Broadband Speed Upgrade Ensures Long-term Sustainability of Broadband Network Investment Growth

From the perspective of broadband network construction, it can be divided into two phases based on construction priorities: 1. Basic broadband network coverage construction phase; 2. Broadband subscriber activation and development phase. In brief, due to China's special national conditions, the construction of subscriber premises networks is exclusive in nature. Therefore, during the broadband network coverage construction phase, in order to occupy subscriber-side pipeline resources as much as possible, network construction exhibits a certain degree of explosiveness. In the subscriber development phase, following the pace of subscriber growth, the duration of network construction investment is longer. It should be noted that during the network coverage construction phase, the focus of network construction is on line and pipeline resource construction, i.e., ODN network construction, also known as the "thin coverage" model. In the subscriber development phase, the focus of broadband network construction shifts to completing fiber network construction in building corridors and subscriber premises, with major investment in main equipment such as ONUs, i.e., transitioning from the "thin coverage" to "full coverage" construction model.

According to calculations, in the total investment cost of FTTH, the cost from "thin coverage" to "full coverage" accounts for approximately 50%. Therefore, considering the relatively low broadband subscriber penetration rate in China, especially the low FTTH subscriber penetration rate, the broadband speed upgrade ensures that the growth of broadband network investment has long-term sustainability.

The broadband speed upgrade will make the bandwidth advantages of telecom operators more prominent, stimulating radio and television operators to accelerate the pace of NGB construction.

For a long time, China Telecom and China Unicom have been the main implementers of broadband network construction in China. However, after the launch of "Triple Play," cable operators in the radio and television sector have also become important participants in the broadband market. Obviously, judging from the current status of broadband network resources alone, after the implementation of the broadband speed upgrade, the bandwidth gap between radio and television operators and telecom operators will become even more apparent. Therefore, the implementation of the broadband speed upgrade project will force radio and television operators to accelerate the pace of NGB construction to ensure that their competitiveness in the broadband field does not decline excessively.

On the other hand, as another major telecom operator, China Mobile's disadvantage in the all-service era is becoming increasingly evident, and it has a strong willingness to enter the broadband market. Obviously, the implementation of the broadband speed upgrade project is beneficial to incumbent players in the broadband market such as China Telecom and China Unicom, as it strengthens their bandwidth advantages. Therefore, for China Mobile, in order to cope with the unfavorable situation, it will inevitably accelerate cooperation with the radio and television system, hoping that the cooperation between the two parties can achieve complementary advantages and make a difference in the broadband market.