I'm writing this piece on the plane on my way back to Vancouver after a 12-day trip in China. I've written about China before, and every time I go, I understand and appreciate this complex country and culture a little more. If you think China is "up and coming," well, you might want to go and take a look for yourself. To be honest, I think they are already here.
What have I learned about the Chinese broadband industry? To start with, cable is the ugly duckling in China. There are roughly 200 million cable users in China, of which less than 15% have high-speed internet. That's not too shabby, but it's a lot lower than the 500 million plus users on wireless and wired networks. On top of that, the government also mandates that operators provide a number of services at no cost, and smaller providers are up against two cash-rich broadband giants that are subsidized by the government.
As a result of these factors, many cable operators feel that they must give away some of their services in order to attract, or simply keep, their user base. This is a battle that they are unlikely to win, and it explains why the price per port is so crucial to operators. It also helps explain why technologies like EPON Protocol over Coax (EPoC) and Ethernet over Coax (EoC) are widely deployed in China — CMTS ports are just too expensive. The Chinese cable industry has clearly had to be very creative to remain viable and grow, and operators are now driving a new platform called centralized DOCSIS, or C-DOCSIS. This reduces the port cost dramatically, allowing them to compete more effectively with wireline and wireless carriers.
What does all this mean for software makers? Well, we need to first understand the issues and adapt as much as possible. This adaptation includes everything, from the features we offer, to support mechanisms, to, of course, pricing models. So, our homework is to now find a way to make the software affordable and feature-rich for people on the other side of the world. It's not an easy task, but I think it's worthwhile in the end. We're teaching them how to build a business with some North American flavor, while they're teaching us how we can be more competitive. We've made a lot of progress in China already based on how fast cable operators are growing. Even for ugly ducklings, it's impressive — in some cases, up to 100% per year. Not bad for a so-called "up-and-coming" country!
By Stephane Bourque, Founder, CEO and President at Incognito Software Systems. Incognito Software Systems is a global provider of broadband device provisioning, IP address management, bandwidth monitoring, and service activation solutions.
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