Broadband access market to open the price war or inevitably

In fact, the “gateway” of the broadband access market has become very loose in the past year or two. There are many private enterprises influx, and the basic operators are willing to accept it to expand new markets, especially in suburban and rural areas. . Once the Ministry of Industry and Information Technology officially approves the document, the broadband access market will intrude into more participants, and market competition will become more intense, especially for market leaders such as China Telecom and China Unicom.

Shanghai Adds Broadband Service Provider for the First Time in Ten Years

In December last year, the Ministry of Industry and Information Technology issued the first batch of mobile resale business licenses, and for the first time, mobile virtual operators in the real sense appeared in China.

Unlike mobile resale, although the Ministry of Industry and Information Technology has issued a document intending to open up broadband access services, there are already many privately-funded enterprises on the market. As early as 2001, the former Ministry of Information Industry issued the "Circular on Opening up the Pilot Work of the Broadband Residential Network Operation Market", and opened up the broadband market of 13 pilot cities such as Beijing, Shanghai and Guangzhou. Great Wall Broadband, Founder Broadband and other well-known private enterprises Broadband operators are established during this period. In 2012, Great Wall Broadband was acquired by Dr. Peng, who later became China’s largest private broadband provider. "Now we have exceeded one million users in the Shanghai market," said Xu Xin, deputy general manager of Shanghai Peng.

Taking the Shanghai market as an example, only 9 companies have been approved by the communications management department to operate broadband premises network business: Telecom, China Unicom, Railcom, Oriental Cable, Great Wall Broadband, Science and Technology Network, Juyou Network, China Telecom, and Shanghai Telecom. Residential broadband network, any organization or individual that has not been approved may not engage in business activities of broadband subscriber premises network business. The "IT Times" reporter recently learned that in September this year, the Shanghai Communications Management Department has newly approved three companies to enter the broadband station network operation market, "these three are Orange Network, South Telecom and Changxing Technology," informed people. Told reporters. Among them, one orange network has begun to provide 10M, 20M, 30M, even 50M, 100M home broadband services.
In other provinces and cities, there are more and more "new troops" in the broadband market. Taking Heilongjiang as an example, according to media reports, since October 2013, more than 40 private communications and construction companies have launched resident network trials, and have conducted revenue sharing with basic operators. In many provinces and cities such as Inner Mongolia, Yunnan and Sichuan, the broadband market has also added a lot of new faces.

The price war is inevitable

The right to issue mobile licenses for resale business is in the hands of the Ministry of Industry and Information Technology. The ability of private capital to enter and leave the broadband access market is in the hands of communications management agencies.

There are 16 first pilot cities with broadband open, including Shanghai and Guangzhou. According to the consultation draft, the Ministry of Industry and Information Technology commissioned the provincial (district, city) communications authority of the pilot city to accept and review applications for local broadband access network pilots and issue pilot approvals. The private enterprises applying for the trial submitted applications to the Communications Administration of the province (region, city) where the pilot cities are located.

"The document has not been down for a few days and everyone is still digesting it, so there is no specific information to disclose." However, the market has already been sharpened. According to the reporter's understanding, Founder Broadband, which had been entrenched in the Beijing market, has already established a branch in Shanghai. Now it is recruiting customer service personnel and broadband sales personnel on a large scale. "With the release of the policy, there will be more service providers in the broadband market in Shanghai in 2015, and the competition will be even fiercer. Private enterprises are lower in operating costs, and they must certainly take the price war to rob the market. "The person in charge of the broadband business of a mainstream operator said that in his opinion, the broadband price war is inevitable.

The reason why the market situation has become complicated is not only the increase of the main players in the broadband market competition, but also whether China Mobile’s behemoth will set off a “bloody storm” in the broadband market. Xu Xin is now more worried about this, because the rich and powerful China Mobile is fully capable of playing a price war in the broadband market, which will cause tremendous pressure on other competitors.

Relieve broadband construction "money shortage"

The competent authorities have liberalized the broadband access market for private capital, on the one hand, in order to allow private investors to obtain more investment opportunities, and on the other hand to promote the national broadband strategy and ease the financial pressure encountered during the broadband construction.

After the "broadband China" strategy was introduced last year, the industry was happy and the broadband development finally rose to the national strategic level. However, there were complaints from the industry. Although there are national strategies, there is a lack of real investment in the government and the strategy is not advancing rapidly. The phased goals set out in the “Broadband China” strategy include that fixed broadband access users should reach 270 million by 2015. However, the latest data released by the Ministry of Industry and Information Technology show that by October this year, the number of broadband users has just exceeded 200 million. It also means that we must achieve the goal of 270 million households in 2015. In the next 14 months, we will develop an average of 5 million households each month. However, the number of net broadband subscribers that the three basic operators increase each month simply fails to achieve this goal. From August, September and October this year, the average monthly net increase is less than 1 million.

In this context, it may be a good choice to introduce public funds and increase investment in “real money and silver”. According to the draft, the "pilot companies can participate in broadband China projects, broadband demonstration projects, universal services, etc., and enjoy relevant policies in the same way as basic telecommunications companies." From this point of view, the intention is to attract public funding to promote national broadband strategies. It is clear.

For basic operators, although the participation of private enterprises will make the broadband market more competitive, they also need the participation of private capital. Wang Xiaochu, chairman of China Telecom, said at an internal conference in October this year, “Broadband construction alone is not enough for the group’s funds and must rely on social capital.” In fact, China Telecom has begun to do so in some provinces and cities, for example, Sichuan Telecom, through the way of revenue sharing, has attracted private capital to join in, thereby quickly advancing its own fiber-optic broadband network construction.