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China Leading Asia Fiber Infrastructure Investment

While most nations are still debating their national broadband policy objectives and associated telecom infrastructure investment strategy, China will overtake Japan to become Asia's largest fiber optic communications market.

China will have more fiber access lines for broadband internet service at year-end 2011, versus Japan, according to the latest market study by Pyramid Research.

In Pyramid's last report on China, they projected that the Chinese market would overtake the Japanese market by 2011. But, the strengthening of the Japanese yen against the U.S. dollar means that the event will be delayed two years, to 2013, when China's $168.1 billion in service revenue generated surpasses Japan's $166.8 billion, notes Daniel Yu, Senior Analyst at Pyramid Research.

"However, China will still overtake Japan to become Asia's largest fiber market by 2011, with 25.9 million fiber access lines in service at year-end 2011, versus Japan's 25.2 million," he adds.

One of the main drivers behind the rapid rise in fiber is a strong commitment from the Chinese government to deploy the technology. Migration to higher speed, and thus higher-priced, fiber-optic connections, will ensure continued growth in China's fixed service revenue.

The industry as a whole expects to spend $22 billion over the next three years deploying a fiber network, increasing total ports from 20 million to 80 million.

China's networks follow predominantly the FTTB/N configuration in metro areas and newly developed multi-dwelling units rather than the more costly FTTH configuration. FTTx service is still considered expensive, however.

"As demand for high-speed access increases, economies of scale for both the equipment and the CPE costs will increase the affordability of the service," Yu explains.

FTTx will see its share of total broadband accounts rise from 14.8 percent at year-end 2010 to 30.9 percent at year-end 2015. Pyramid also expects broadband net additions to top 19 million in 2010 and climb to 24 million by 2015 as fiber technology gains acceptance in the market.

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