As many as 104 million Chinese people now have
access to broadband, a psychological milestone in the development of the
Internet that has dotcoms enthusiastic.
The China Internet Network Information Center (CNNIC), which has been
tracking development since 1997 and in that time has released 19 annual and
semi-annual reports, said yesterday that 90.7 million people used a broadband
connection by the end of December.
that number is combined with the users of dedicated lines, used mainly by
commercial enterprises, the total number of broadband Internet users in China
reached 104 million out of the total Internet population of 137 million.
"With a broadband penetration rate of 76 percent, China has already become
one of the most developed markets in broadband," said Wang Enhai, an official
with the CNNIC.
The Ministry of Information Industry yesterday also released the figures from
telecom operators and said there were 51.9 million broadband Internet lines,
meaning that many people share one line together.
As broadband expanded, the cost of Internet connections fell. The average
connection cost dropped by almost 20 percent to 83.5 yuan per month at the end
An increase in the number of broadband users generates enthusiasm from
dotcoms and one of the direct beneficiaries is video-sharing websites.
Victor Koo, CEO of Yoqoo.com and former chief operating officer of the top Chinese Internet portal
Sohu.com, said a better consumer infrastructure will allow companies like Yoqoo
to provide better quality content that is more seamless in its delivery .
"If users do not have broadband down to the last mile of their connection,
video-sharing websites will not be able to survive," he said.
Koo started his firm in June, 2006 and within less than six months received
$12 million in investment from three venture capital firms that anticipate a boom in video sharing.
A $1.65 billion acquisition of the US video-sharing website YouTube by the
search giant Google greatly boosted Chinese entrepreneurial interest in building
Last year, 12 video-sharing startup companies raised almost $100 million in
However, Chinese YouTubes face a mounting difficulty lack of business models.
While Google can launch video search services with YouTube's online community
and a large number of affluent online consumers, Chinese Internet companies have
to think about where to get revenue.
According to the CNNIC, more than 70 percent of China's Internet users are
aged under 30 and almost 70 percent of them earn less than 2,000 yuan a month,
including 25 percent who make less than 500 yuan.
"The situation of a large, but low-income Internet population requires
innovation from Internet companies," said Lu Bowang, president of the
professional Internet market research house China IntelliConsulting Co Ltd.
Most successful Chinese companies have made money by managing a user
population of tens of millions who only pay a few dollars a month.
Shanghai-based The9 Ltd, which operates the hugely popular
online game World of Warcraft from Blizzard Entertainment, had 5.9 million paid
accounts in the end of the third quarter, but its revenue was just $29.5
"Technological innovation is good, but it is more important to have business
innovation," said Zhu Jin, chairman and CEO of the NASDAQ-listed Chinese game
Different from Western or foreign game operators, Chinese online game
operators have to sign up thousands of distributors, whether at newspaper booths
or Internet cafes.
Although that is a costly model, it bundles distributors with game operators,
which puts the users in their hands.
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