.7 Grading of cities
1.8 Basis for grading
2. Analysis of answers to questions in the questionnaire (including some provincial networks)
2.1 Questionnaire
2.2 Analysis of answers to all the questions
2.2.1 Deployment of broadband backbone in the area the organization surveyed is involved
2.2.2 Technology employed for broadband backbone deployment
2.2.3 Selection of router venders in broadband backbone deployment
2.2.4 Number of core optical nodes in the broadband backbone
2.2.5 Number of edge optical nodes in the broadband backbone
2.2.6 Gateway bandwidth of the broadband backbone
2.2.7 Selection of operators for Internet gateway (not limited to one)
2.2.8 Deployment of broadband access network in the area where the surveyed is
2.2.9 Access means for broadband access networks (not limited to one)
2.2.10 Estimated number of subscribers supported by the broadband access network deployment this year
2.2.11 Selection of broadband access server vendors in access network deployment the organization surveyed is involved
2.2.12 Portal deployment for metropolitan area network
2.2.13 Broadband applications currently available (not limited to one)
2.2.14 Most interesting broadband applications (not limited to one)
2.2.15 Definite partnership with broadband content providers
2.2.16 Use of software for user management and billing
2.2.17 Manageability and billability of each value-added applications by software for user management and billing
2.2.18 Number of local Internet users via traditional means
2.2.19 Broadband networks the organization surveyed is involved and the number of subscribers allowed for access
2.2.20 Estimated investment capital for broadband metropolitan area network (Unit: RMB)
2.2.21 Needs for funding from the public
2.2.22 Restructuring in the organization surveyed (not limited to one)
2.2.23 Deployment of DVB-C by the organization surveyed   
3. Conclusion
4. Attached tables (Table 1 - Table 10)
102 CATV operators' answers to 23 specific questions

Introduction

The deployment of broadband networks is booming in China at the moment, as network services go broadband, metropolitan and personalized. China's CATV networks are in their evolution towards networks offering full services. With projected 60 million subscribers accessing their broadband networks in 5 years, the cable operator would be as strong as China Telecom. Aimed at this market opportunity, we prepared this survey, regarding deployment of broadband metropolitan area networks in thousands of cities, prefectures and counties.

In June 2000, Technology Exchange Ltd. and OneWave Co. Ltd. jointly launched this survey to see the basic situation and features of deployment of CATV-based broadband networks across China, based on various statistics. Moreover, we can see what are in those operators running CATV-based broadband networks: the factors that have influence on their decision-making, business style and views.

This survey covers deployment of CATV-based broadband metropolitan area networks and access networks in every city of China, plus gateway bandwidth, number of subscribers supported, use of equipment, applications available, requirements for management software and applications, and organizational system and capital, etc. These, as basis for decision-making, are of great importance to broadband network equipment venders, broadband network software developers, broadband content providers/application developers, broadband network investors, etc. in understanding deployment of broadband networks in China and operators' requirements.

As the first of its kind, the survey used various approaches including mailed questionnaire, telephone interview, or via fax and Internet, in accordance with statistical methodology and international practice. The survey won strong support from a vast number of broadband network operators, resulting more than 550 valid answers, among which 102 answers specific to CATV operators were selected for generation of this report.

The deadline for this survey is August 10, 2001 and the report was generated on September 5.

 Technology Exchange Ltd. is an international company, active in media and information exchange. The company provide diversified technical information and consulting services to industries of telecom, radio and TV, instrumentation, medical devices, pharmacy, etc. Their publications include International Network and Multimedia (INM), International Broadband Network (IBN), International Broadcast Information (IBI), enhanced by a newly launched web site of www.tech-ex.com.
 OneWave (Shanghai) Co., Ltd., a foreign-funded service provider featuring new Internet broadband technology, focuses on provisioning of total solutions and associated software for China's broadband networks, together with related service consulting and technical support offered. It was its market research team, as a main force, that conducted the survey, and its technical support, data processing and statistics/analysis. They contributed a bulk of data and opinions for reference.

1. A Macro-view of rollout of CATV-based broadband networks in China
 
1.1 Predicted growth of Internet users in China

The curve illustrating the growth of Internet users in the period of 1997-2001 indicates that the curve will be flattening in the next 5 years. Saturation will come when the number of Internet users in China tops 140 million.

