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Fourth Chinese telecoms licence unlikely to precipitate convergence

The Chinese Ministry of Industry and Information (MIIT) has granted China Broadcasting Network (CBN) the country’s fourth telecoms licence.

Despite CBN’s background in broadcasting, the development is not expected to catalyse the convergence of broadcasting and telecoms networks within China. CNB was founded in 2014 by China’s broadcasting regulator as a means of consolidating the country’s disparate cable TV sector; CBN and several other cable TV firms currently provide broadband services as part of their offering, but do not hold a significant portion of the broadband market.

However, CBN’s entry into the telecoms space is unlikely impact the Big Three Chinese operators as has neither the scope nor capital to compete at their level, nor indeed does its licence allow it to offer mobile services. The firm’s basic telecoms licence allows it to deploy infrastructure and offer domestic internet data transmission. While CBN holds 700MHz spectrum that could technically be used for 4G, the investment required to build out a network and deploy services would make the venture competitively unviable.

China’s State Council issued its ‘Three-Network Convergence Promotion Plan’ last September, which is aimed at expediting the complete convergence of the networks used for telecoms, internet and broadcasting. Pilot programmes to encourage this plan have been in place since 2010, but progress has been slow due to the cable TV industry’s lack of capital.

There are currently around 230 million cable TV subscribers in China, although as of last year only around 15 million of these subscribed to broadband via their cable provider. The smaller of the Big Three operators, China Telecom and China Unicom, had a combined 180 million broadband subscribers during the same period. 

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