Convergence moves apace for broadcasters, telecoms

By Wang Xing (China Daily)
Updated: 2010-10-05 09:52
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BEIJING - The French telecoms equipment company Alcatel-Lucent said it plans to sell more products to Chinese broadcasters in the wake of recent efforts by China to encourage cable TV companies to provide telecom services, increasing demand for new equipment.

Rajeev Singh-Molares, Alcatel-Lucent's president for Asia-Pacific, told China Daily that the company sees huge potential from Chinese cable TV players to buy telecoms equipment, creating a market opportunity that "may be bigger" than that provided by the launch of the 3G network in the country last year.

"In other markets the cable players do very well in competing with telecom operators," said Singh-Molares. "In a couple of years you will see money spent in that market."

He said the government decision to allow Chinese broadcasters to enter the telecoms market made it "very possible" for the cable players to challenge the position of telecom carriers such as China Mobile, China Telecom and China Unicom.

In January, the Chinese government said it plans to accelerate the advancement of the three-network convergence, which allows telecom carriers, television broadcasters and Internet companies to enter each other's respective fields and provide services.

That announcement gave industry firms the green light for a two-year trial period starting this year in selected cities. The government also decided that nationwide commercialization would take place between 2013 and 2015.

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Helen Zhu, an analyst at Goldman Sachs, said she expects to see increased capital expenditure by both telecom carriers and cable operators to upgrade their network capabilities in the coming years.

She said in a research note that cable TV broadcasters may need to invest more than their counterparts in telecoms since cable network upgrade requirements are dramatically different depending on location, while telecom companies have already been steadily expanding bandwidth and fiber-optic rollouts.

Zhu did not offer an estimate for the cost of these investments.

Compared with telecom conglomerates, China's broadcasting market players are not centrally located. Even China Central Television doesn't have a nationwide cable network.

Singh-Molares said demands from Chinese cable players will start to show in 2011 when the State Administration of Radio, Film and Television's (SARFT) efforts to restructure itself to create a national network near a close.

He said Alcatel-Lucent has already provided equipment for the Oriental Cable Network, a cable player in Shanghai, in its construction of the next generation broadcasting network.

In August, SARFT said it intended to consolidate all the Chinese radio and television networks under a single national cable television network company. The new company, which will be formed by the end of the year, will expand into new businesses such as mobile TV and online videos.

China had 173.98 million cable TV subscribers by the end of last year, according to figures from the National Bureau of Statistics. The number of Chinese cellphone users and Internet users reached 747.384 million and 384 million respectively in the same period.