Curve illustrating the growth of Internet users in China 1997-2005
Ten thousand
Figure 1.1 Predicted growth of Internet users in China 1997-2005

Households with CATV (ten thousand)
Subscribers of CATV-based broadband networks (ten thousand)
Users of CATV-based broadband networks (ten thousand)
Figure 1.2 Predicted growth of CATV-based broadband network subscribers

1.2 Predicted growth of CATV-based broadband network subscribers

CATV subscribers will increase from today's 80 million to 140 million within 5 years. CATV-based broadband network subscribers are predicted to increase from today's 3 million to 60 million within 5 years. (According to the statistics, transformed CATV-based two-way networks have 10 million subscribers across China). Our conservative prediction sees users will increase from 1.5 million in 2001 to 35 million in 2005. 

1.3 Predicted growth of ITV subscribers within 5 years

ITV subscribers (ten thousand)
Figure 1.3 predicted growth of ITV subscribers within 5 years

According to statistics, there are presently less than 2 million ITV subscribers in China. But the figure, as predicted, will reach 30 million in 5 years. It could be studied in combination with deployment of DVB-C systems, described in 2.2.23.

1.4 Predicted ITV market size

The estimated average investment is US$3 million/city, according to the number of cities and the cities that we directly contact with. The total investment amounts to US$600 million, at 200 key cities. The price of terminals (STB) averages US$180 per unit. There would be an equipment market worth US$5.4 billion with 30 million ITV subscribers in 5 years. The ITV market will be worth US$6 billion, surely the value is only a "better-case" in terms of theory!

Average investment for a city (US$, ten thousand)
Number of key cities
Total (US$, ten thousand)

Terminals (set top boxes)
Unit price (US$)
Number of subscribers (ten thousand)
Total (US$)

Total of market size (US$, ten thousand)

Figure 1.4 Predicted ITV market size

1.5 Predicted broadband macro-market size (based on the number of subscribers)
Table 1.1 Radio and TV sector and other broadband network operators' 5-year subscriber growth plan
Subscribers of radio and TV sector (ten thousand)
Subscribers of China Telecom (ten thousand)
Subscribers of other operators (ten thousand)
Total (ten thousand)
Average cost of transformation for each subscriber (terminals excluded) (US$)
Total market size (US$, ten thousand)

The major operators in China will increase approximately 7.5 million users within 5 years. Studies show that FTTx and HFC transformation cost for each subscriber in Beijing, Shanghai, Guangzhou and other cities will make a US$ 7.463 billion worth broadband market, if the average cost of transformation for each subscriber in most cities is RMB800/household (i.e. US$100/household).

1.6 Predicted broadband macro-market (based on investment involved)

The total broadband market size is predicted, based on the overall investment involved, according to the official sources of radio and TV sector, telecom sector and other broadband network operators.
The calculation results of Table 1.2 are of little difference to that of Table 1.1.

Table 1.2 Market prediction based on investment involved
Investment by radio and TV sector
Investment in each city (US$, ten thousand)
Number of key cities
Total (US$, ten thousand)
Investment by China Telecom
5-year investment for data communications (US$, ten thousand)
Annual growth of investment for broadband networks
Total (US$, ten thousand)
Other operators (US$, ten thousand)
Total market size (US$, ten thousand)

1.7 Grading of cities
 
From statistics in different aspects including population, growth of CATV network subscribers, broadband network plans and investment in many typical cities to be surveyed, we found that the rollout of CATV-based broadband metropolitan area network has correlation with city scale, economic growth, capital, etc. to a certain extent. These become basis for the grading of cities. We sifted through the responses in a quantitative way to see the generality. Cities are divided into ultra-large, large, medium-sized and small ones so venders can well define their target customers and work out the market potential for their products. Data of various kinds are listed in Table 1.3 for reference. Specific studies can be conducted in combination with the individual survey and data statistics with the subjects of 102 provinces, cities and prefectures shown in the attached tables (Table 1 - Table 10).

Table 1.3 Grading of cities
                           Ultra-large cities
Prerequisites                               Examples
Population (ten thousand)
Or CATV subscribers (ten thousand)
Or revenues from commercials (RMB, ten thousand)
Or number of the subscribers supported by deployment of CATV-based broadband access networks this year (ten thousand)
Or predicted investment for CATV-based broadband metropolitan area networks (RMB, ten thousand)
                            Large cities
Prerequisites                              Examples
Population (ten thousand)
Or CATV subscribers (ten thousand)
Or revenues from commercials (RMB, ten thousand)
Or number of the subscribers supported by deployment of CATV-based broadband access networks this year (ten thousand)
Or predicted investment for CATV-based broadband metropolitan area networks (RMB, ten thousand)
                           Medium-sized cities
Prerequisites                              Examples
Population (ten thousand)
Or CATV subscribers (ten thousand)
Or revenues from commercials (RMB, ten thousand)
Or number of the subscribers supported by deployment of CATV-based broadband access networks this year (ten thousand)
Or predicted investment for CATV-based broadband metropolitan area networks (RMB, ten thousand)
 
