China Opens $100 Billion Triple Play Opportunity

A new report from a Chinese state-backed research institute claims the introduction of "triple play" services for the nation's cable operators will generate roughly $100 billion in opportunities during the next several years.

Network upgrades, set-top box development, construction of information systems, and upgrading of broadband technology are expected to be worth $36 billion, while sales of services and terminals are expected to contribute $64 billion.

Furthermore, digital content development and set-top box production and installation should create up to 200,000 new jobs, according to a paper published by Wu Hequan, VP of the Chinese Academy of engineering. The large scale project is expected to boost GDP growth by 0.8%.

Unlike in the United States, where cable and telecom companies wage battle over the same customer base, in China the regulators have dragged their feet on letting the industries offer competing services even though the technology has enabled it for years. This has dramatically slowed the rollout of platforms such as IPTV or broadband over cable, because rival government ministries are protecting the interests of both the cable and telecom companies.

But recent action by senior government leaders, such as Premier Wen Jiabao, seems to have broken the deadlock. China's cable regulator, the State Administration of Radio, Film, and Television, has snatched exclusive control over content of IPTV, while the Ministry of Industry and Information Technology is responsible for data transmission of the video feed.

SARFT has also been granted permission to enter the telecommunication business, "to operate access to Internet, data transmission, and Internet protocol phone business through its cable network," according to a government policy release.

The forced détente between the regulars gives industry firms the green light for a two-year trial period for triple play services starting this year in selected cities. Nationwide commercialization would take place between 2013 and 2015.

This is the first time that senior Chinese officials have laid out a concrete schedule for the rollout of the competitive services. "The project, if it made a substantial breakthrough, would fundamentally change the playing field for China's telecom, Internet, and broadcasting industries," said Xiang Ligang, one of China's leading telecom experts. "But that's also the reason why the advancement of the project has faced so many difficulties."