The Rise of China’s Telecoms: Part I

The Rise of China’s Telecoms: Part I

This is the first of a two-part series examining China's telecom sector. Part I examines the domestic telecom market. Part II will examine Chinese telecoms' international expansion.

SHANGHAI -- In less than 20 years, the Chinese telecommunications sector has developed from a primitive government monopoly into the largest cellular and Internet communications market in the world. This change is a testament to the country's rapid social and economic development as well as the increasing sophistication of state-owned enterprises (SOEs) in the industry. But with domestic markets rapidly approaching their saturation point for basic services, sustaining this growth will require deepening and diversifying the domestic sector, something that is certain to prove its toughest challenge yet.

Much of the importance of China's telecom sector stems from its sheer size: 850 million cellular users, 300 million fixed-line customers and nearly 500 million Internet users. China Mobile, the world's largest cellular operator, has more than 500 million customers on its books, while its closest domestic rival, China Unicom, has more than 150 million. In an era of steady income growth and increasing geographic mobility among ordinary citizens, China's telecom firms have been able to build on these economies of scale to establish themselves as formidable global players.

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