1.8 Basis for grading
Table 1.4 Basis for grading (a)
                             Comparison between ultra-large cities and large cities
Items
Population (ten thousand)
Per capita disposable income in 2000 (RMB)
CATV subscribers (ten thousand)
Household computer penetration (%)
Internet uses in 2000 (ten thousand)
Subscribers of transformed two-way networks (ten thousand)
Projected subscribers of broadband access networks (ten thousand)

Table 1.5 Basis for grading (b)
                            Comparison between large cities
Items
Population (ten thousand)
Per capita disposable income in 2000 (RMB)
CATV subscribers (ten thousand)
Household computer penetration (%)
Internet uses in 2000 (ten thousand)
Subscribers of transformed two-way networks (ten thousand)
Projected subscribers of broadband access networks (ten thousand)

2. Analysis of answers to questions in the questionnaire (including some provincial networks)
2.1 Questionnaire
(1) Deployment of broadband backbone in the area the organization surveyed is involved:
a. Not yet  b. Under way   c. Complete   d. In plan
(2) Technology employed for broadband backbone deployment
   a. ATM  b. IP over SDH   c. IP over ATM    d. DPT    e. Gigabit Ethernet
(3) Selection of router venders in broadband backbone deployment
a. Cisco  b. Juniper   c. Extreme    d. Huawei   e. Others (please specify)
(4) Number of core optical nodes in the broadband backbone
a. up to 3  b. 4-5   c. 6-10  d. 11-20  e. Over 20 (Please specify if detailed data available)
(5) Number of edge optical nodes in the broadband backbone
a. up to 5  b. 6-10  c. 11-20  d. Over 20 (Please specify if detailed data available)
(6) Gateway bandwidth of the broadband backbone
a. up to 2M  b.2-5M  c.5-10M   d. 10-50M  e.50-100M  f. Over 100M
(Please specify if detailed data available)
(7) Selection of operators for internet gateway
a. China Telecom  b. China Netcom  c. China Unicom  d. China Jitong  e. Others (please specify)
(8) Deployment of broadband access network in the area where the surveyed is
a. Not yet  b. Under way  c. Complete  d. In plan
(9) Access means used by the broadband access network (not limited to one)
a. ADSL  b. Cat.5    c. Cable Modem   d. Others
(10) Estimated number of subscribers supported by the broadband access network deployment this year
   a. up to 20,000  b.20,001-50,000   c. 50,001-100,000   d. 100,001-200,001
   e. 200,001-300,001  f. 300,001-500,000  g. over 500,000 ( please specify if detailed data available)
(11)  Selection of broadband access server venders in access network deployment the organization surveyed is involved
a. Nortel  b. Unisphere  c. Redback   d. Huawei    e. Others (Please specify)
(12)  Portal deployment for metropolitan area network
a. Not yet   b. No   c. Under way  d. Under consideration
(13) Broadband applications currently available (not limited to one)
   a. High-speed Internet access  b. Home VOD   c. Real-time stock transactions 
   d. E-commerce  e. Distance learning and telemedicine   f. Live broadcast over Internet
   g. Interactive games over Internet  h. Travel channels   i. Foreign exchange quotes
   j. Audio & video exchange center   k. others  
(14) Most interesting broadband applications (not limited to one)
   a. High-speed Internet access  b. Home VOD   c. Real-time stock transactions 
   d. E-commerce  e. Distance learning and telemedicine   f. Live broadcast over Internet
   g. Interactive games over Internet  h. Travel channels   i. Foreign exchange quotes
   j. Audio & video exchange center   k. others  
(15) Definite partnership with broadband content providers
    a. Yes  b. Not yet  c. Under negotiation
(16) Use of software for user management and billing
   a. Already in use  b. In great demand   c. Normal   d. Not necessary at the moment
   (Please specify the vender if any in use)
(17) Manageability and accountability of each value-added applications by software for user management and billing
   a. Absolutely necessary   b. Not necessary   c. Hard to say
(18) Number of local Internet users via traditional means
   a. less than 100,000  b. 100,000-200,000  c. 200,000-500,000   d. Over 500,000
   (Please specify if exact figure available)
(19) Broadband networks the organization surveyed is involved and the number of subscribers allowed for access
   a. less than 100,000  b. 100,000-200,000  c. 200,000-500,000   d. Over 500,000
   (Please specify if exact figure available)
(20) Estimated investment capital for broadband metropolitan area network (Unit: RMB)
a. up to 50 million  b. 50 million - 100 million  c. 100 million - 200 million
d. 200 - 500 million  e. Over 500 million (Please specify if exact figure available)
(21) Needs for funding from the public
   a. In great demand   b. Not necessary yet    c. In the process of funding  
   d. Funding is over
(22) Restructuring in the organization surveyed (not limited to one)
   a. Network center established    b. Network and station separated  
   c. Joint venture already set up
(23) Deployment of DVB-C by the organization surveyed
   a. Not yet   b. Under way   c. Complete   d. Under consideration

