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Internet in China: Speed Remains Comparatively Slow

Internet, China Unicom, China Telecom

China’s Internet population has soared in recent years, yet it has not been coupled by greater broadband availability. Despite the rising prominence of China’s web space and the fervor of its users, reports have consistently shown that the speed of Internet access remains modest in comparison to its neighbors in Asia, particularly South Korea and Japan.

What makes this an issue?

Certainly it can be argued that the size of China’s population and the necessity of further development is a limitation on progress. Yet according to provincial speed rankings released recently by ChinaCache, 1st quarter average internet speeds in Beijing and Shanghai were 3.16Mbps and 3.76Mbps.

This would not sound so bad if it were not for data provided by Akamai Technologies this week, which show that average speeds for Q4 2011 in  Japan, South Korea, and the US were 9.1Mbps, 17.5Mbps, and 5.8Mbps respectively.

Though on the surface it appears that China is catching up, it is worth noting that China’s overall average clocks in at 1.5Mbps.

Contrasting expansion

While speed is gaining ground slowly in China, growth of internet users worldwide is moving at an incredible pace and it is expected to continue doubling every 5 years, according to research conducted in 2009 relating to Moore’s Law. China undoubtedly will be the largest factor, but what part will it play in technology?

According to information released by Internet World Stats, from 2000 to 2011 the world’s Internet population increased from roughly 361 million to 2.27 billion users. A quick calculation reveals that from that 1.91 billion increase, China represented 491 million new users. In other words, over the past 10 years, China has represented a whopping 26% of world growth in Internet usage.

Carrier inefficiencies

Though the big carriers (China Unicom, China Telecom) have obviously and arguably made noble inroads in internet penetration , China’s rapid web growth has not been accompanied by a restructuring of its state-owned enterprises. This was brought to the forefront in December 2011 when an investigation was made into anti-trust violations. China Unicom and China Telecom were both accused of overpricing their services compared with market standards, though the charges were quickly retracted after the companies released statements committing themselves to improvement.

Ensuring China’s competitiveness

The startup and mobile Internet world may see China as a market for growth, but it is highly likely that Internet efficiency issues will begin to deter some companies from investment, especially as those services begin to depend more and more on reliable bandwidth. If China intends to work towards greater market viability and competitiveness, some form of restructuring will be necessary.

South Korea is a case in point, where gigabit internet is king. The largest three carriers in South Korea provide the world’s highest speeds at some of the most competitive prices. They are also private companies that are operating on little government backing other than policy support. Its worth reiterating here that, though South Korea is a smaller and much more highly integrated country, within the top tier Chinese microcosms of Beijing and Shanghai speeds still remain dramatically low.

Unfortunately, though the world’s droves of Internet addicts are increasingly Chinese, they will continue to be throttled by market inefficiencies until a structural change occurs.

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