China overtakes US as world's largest broadband market

September 29, 2008 - China has now overtaken the US as the largest national broadband market in the world, according to new findings from research firm Point Topic, with both markets on around 78mn broadband lines at the end of last August, but with China growing twice as fast.

“This is a major milestone for China,” says Oliver Johnson, Chief Executive of Point Topic. “Launching people into space is spectacular, but having the biggest broadband market down here on earth means a lot more for building a modern, hi-tech economy." The research firm reports that following an initial growth spurt, China was initially expected by some observers to overtake the US in 2006, but missed this date as growth levelled off in China as it speeded up in the US.

For 18 months the two countries were found to have similar growth rates, but from 2008 the growth rates diverged "sharply" as new broadband lines added in the US fell from 3.4mn in the last quarter of 2007 to 1.1mn in the second quarter of 2008, while in China net adds increased from 3.5mn to 5mn by the same comparison.

“We expect Q3 to show some improvement in the US,” said Johnson. “It’s usually better than Q2. And growth in China is likely to fall back a bit. Even so, China is almost certainly going to come out ahead when all the figures are in. It’s not so surprising that the US has been overtaken in absolute numbers – after all, China has more than three times as many homes and people. But the US has also fallen behind the leading European and Asian countries in percentage take-up of broadband."

Point Topic names "light-touch regulation" as one of the factors contributing to the slow-down in broadband growth for the US, as it has allowed incumbent operators to dominate the market, leading to higher prices and slower growth, while in many countries where there is more open competition the broadband market has leapt ahead.