2.2 Analysis of answers to all the questions
2.2.1 Deployment of broadband backbone in the area the organization surveyed is involved

Results:
Under way   55
Complete    19
In plan      23
Not yet      9

Figure 2.1  Deployment of broadband backbone in the area

Conclusion:
A fast-paced deployment of broadband networks is seen across China. More than half of the CATV operators are actively involved in deployment and transformation of broadband backbones and broadband access networks.

From Figure 2.1, we can see that CATV-based broadband metropolitan area networks of 70% of the surveyed were under deployment or complete. The foundation of a mutual market is taking shape. However, due to restrictions of capital, profit making models and restructuring, only 18% of metropolitan area backbone were complete, while 30% in plan or under consideration.

2.2.2 Technology employed for broadband backbone deployment

Results:
ATM            15
IP over SDH      44
IP over ATM     19
DPT            18
Gigabit Ethernet   9

Figure 2.2 Technology employed for broadband backbone deployment

Conclusion:
IP over SDH is virtually a leading backbone networking scheme for large cities and long range transmission. It is widely used in radio and TV sector, with better use of bandwidth, adopted by 43% of the metropolitan area networks.

IP over ATM took the second place. The reason to adopt ATM is that the existing ATM networks would be well used with this solution. It is more applicable medium-sized and small cities, and ideally suited for supporting services that target corporate customers. Security and stability is guaranteed. Organizations such as banks prefer ATM-based networks that reduced investment with immediate benefits seen.   

The next option is DPT ring-shaped networks, old ATM networks and emerging Gigabit Ethernet. DPT technology by Cisco is in extensive use. Hangzhou CATV adopted DPT ring-shaped network. The backbone design, with its features of twin-ring architecture and automatic protection and switching, ensures routing for other nodes will not be affected whenever any node fails.

Gigabit Ethernet, with the minimum investment, is the latest networking technology, not well accepted yet. Moreover, service offerings over newly launched Gigabit Ethernet are not flexible enough. However, the problems will be solved with the latest technologies.

2.2.3 Selection of router venders in broadband backbone deployment

Results:
Cisco     63
Juniper     5
Extreme   10
Huawei   14
Others     3

Figure 2.3 Selection of router venders in broadband backbone deployment

Conclusion:
This question is to examine operators' preferences for brands of routers used in backbones:
Cisco has great advantages of branding, with 66% of operators as its customers.
Huawei is well received with a share of 15%, next only to Cisco, as their products are good in quality but low in price.
With its products widely recommended, Extreme, now listed as the third in branding, is about to come from behind with its higher performance/cost ratio.

2.2.4 Number of core optical nodes in the broadband backbone

Results:
Up to 3     9
4-5 31
6-10 29
11-20 16
Over 20   14

Figure 2.4 Number of core optical nodes in the broadband backbone

Conclusion:
The deployment of backbones is still in its infancy and small in scale at present.
Hangzhou Netcom Infoport (the entire CATV network in Hangzhou) has 4 core nodes in the backbone, so it is common to be with 3-5 core nodes, contributing 32%. In addition, the number of optical nodes in a backbone is bound up with the network architecture and coverage. The number of equipment selected for the backbone is relative to that as well.     

2.2.5 Number of edge optical nodes in the broadband backbone

Results:
Up to 5       10
6-10         21
11-20 25
Over 20      49

Figure 2.5 Number of edge optical nodes in the broadband backbone

Conclusion:
Some respondents somewhat mistook an edge node as a zone node, instead of a convergence node, as exactly meant.

