hina stands at the brink of becoming a market of tens of millions of broadband subscribers in three years. Carriers are already beginning to widely deploy Ethernet and asymmetric digital subscriber lines (ADSLs), even as the Chinese government sets into motion an ambitious plan to link the vast nation's many cable TV networks into a single optical broadband net. And the authorities will reportedly issue licenses for cable and wireless access operators soon.

Since the introduction of the Internet to China, Web surfers have complained about the low connection rates. Subscribers found that ISDN from China Telecom, with a maximum data rate of 128 kbits/second, was a pipe dream. Now, though, the total capacity of backbone optical-network operators like China Network Communication Corp. and China Telecom has reached 800 Gbits/s. Tough competition between those two carriers is expected to eventually lower the cost of bandwidth.

With a push from real estate developers and others with an interest in the residential market, Ethernet has become in the past year the first broadband approach to cater to China's home market. But DSL isn't too far behind. After field trials in Guangdong, Shanghai and Jiangsu, China Telecom signed an agreement with Alcatel last month to deploy DSL broadly here. The operator, which serves 130 million fixed-line telephone subscribers and covers 99 percent of the nation's telephone infrastructure, will install Alcatel's 7300 DSL access multiplexer platform and DSL modems around the country.

"China is becoming the second-largest DSL marketplace, just after the United States," said Johnson Tsai, technical marketing manager of Texas Instruments China.

Also entering the access sweeps is local multipoint distribution service technology. Sources said that China's State Radio Regulation Bureau will release 26 GHz as the frequency for LMDS in the first half of this year. Sources also confirmed that the Ministry of Information Industry will issue licenses for LMDS operators for a total of 500 MHz of bandwidth.

Johnson Tsai, technical marketing manager of Texas Instruments China, claims China is moving into the No. 2 DSL spot, just after the United States.

Up to the end of last year, China had 144.4 million fixed-line phone subscribers, 70.9 million mobile-phone subscribers, 22.5 million Internet subscribers and 90 million cable TV subscribers. Ethernet to the home, DSL, cable modems and LMDS will become the four leading broadband access technologies for China.

Ethernet goes home
In the last year, the most popular slogan in the China real estate business has been "broadband to the home." Many developers are connecting their customers nationwide in new and even older residential zones to 10 Base T 10-Mbit/s Ethernet. Many cities also have formed big and small networks in that way.

The typical network uses Category 5 unshielded twisted-pair wiring to the home combined with optical fiber to larger buildings. The metropolitan-area network uses Internet Protocol over dense wave-division multiplexing or 1-Gbit/s Ethernet connections. The backbone runs on IP over DWDM.

Although LAN lines must still be laid to every home, Ethernet access is cheaper than the alternatives. An Ethernet card for the customer is in the $10 range, less expensive than ADSL and cable modems here.

Great Wall Broadband Network Co. Ltd.-founded a year ago by Great Wall Computer, one of China's largest public PC and peripherals producers-became the first nationwide commercial Ethernet broadband operator.

"We already have gathered 13 million contracted subscribers, and we have finished construction for 1.5 million of them," said Yuhang Yang, general manager of Great Wall Broadband. "Our initial subscription fee is $60 and the monthly rate is $18-that's very attractive to Chinese subscribers."

About 300,000 subscribers are said to be ready to use this Ethernet-based broadband network. Great Wall is aiming for 10 million subscribers in three years, starting with an anticipated 3 million new subscribers in 2001.

Analysts here pointed out that Great Wall Broadband has about a 60 percent market share for Ethernet access, a sector that now claims about 5 million subscribers. That figure will reach 20 million in 2003, observers said.

But it's clear that Great Wall will face tough competition from other parties. As opposed to the IP networks of China Unicon and China NetCom, China Telecom has a mature ATM switch network for quality voice. It regards Ethernet LANs as an access point to the home.

