China telecom market maintains fast and steady growth

BEIJING: CCID Consulting, China's leading research, consulting and IT outsourcing service provider, releases its article on China's continuing, fast and steady growing telecom market.

I. Overall Size

In the global communication business industry, user accounts amount to 32.6 percent of a carrier's total revenue and 37.3 percent of total profit. Consumers are represented in small numbers but have high ARPU value. In the Chinese market, revenue from consumers reached 79.97 billion Yuan in the first half of 2007, up 21.3 percent year-on-year, accounting for 23.4 percent of the total revenue in the market. China is now realizing the importance of its consumers, which means that there is much room for growth in the market.

II. Market Characteristics

1. The scope of telecom applications across all industries has expanded. From unattended ticket systems on municipal buses in the transportation industry, to mobile phone banking and securities in the financial services industry, to integrated emergency command systems and mobile SMS platforms in the government sector,to long-distance education and direct home education vehicles in the educational sector; many sectors have successfully tailored telecom applications to their industry needs. It can be said that industry-specific telecom solutions are bringing tremendous social and economic benefits to more and more of its consumers.

2. Competition between telecom companies that offer similar services to users is intense. Basic telecom services for consumers include Internet access, renting bandwidth and voice services for enterprises. In this market, carriers provide homogenized services, resulting in fierce price competitions. This has forced carriers   into a vicious cycle of low price competition.

3. Value-added services for industry-specific telecom applications continue to develop. China's industry-specific telecom services market is now in a transitional period from basic telecom services to value-added services. In specific industries, carriers have integrated telecom applications, software systems and total online service solutions with specific industry needs. These solutions are more profoundly integrated with the industry's consumer information systems, and production and services processes, which attract many    customers.

III. Market Structure

1. User structure CCID Consulting has divided China's CT industry market into financial services, energy, transportation, telecom, postal services, healthcare, media market, construction, government education, family, research and others. In regards to the industry-specific telecom application market, the sectors discussed are financial services, logistics, education, government, oil, coal and power.

From the analysis of the market segments in the telecom industry, we can see that with the approach of the 2008 Beijing Olympic Games, there has been a big increases in the input of telecom applications in all sectors. This is reflected in the horizontal expansion scale and new business expansion models. The increases are particularly outstanding in the financial services, government and logistics sectors.

2. Carriers' market structure: Thanks to its historical fixed network resources, China Telecom has many advantages over its competitors. It is in a monopolistic position in building an enterprise's network infrastructure. Its main products include network and private line leasing. China Mobile is mainly oriented towards personal users. Its corporate clientele is relatively weak. But, starting from 2003, the company implemented an exquisite product project for corporate clients, and has opened a series of applications tailored to industry needs.

It has gained certain achievements in the industry feature application field for corporate clients. Other carriers have also offered corresponding industry applications in relation to their own

needs. The following figure shows carriers' shares of China's industry-specific telecom market.

IV. Trend and Forecast

In the first half of 2007, telecom applications in various industries made comprehensive progress. All industry-specific markets expanded in size, mainly due to carriers' increased inputs to customers and the full-scale expansion of enterprise network market. CCID Consulting forecasts that in the second half of 2007, the industry-specific telecom application market will continue to maintain a rising trend. For the whole year, the market will reach a size of 127.49 billion Yuan.

Currently, China's industry-specific telecom market is now in a full transitional period from basic telecom services to value-added services. It can be foreseen that telecom applications will become integrated into industries. The rapid development of communication technology will generate new demand. In the next few years, the industry-specific telecom market will have much room to grow.