Moreover, different metropolitan area networks adopt different backbone networking, e.g. Hangzhou CATV-based broadband backbone is with DPT ring-shaped networks, 3 edge rings and 9 edge nodes. Though the case falls into a part with only a smaller share of 20%, in fact, the network scale in Hangzhou takes a lead in the country.
Therefore, networking and network scale in the city should be estimated with reference from specific remarks for various cities concerned, as listed in attached tables (Table 1-Table 11).

2.2.6 Gateway bandwidth of the broadband backbone

Results:
0-2M         24
2-5M         13
5-10M        27
10-50M       11
50-100M      6
Over 100M    19

Figure 2.6 Gateway bandwidth of the broadband backbone

Conclusion:

CATV-based metropolitan area networks deal with the problems of gateway bandwidth by leasing lines from other operators or using gateways of the upper networks. Limited to the business strategy, the gateway bandwidth is not proportional to the scale of a metropolitan area network.
Drawn from Figure 2.6, gateway bandwidth available can be separated into three extremes: more are with no or low bandwidth, bandwidth ranging from 5-10M or bandwidth over 100M.  
Hangzhou CATV had a joint venture with Netcom and changed its name to Hangzhou Netcom Infoport. The problems of gateway bandwidth and telecom service operation were thus solved successfully.

2.2.7 Selection of operators for Internet gateway (not limited to one)

Results (repetitive counting is possible)
China Telecom         17
China Netcom          31
China Unicom          14
China Jitong           30
Others                6

Figure 2.7 Selection of operators for Internet gateway

Conclusion:
Netcom, as a backbone bandwidth wholesaler, obtained the largest market share; Jitong emerged suddenly as a new force; China Telecom took the third place, due to the direct competition between CATV operators and China Telecom.
The tendency that symmetric penetration by Telecom operators and CATV operators in service markets so that they can compete with each other is foreseen. However, the scope and timing will be rather asymmetric. For a fairly long period of time, it is hard to have great impact on the service offerings originally by their rivals.
If they join hands, the business model, with which subscribers can pay content services by CATV operators via telecom networks, is viable. 

2.2.8 Deployment of broadband access network in the area where the surveyed is

Results:
Not yet       11
Under way    62
Complete      7
In plan       24

Figure 2.8 Deployment of broadband access networks

Conclusion:

Figure 2.8 shows the deployment of broadband access networks.

According to 2.2.1, deployment of broadband backbones in 74 cities is under way or complete. Correspondingly, here come the results indicating deployment of broadband access networks in 69 cities is under way or complete. The results drawn from the two questions are basically identical.
There would be various specific cases:
 Backbones grew out of nothing in some cities;
 Access networks transformed into two-way ones;
 Rebuilt with new investment, e.g. Hangzhou CATV built a new IP-based broadband access network;
 Metropolitan area backbone is not available in some cities, only "enclosure movement" is initiated in residential quarters and deployment is in a down-top mode.

2.2.9 Access means for broadband access networks (not limited to one)

Results:
Cable Modem    88
Cat.5           64
Others          11

Figure 2.9 Access means for broadband access networks

Conclusion:
This question was directed to all the operators, with ADSL included. However, in this version with focus on CATV-based broadband networks, only Cable Modem and Cat.5 as leading means are examined. (Repetitive counting is possible)

Cat.5, with its unique advantages in the market, enters the user's market more quickly. However, being bound by as great difficulty in network management, high cost of broadband access servers and switches on floors and complexity of interior decoration and cabling, it has a share of 40%.

CATV-based broadband metropolitan area networks are mainly with Cable Modem (53%), supplemented by Cat.5.

Hangzhou Netcom Infoport put Cat.5 into wide us in urban areas, while Cable Modem in subsidiary counties and towns. It is more likely that cities will combine these two means to match the needs of various residential quarters, buildings and the market.

2.2.10 Estimated number of subscribers supported by the broadband access network deployment this year

Results:
Up to 20,000                  77
20,001-50,000                 11
50,001-100,000                3
100,001-200,000               4
200,001-300,000               0
300,001-500,000               2
Over 500,000                 2

Figure 2.10 Estimated number of subscribers supported by the broadband access network deployment this year

Conclusion:
Subscriber plans for the first phase deployment of broadband metropolitan area networks in all the cities seemed relative conservative.
For example,  100,000 households in Hangzhou;
             10,000 households in Suzhou;
             Over 500,000 households in Hubei Province;
             In many cities, trials are conducted only in residential quarters.