In fact, "Beijing, Shanghai and other sections of China are testing Infineon's 10 Base S prototype systems," said Wilfried Brachschoss, vice president of Infineon Technology Hong Kong Ltd. "Local system builders like Huawei and ZTE are designing 10 Base S systems for China Telecom," as is Siemens AG, he said.

Huawei and other local OEMs drawn to the booming market, such as Shangda Electronic, are producing LAN switches and routers for Ethernet service. These local producers have grabbed a significant market share from foreign suppliers like Cisco, analysts said.

"The demand for low-cost LAN switches is strong here," said an engineer at Integrated Device Technology. "Two OEMs have adopted a design based on our IDT 32-bit, 150-MHz processor, a Broadcom switch chip and Wind River's VxWorks embedded operating system."

Chinese IC design houses also see an opportunity in Ethernet and DSL chip sets. Hangzhou You Wang IC Design Co. Ltd. is moving from traditional consumer electronics chips to telecom ICs, said Xiangdong Chen, the general manager there. Advocates expect DSL technology to take off rapidly for Internet access. At the end of 2000, about 77 percent of China's 22.5 million Internet subscribers were using slow dial-up connections, so DSL broadband access is fast making inroads. At a monthly subscriber rate (in Shanghai) of $15, and a speed of 380 kbits/s, DSL is both cheaper and faster than dial-up service.

While Alcatel has won a number of contracts for DSL in Beijing, Shanghai, Jiangsu, Guangdong and Fujian, in Shanghai ZTE won half of the contract, proving that local suppliers may be formidable competitors for the international communications equipment conglomerates.

According to forecasts from Huawei and ZTE, China will install more than 1.5 million DSL ports this year and 10 million new ports next year. It's possible that operators will double their demand in 2003, the companies said.

In preparation, TI has established joint labs with Huawei, ZTE and Datang, the top three local infrastructure builders. The Dallas-based chip giant has also set up a joint design house with a local partner at Shanghai to generate customer-premises equipment solutions for local OEMs, and has allied with the most important modem producers, like Star (Fuzhou, Fujian), TPLink (Shenzhen) and QX Comm.

"Local infrastructure builders like Huawei, ZTE and Datong will share at least half of the market, and all of them are TI's partners in China," said Tsai of TI China. Tsai said that local producers are preparing for a market explosion next year.

Pressed by the competition from Ethernet and DSL, the State Administration of Radio, Film and Television has vowed to establish a modern broadband network in China in 10 years. But Sarft faces two obvious challenges. The first is the fact that China's cable TV networks belong to different provincial and regional operators. The second is that the Chinese government still controls the broadcasting media tightly. The result is a nationwide network surrounded by commercial city- or province-based nets.

To absorb and attract regional operators, Sarft plans investments to modify the current TV-oriented network into a two-way net. The new network also is being structured to remain independent from politics related to the broadcasting and program-production arms of Sarft.

Two-step operation
Sarft plans to build this broadband network in two stages. In phase one, ending in 2005, Sarft will finish the tough job of bringing distributed networks together and at the same time will expand the current 90 million subscribers to 150 million. In phase two, ending in 2010, the total subscriber figure will reach 200 million. Hybrid fiber-coaxial cable will be the main access technology for Sarft's network.

These ambitious plans have attracted a number of opportunity hunters. Motorola Broadband Communication Sector and other infrastructure and cable modem providers are pursuing the coming market in the belief it will take off in the same way as the broadband market that's emerging in the United States.

"I'm very pleased to hear that Sarft is accelerating to rebuild China's cable TV network. It will generate a huge market for cable modems and digital set-top boxes in three years," said Wensheng Zhang, engineering manager of Motorola Broadband Communication China. "We have designed a solution for China's cable TV operators, and have become the consultant for many cable TV stations."

"I believe cable will become the most important broadband access approach in China in the near future," said Yi Yuan, Motorola's Asia and Greater China business development manager.

Whether it's via Cable, DSL, Ethernet or LMDS-whichever technology becomes the access method of choice-it's clear that China is about to make big news in broadband.