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Just How Big is China’s Cable and TV market?

The numbers are big. Official figures quoted at the recent 21st annual China Content and Broadcasting Network (CCBN) conference indicate that China has 400 million TV households, of which 210 million subscribe to cable TV (CATV). Of these cable subscribers, 140 million receive digital service while the rest are still on analog systems. This means that the country’s CATV network is still largely a one-way network, limiting the growth of on-demand and interactive services. Compared to broadband offered by the dominant telecom operators—China Telecom and China Unicom—the country’s CATV high-speed Internet service is tiny at a mere 5.64 million subscribers in total.

Theoretically, China’s unique CATV industry is organized in a four-layer hierarchical structure. First, there’s the nationwide network. Secondly, each of the country’s thirty-odd provinces runs its own CATV network. Then each municipality owns a cable network, and finally, each county below the municipality level runs its own network. In reality, this structure is not always so fixed, as some government levels merely perform administrative functions while others actually own a physical network of services. Even so, there are still thousands of CATV operators in China and almost all of them are owned or partly owned by some level of government.

The country is currently undergoing a major effort to consolidate CATV networks. The first step is to consolidate all networks up to the provincial level, so that each province will run a connected cable network by merging and unifying the networks within its provincial territory. The aim of this is to provide a foundation of operational scale and reach. Leading the effort is the State Administration of Radio, Film, and Television (SARFT), the government regulator that sets state policies and regulations for these industries. Each CATV operator is owned by the respective administrative branch of SARFT, so in essence, the regulator is the operator.

This consolidation is part of China’s Next Generation Broadband (NGB) initiative. It involves an upgrade of the country’s CATV systems to two-way transmission and the deployment of a distributed conditional access system to deliver high-definition TV, 3D TV, Ultra HDTV, and multimedia. The NGB will enable China to move towards an all-digital, all-IP world. By the end of this year, the aim is to turn 50% of all networks above the municipal level into all digital and IP services, and by 2015, for 80% of all networks to feature two-way services. China’s CATV industry is also expected to grow from the current 28 high-definition channels and one 3D channel to at least 100 HD channels and 10 3D channels by 2015.

There is still a proliferation of Ethernet over cable (EoC) but DOCSIS has gained ground recently through what is known as “C-DOCSIS”. This localized version of DOCSIS architecture pushes the traditional CMTS further to the edge of a Converged Media Converter (CMC) to deliver bandwidth to some 300 homes more cost-effectively than a CMTS.

All in all, the country is gearing up for delivering the 4As: anywhere, anytime, any device, and any content. Multi-screen access to content is a priority. Although the market is big, it can be confusing for equipment vendors and revenues can be elusive. Layers of bureaucracies, shifting priorities and timelines, and intricate distribution channels have contributed to market inefficiencies that hinder the growth of this industry. Cable in China is caught between the need to provide a commercial service and adhere to its function as a governmental branch that has to carry out state goals and priorities.

By William L. Yan, Chief Operating Officer at Incognito Software Systems

Incognito Software Systems is a global provider of broadband device provisioning, IP address management, bandwidth monitoring, and service activation solutions.

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