So far, broadband access networks with more than 500,000 subscribers will be deployed in the first phase only in a few large cities (even from the data fed back by provincial networks).
It would be a great risk if an access network with subscribers ranging from 300,000 to 500,000 were deployed in the first phase. Broadband network industry needs heavy investment, but gain returns slowly. If we put undue emphasis on wider coverage for the networks, the cost of equipment depreciation would be huge. To consolidate every step in pursuit of high commissioning rate would be more successful to achieve the goals of get returns from business revenues, as desired by CATV operators across China.

The respondents misunderstood the questions of 2.2.10 (planned subscribers), 2.2.19 (Internet users via traditional access means) and 2.2.19 (Internet users via broadband access, paid for subscription). So data here is for reference only. 

2.2.11 Selection of broadband access server vendors in access network deployment the organization surveyed is involved

Results:
Huawei      39
Nortel       24
Unisphere     6
Redback      5

Figure 2.11 Selection of broadband access server vendors in access network deployment the organization surveyed is involved

Conclusion:
This is to see customers' preference for broadband access server vendors. Huawei topped the chart, folllowed by Nortel. The chances for Unisphere and Redback were nearly the same.

In addition, this depends on how operators understand the features and functions of broadband access servers.
The massive broadband access server market is expanding rapidly. This and related tables attached only show the popularity of given brands in the world of broadband access products. We carried out a survey of nationwide broadband access servers separately. Please refer to the upcoming versions of market research reports we prepare.
Huawei's products are inexpensive, but of high quality. They are best received, as demands are greater, while the market immature. 

Unisphere, whose performance/cost ratio is superior, is presently not a strong brand in China. However, their products were put into operation already in cities like Hangzhou.

In China, Redback is incomparable with Huawei and Nortel in brand recognition and competitiveness.

2.2.12 Portal deployment for metropolitan area network

Results:
Not yet           28
No               3
Under way        33
Under consideration  41

Figure 2.2.12 Portal deployment for metropolitan area network

Active deployment of broadband portals is under way, but real value-added applications with broadband features are rare. That results in hot deployment and cold use as a vivid picture of today. Deployment of broadband portals, introduction of management platforms for value-added applications and more applications with broadband features will become prerequisites for fast subscriber growth and increased service revenues. To date, cable operators in many medium-sized or small cities place their focus on network services.

Moreover, after deployment of broadband portals (in narrow sense), few achieved tight integration of applications with management and billing systems. Personalized services, such as flexible options for applications and separate billing for specific applications are not well represented with broadband portals currently available.

31% of the respondents said that their broadband portals are under construction against 39% under consideration. While massive rollout of backbones and access networks were witnessed by 70% of the respondents (according to 2.2.1 and 2.2.8), the figures were out of proportion. In fact, operators remain undecided, due to the heavy investment for application systems and relatively vague prospect for profitability.

2.2.13 Broadband applications currently available (not limited to one)

Results:
High-speed Internet access         68
Home VOD                     42
Real-time stock transactions        76
E-commerce                    18
Distance learning and telemedicine  44
Live broadcast over Internet       37
Interactive games over Internet     17
Travel channels                 17
Foreign exchange quotes          5
Audio & video exchange center    15
Others                        10

Figure 2.13 Broadband applications currently available

Conclusion:
Given high-speed Internet access as an application, real-time stock transaction, which appears to be the most popular application, was put into operation extensively. However, personal experience and surveys revealed the application of stock transactions had too many rivals or unfavorable factors, e.g. TV, transactions made via telephone, more brokers, no delay with transactions over narrow-band networks, no permit for online transactions, no commission for transactions. Consequently, its prospect with broadband metropolitan area networks is not that optimistic.
Educational and medical applications delivered over networks are profitable and of great significance to the public.
The huge investment had a great impact on the decision-making by operators to select VOD as one service.
Streaming media solutions that are emerging make improvements, both technically and economically. Though the movies of greatest hits are much enjoyed in Hangzhou (free of charge), whether streaming media is profitable or not remains to be seen.
Few would choose foreign currency exchange or other items as applications to be chosen.
Better-than-average applications include VOD, live broadcast over Internet, educational and medical applications over networks, real-time stock transactions plus high-speed Internet access. Lack of popularity, profitability and broadband features are what limit widespread uses of other applications. 

