Mobile broadband in China kicking-off

MELBOURNE, AUSTRALIA: According to a new report from Ovum, the global analyst and consulting company, China’s 3G mobile broadband (MBB) connections will overtake fixed broadband connections by 2014. The primary drivers include growing demand for mobility, cheaper devices and attractive pricing strategies for MBB arising from the operator’s ambitious 3G growth plans.

In its “Mobile broadband in China” report, Ovum predicts high growth rates of MBB connections over the next few years, from 30 million of total connections in 2010 to 377 million in 2014. “This is a staggering 1157 percent growth from 2010. We expect that handsets will account for 86 percent of total connections by 2014”, explains Tracey Chen, Senior Analyst at Ovum.

In particular, the report reveals different patterns of growth for laptop and handset connections. Laptops currently dominate connections, but handsets will increase dramatically during the next years, overtaking laptop users (based on revenues).
“This trend is driven by high handset penetration and operator efforts to market mobile internet services on these handsets. However, laptop users will contribute a disproportionate share of revenue due to more lucrative pricing plans”, said Tracey Chen, based in Beijing.

Extensive municipal government investment in WiFi technology (so-called “wireless city” projects) will be a medium term threat to MBB in the low-end consumer segment, particularly for laptops, because these WiFi services are offered free of charge. Though WiFi is not allowed on handsets at this time, any relaxation can only increase the threat.

In the long run, the threat posed by WiFi in the low-end market will depend on whether significant government support for WiFi is sustained. In response, the operators offer dual mode 3G plus WiFi datacards, and have chosen a mixed 3G/WiFi strategy.

In contrast to the low-end market, Ovum expects that medium to high-end consumers and enterprise customers will prefer the network coverage and information security advantages of 3G MBB.

Operators have worked with a few municipal governments to redeploy 3G networks for use in wireless city projects. This is eating into their 3G spectrum allocations, leading to accelerated consumption of their limited spectrum resources. Spectrum management issues, particularly the allocation of further 3G spectrum, require clarification and will hold back mass deployment of 3G until resolved.

Finally, the China mobile broadband market is in its early stages. In the coming years we expect to see mobile broadband grow in sophistication, with more segmented pricing and packaging, national mobility coverage and wider device choices to attract different user groups.