China to spend US$193 billion on boosting internet speeds in push for service-led economy

PUBLISHED : Wednesday, 20 May, 2015, 7:28pm
UPDATED : Thursday, 21 May, 2015, 8:56am

China will invest more than 1.2 trillion yuan (US$193 billion) to boost internet speeds and coverage across the country as it looks to move towards an economy driven by services and innovation.

The State Council said on Wednesday more than 430 billion yuan will be spent in 2015 and a further at least 700 billion yuan between 2016 and 2017 to promote network infrastructure in urban and rural areas.

The announcement follows Premier Li Keqiang's call last week to telecoms companies to ramp up internet speeds and cut charges. Li said China is the world's biggest mobile phone market but its information infrastructure is backward, with internet speeds ranked below 80th in the world.

South Korea led the world with average internet speeds of 25.3 megabits per second last year, according to US cloud services firm Akamai Technologies. Hong Kong was second with 16.3Mbps, and Japan third with 15Mbps. The mainland's average was 4.25Mbps.

China’s economic growth is slowing and the government wants to move away from traditional low-margin and low-cost manufacturing and towards services and consumers as a growth engine.

The government has already announced a plan to upgrade manufacturing to the levels of industrialized nations in 10 years and move into areas such as e-commerce and new materials.

According to the State Council’s guidelines, optical broadband speeds offering up to 100Mbps  will be available this year to 80 per cent of urban families, while average broadband speeds will reach 20Mbps  from the current 9Mbps  in four municipalities – Beijing, Tianjin, Shanghai and Chongqing  – and in provincial capitals.

More than 1.3 million 4G base stations will be built in urban and rural areas by the end of this year, as the number of the 4G users will reach 300 million. By 2017, average broadband speeds will reach 30Mbps  in major cities and 20Mbps  in smaller ones.

More than 1.30 million 4G base stations will be built in urban and rural areas by the end of this year, as the number of the 4G users will reach 300 million across China.

By 2017, average broadband speeds will reach 30Mbps in major cities and 20Mbps in smaller ones.

Fair and strong competition in the telecoms market is needed to tackle high charges, the guidelines said. Telecoms operators should launch more affordable data packages and innovative services such as allowing data traffic to be shared, exchanged and used without being cleared, the document said.

Pilot schemes for broadband access will be expanded to over 30 cities for 100 state-run and private enterprises by the end of this year, which will attract over 10 billion yuan of domestic, non-government capital.

China has more than 630 million internet users and 570 million mobile subscribers, according to the industry ministry. But the services are not cheap.

Urban users, who earn on average between 2,000 yuan and 4,000 yuan a month, pay about 100 yuan a month for broadband and 50 yuan for 1GB of mobile data.

Last week, China Unicom announced it would cut mobile data fees by 20 per cent, while China Mobile would reduce charges by more than 35 per cent and China Telecom would also cut bandwidth fees by 35 per cent.