2.2.14 Most interesting broadband applications (not limited to one)

Results:
High-speed Internet access    94
Home VOD                83

2.2.15 Definite partnership with broadband content providers

Results:
Yes               16
Not yet            62
Under negotiation    28

Figure 2.15 Definite partnership with broadband content providers

Conclusion:
This is one of three focal points (ASP/ICP settlement with separate accounts, easy of accounting, flexible billing) for deployment of new operating platforms in the time ahead. Content is King. The win-win partnership between NSP and ASP is a key solution to eliminate "bubbles" caused by network-based economy. However, there are only a few operable broadband metropolitan networks with definite partnership established at present..

Cable operators have urgent needs for introduction of operable and manageable platforms for value-added applications and formation of a win-win partnership, e.g.
 Joint operation with content/application system platform providers;
 Lease of application systems;
 Purchase of application systems.

Hangzhou Netcom Infoport performed well in integration of broadband applications and formation of partnership, with about 30 sub-categories on 12 channels (high-speed Internet access included). With this, more market shares and subscribers were rapidly gained. Some 30,000 paid subscribers opened accounts within a period of time as short as several months.

2.2.16 Use of software for user management and billing

Results:
Already in use                33
In great demand               31
Normal                      22
Not necessary at the moment     16

Figure 2.16 Use of software for user management and billing

Conclusion:
The operation support systems for IP-based broadband metropolitan networks include key functions for user management and billing. However, the management and billing systems for contents and applications were not basically put into operation by CATV-based broadband networks.

The software for network management and billing mainly includes:
(1) small software for management and billing: broadband applications for residential quarters, hotels and campus networks, corporate broadband networks, etc.
(2) (2) large systems for MAN management and billing: items currently available include: accounts, points of business, user registration, sheets, task slips, etc.
Vendors of large systems for user management and billing include OneWave, AsiaInfo, HPC, Portal, etc.

Operable networks with deployment complete: 32%
Users with mature requirements: 31
Potential users: 38.

2.2.17 Manageability and billability of each value-added applications by software for user management and billing

Results:
Absolutely necessary   86
Not necessary         17
Hard to say            3

Figure 2.17 Manageability and billability of each value-added application by software for user management and billing

Conclusion:
It appears that most operators are look ahead. In future, management and billing system will not limited to user management and billing only for network services only, but also for contents and applications.

With growing number of broadband content/application developers and diversified partnership with operators, requirements for value-added application management platforms and application systems are urgent. There would be 86 (81%) potential users of application systems.

2.2.17 and 2.2.16 should be examined with one another.

2.2.18 Number of local Internet users via traditional means

Results:
Less than 100,000  81
100,000-200,000   10
200,000-500,000   5
Over 500,000      9

Figure 2.18 Number of local Internet users via traditional means

Conclusion:
Respondents may misunderstood the question, with doubtful data fed back. Even respondents could not make sure if the data were accurate or not.
Please refer to attached tables (Table 1-Table 11) for specific description of all the cities concerned.

2.2.19 Broadband networks the organization surveyed is involved and the number of subscribers allowed for access

Results:
Less than 100,000  86
100,000-200,000    5
200,000-500,000    5
Over 500,000      6

Figure 2.19 Number of subscriber allowed for access to broadband networks

Conclusion:
The data given is incorrect to a certain extent. See also attached tables that offer details of the answers. The definition of subscriber of transformed two-way networks was confused with projected subscribers and users that pay services of broadband access networks.
This is to see the deployment of broadband access networks of today, basically the same to 2.2.8.

Those with subscribers less than 100,000 include cities with no deployment and plan.

For example:
 Subscribers of Guangzhou access networks include 270,000 from Guangdong CATV networks, 250,000 from Guagnzhou CATV networks and 50,000 from other broadband networks, totaling 600,000 approximately.
 Tianjin get 200,000 subscribers accessed this year, and the figure will be 1.4 million in three years.
 Shanghai got over 1 million subscribers accessed this year.

2.2.20 Estimated investment capital for broadband metropolitan area network (Unit: RMB)

Results:
Up to 50 million           60
50 million - 100 million    21
100 million - 200 million   10
200 - 500 million          6
Over 500 million           4

Figure 2.20 Estimated investment capital for broadband metropolitan area network (Unit: RMB)

Conclusion:
This basically matches our definition of 5 ultra-large cities, 21 large cities and 70 medium-sized and small cities.

Small-scale investment or investment planned (including that for networks under plan) account for 59%; no more than 20 broadband metropolitan area networks that are profitable and can be run independently and are large in scale and with prospect.

If State Administration of Radio, Film and Television is involved in joint ventures, the interconnection and interworking of nationwide metropolitan area networks, unified plan and management would be made possible. Medium-sized and small metropolitan area networks will be under unified management, merged or purchased.
 
