Broadband China Strategy Calls for Huge International Capacity

The State Council of China has issued the Broadband China Strategy and its Implementation Plan. As huge demands from China have driven the rising of commodity prices for oil, iron ore, etc., the demands on international cable capacity driven by the Broadband China Strategy may promote or at least uphold the prices for international capacity. The terrestrial and submarine cable industry, no matter manufacturers or capacity providers, will benefit from China's broadband strategy.

China has promoted broadband strategy from a sector plan up to a national strategy. The State Council issued the Broadband China Strategy and its Implemetation Plan and Several Opinions of the State Council on Promoting Information Consumption and Boosting Domestic Demand, aimed to boost its slowing down economy and restrcuture economic model. While in May 2012, the Ministry of Industry and Information Technology (MIIT) released the 12th Five-Year Plan for Communications Sector, which included the 12th Five-Year Plan on Broadband Network Infrastructure and the 12th Five-Year Plan on International Communications.

The State Council has reviewed the MIIT's sector plan, promoted it to a higher and national level.

According to the MIIT's 12th Five-Year Plan for Communications Sector, it is expected that China may need more than 5000 Gbps additional international capacity from year 2012 to 2015. Though there is no specific figure on international capacity requirement revealed in the Broadband China Strategy, it is obvously that more international capacity is required as the Broadband China Strategy has set a higher and tougher criteria on broadband coverage and access rate. From international capacity point of view, the Broadband China Strategy is a challenge more than opportunities for Chinese carriers, no matter China Telecom, China Unicom or China Mobile.

With this perspective, it is no wonder why Chinese carriers have carried out huge capacity procurement in the past two years. Don't be surprise there comes more.

China is lack of international capacity accross Pacific and to Europe.

The latest submarine cable connecting China and the US, the Trans-Pacific Express (TPE), has been almost used up. And it has been equipped with full design capacity. Only if 100G technology is deployed on the TPE submarine cable sytem, there is no much capacity available on this route. And the construction of new submarine cable between China and the US won't be completed until 2016, or even later. Capacity provider on PC-1, Unity, TGN-Pacific, AAG and Japan-US CN will take profit from China's requirement.

For the traffic between China and Europe, there is even less capacity available. The Euro-China terrestrial cable routes via Russia, Mongolia and the Middle East are much expected and their prices have beed dropped down to be affordable for broadband internet. Russian carriers will acquire heavy profit to provide and upgrade their portions of Euro-Asia terrestrial cable systems. Chinese carriers' leading in SMW5 and AAE-1 projects shows another evedence of the threaten from Euro-China capacity shortage.

Broadband China Strategy benefits not only  Chinese but also global telecom and internet sectors, more terrestrial and submarine cable projects are going to be funded and promoted by Chinese carriers. Moreover, don't be surprise, the capacity on some routes may be bought out. Be prepared

 

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For full picture of the MIIT's 12th Five-Year Plan for Communications Sector (2011-2015) please click here.

For full English version of the Broadband China Strategy and its Implemetation Plan issued by the State Council, please click here

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