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Report: Ethernet Use Is Booming In China

China is one of the fastest growing carrier Ethernet markets in the world, with the number of Chinese Ethernet service connections doubling in the first half of 2004 alone to 30 million subscribers, according to a new report from Heavy Reading. The report found that the growth is being driven primarily by consumer, rather than business demand.

In "Ethernet Services in China," Heavy Reading senior analyst Graham Finnie notes that much of the growth is being driven by demand from residential, rather than business customers. Carriers deliver Ethernet over fiber optic to large residential apartment complexes equipped with local area connections. Indeed, according to Finnie, this explains Chinese carriers' substantial investment in fiber optic infrastructure.

"The emphasis on fiber-based access is not surprising given that China's cities are dominated by large blocks of newer apartment buildings," Finnie writes. "Most Chinese cities also are well supplied with fiber in the core that can be extended out to these residential blocks."

In contrast, Chinese providers are less likely to provide network services to business customers over Ethernet. While three major carriers do currently offer enterprise Ethernet private line and LAN services, most continue to focus their offerings in more traditional high-speed internet and IP VPN services. Finnie notes that "although Ethernet is often the base infrastructure for broadband services that are offered to both residential and business users, this does not necessarily translate into native Ethernet services for enterprise users yet."

Nevertheless, carrier Ethernet is a hot business in China, with a surprising amount of competition between providers, with some provinces served by nine carriers. Most of the activity is concentrated in the densely populated south, dominated by large population centers like Hong Kong and Shanghai. Only China Netcom, an offshoot of China's erstwhile telecommunications monopoly, focuses on the Northern provinces.