China - Mobile broadband to overtake fixed broadband in 2014

[digitimes] According to a new report from Ovum, 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.

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. That represents 1157% growth from 2010. Ovum expects that handsets will account for 86% of total connections by 2014, explained Tracey Chen, senior analyst at Ovum.

Notebooks currently dominate connections, but handsets will increase dramatically during the next years, overtaking laptop users. This trend is driven by high handset penetration and operator efforts to market mobile Internet services on these handsets. However, notebook users will contribute a disproportionate share of revenue due to more lucrative pricing plans, said Chen.

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

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

Mobile broadband in China to overtake fixed broadband in 2014, says Ovum