China has now overtaken the USA to become the biggest consumer of broadband in the world according to figures from UK researcher Point Topic. They both had around 78 million broadband lines at the end of August, but China’s growth rate has meant it has overtaken the US already before the next quarter’s numbers are out.
‘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.’
When broadband first surged ahead in China some observers predicted it would overtake the USA in 2006. But then growth leveled off just when it speeded up in the USA. For 18 months the two countries were running more or less in parallel, with similar numbers of lines added in each quarter.
The trends diverged sharply in 2008. In the USA, new broadband lines added fell from 3.4 million in the last quarter of 2007 to barely 1.1 million in Q2 of 2008. In China they rose from 3.5 million to 5.0 million in the same period.
‘We expect Q3 to show some improvement in the US,’ says 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,’ Johnson points out. ‘But the US has also fallen behind the leading European and Asian countries in percentage take-up of broadband. ‘
This has serious implications for the competitiveness of the US economy in a high-tech world. The big debate in America today is focused on the immediate economic crisis but the presidential candidates need to take some time to discuss the longer-term issues.
The current administration has been a ‘big business’ lover, and as a result it allowed the big incumbent telcos to crush all the local CLECs who wanted to attach to their lines, allowing the incumbent operators to keep the broadband market largely to themselves, leading to higher prices and slower growth.