Steady Growth Seen for Fiber in China

Steady Growth Seen for Fiber in China

Charles S. Xu

Kessler Marketing Intelligence Corp.

The singlemode fiber-optic cable market in China grew from $13 million in 1991 to $240 million in 1995 at an average annual growth rate of 107%. The volume of singlemode cable installed for all applications rose from 61,000 cabled fiber-kilometers in 1991 to 1.3 million fiber-km in 1995, an average annual growth rate of 115%. These applications include telecommunications long-haul, feeder and rural networks, as well as fiber-optic cable installed in railroad, power utilities, petroleum and cable-TV network systems.

This growth rate--one of the highest among developing countries--has made China the third-largest singlemode fiber-optic cable market in the world. China has achieved this rapid growth by effectively improving its telecommunications infra structure using state-of-the-art technologies.

For a country with more than one-billion people, China had less than one telephone per 100 citizens from the 1950s to the 1980s. Dynamic changes occurred in the Eighth Five-year Post and Telecom Plan Period (1991 to 1995), however, when China`s Ministry of Posts & Telecommunications (MPT) began building a three-tiered telecommunications network encompassing fiber optics systems, satellite stations and microwave trunks. By 1995, China had established 23 ground satellite telecommunications stations, cut more than 22 fiber-optic cable backbones and completed more than 50,000 km of digital microwave systems.

Slower, steady expansion

In 1996, China`s top priority is to continue building fiber-optics-based networks. However, the fiber optics market in China is not expected to grow at a "jump-start" rate as in previous years. The singlemode fiber-optic cable market is estimated to grow from $300 million in 1996, to $600 million in 2000--an average annual growth rate of 19%. Likewise, the volume of singlemode cable needed each year is predicted to grow from 1.6 million cabled fiber-km in 1996 to nearly 3.5 million cabled fiber-km in 2000--an average annual growth rate of 21%.

Through its provincial and municipal affiliates, the MPT controls the national telecommunications network. In late 1995, the Ministry announced that China plans to invest 360 billion Yen (US$440 million) in the next five years to build a fiber-optic telecommunications network. It will include 23 fiber-optic backbones stretching nearly 30,000 sheath-km.

The entry of China United Telecommunications Corp. (China Unicom) into the market in August 1994 ended the monopoly held by the MPT for the past 40 years. The company plans to build a nationwide fiber-optic system with operators of rights-of-way networks.

China Unicom plans to gain a 10% share of the domestic long-distance market and other value-added services by the year 2000. China Unicom and other non-MPT carriers that have yet to announce plans, are expected to further boost China`s demand for fiber-optic cable in the next five years.

Charles S. Xu is an analyst at Kessler Marketing Intelligence Corp. in Newport, RI.

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