2.2.21 Needs for funding from the public

Results:
In great demand          40
Not necessary yet         27
In the process of funding   33
Funding is over           4

Figure 2.21 Needs for funding from the public

Conclusion:
This is to be of assistance to vendors and investors to well understand capital operation, general trend and potential of the CATV-based broadband networks.

In addition to nearly 30% of the surveyed whose backbones and access networks are not deployed yet, 38% of the CATV-based broadband network operators strongly demand further funding for expansion of network deployment, market investment and scale of application systems. This, from one angle, represents the features of CATV-based networks that is run individually: separate plan, separate capital operation, flexibility and lack of follow-up funds.

Especially in the middle of rollout process with highly competitive markets, the issues the CATV-based networks face are critical. However, as a matter of fact, in a phase when broadband deployment is booming, funding is not the top concern. CITIC Guo-an, Beida Qingniao, Netcom, and many other banks and investors home and abroad closely following with the interest this emerging industry.

Though there remain regulations by which foreign funds are allowed to invest for infrastructure in the radio and TV arena. However, the separation of networks and stations will make administration of CATV-based networks more like businesses, closer to the markets. Capital operation is more flexible in business operation of network services.

2.2.22 Restructuring in the organization surveyed (not limited to one)

Results:
Network center established     59
Network and station separated   34
Joint venture already set up     22

Figure 2.22 Restructuring of the CATV-based network operators

Conclusion:
In line with 3 steps for restructuring, radio and TV organizations are on the way towards standardized, scientific and market-oriented business operation. Independent administration for operation will be established, with separate operation and business accounting.

The ways to implement restructuring include:
 Establishment of network centers, with division of functions, specially for management of networks and value-added services;
 Separation of networks and stations, with network companies established for separate business accounting and operation;
 Establishment of joint ventures will be determined by capital operation, for example, Hangzhou CATV network centers had a joint venture with Netcom and changed the name to Hangzhou Netcom Infoport. This solved problems of funds, international gateways, etc that CATV-based networks frequently meet.

2.2.23 Deployment of DVB-C by the organization surveyed   

Results:
Not yet            39
Under way         17
Complete           6
Under consideration  37

Figure 2.23 Deployment of DVB-C systems

Conclusion:
In fact, deployment of DVB-C systems is currently in a stage when returns are difficult to obtain and profitability mode indefinite.

Deployment of DVB-C systems needs heavy investment. The continual progress made in IP-based video service provisioning made possible the deployment of video service provisioning via IP-based broadband networks. The investment is relatively low, interactivity and management capability outstanding, and systems quite open, favorable to application development. That is why returns on investment for DVB-C systems are not optimistic.

The 5-year target for DVB-C set by State Administration of Radio, Film and Television is 30 million subscribers. In spite of that, various radio and TV organizations remain undecided in decision-making. From Figure 2.23, after highly promoted home and abroad, there remains 77% of DVB-C systems by radio and TV sector not deployed or under consideration.

Well-deployed networks include Guangzhou CATV, Hainan CATV, etc.

3. Conclusion

In this report, we give forecast for rollout of CATV-based networks nationwide, and analysis on deployment of broadband metropolitan area networks at present. They are helpful to vendors to better understand CATV-based broadband networks in China.

Within 5 years from now on, there would be a take-off for China's broadband networks. China does not fall back in deployment of broadband networks against Western advanced countries. With different management systems and service differentiation, would China's major broadband network operators be as mature as those in Western developed countries and South Korea? Would China's operators keep us with or even surpass their counterparts in developed countries? All depend on current investment decision-making and business strategies. Moreover, till now there is none of broadband networks that are really profitable in developed countries. If CATV-based broadband metropolitan area networks, rollout individually, can grow from long-term investment and competition as operated individually, and even survive eventually, the trend, at least from the results we got through this survey, seems optimistic and upward.

As for radio and TV sector, traditionally video service providers, the evolution towards interactivity and personality through network-based evolution will become the basis for grow of radio and TV sector. In the same time, existing network resources should be well tapped to launch ISP-type services and other value-added services.

Either vendors or operators are in a chain of broadband industry. They should be well positioned in a ever changing industry. It is expected that this report will be part of valuable reference.

Follow-up reports:
 Report on Nationwide Market of Broadband Access Servers (BRAS)
 Report on Nationwide Market of Streaming Media Application Systems

- 作者： zhangliping 访问统计：　2005年02月9日, 星期三 09:29 加入博采