China’s Ministry of Industry and Information (MIIT) yesterday granted a telecoms licence to China Broadcasting Network (CBN), creating a fourth player, but the move is unlikely to speed up broadcasting-telecoms network convergence in the country.

The licensing of CBN, which was established in 2014 by the Chinese broadcasting regulator to consolidate the country’s fragmented cable TV industry, is unlikely to have a significant impact on the three telecoms operators, Fitch Ratings argued. Cable TV operators like CBN have been providing broadband services, but lack the capital and scale to compete with their telecoms counterparts, it said. reported two weeks ago that the MIIT was planning to award “a basic telecoms service operating licence” to CBN, which is backed by the Ministry of Finance.

CBN will not enter the mobile market anytime soon as its telecoms licence only covers telecoms infrastructure and domestic internet data transmission services. CBN holds 700MHz spectrum, which can be redeployed for 4G use, but even the rollout of a basic 4G network would take massive capital as well as time that would leave it far behind its competitors.

Granting CBN a telecoms licence advances the State Council’s ‘Three-Network Convergence Promotion Plan’ issued last September. The plan aims to speed up the full convergence of telecoms, broadcasting and internet networks. China has been running a pilot programme in 54 major cities since 2010 that allowed telecoms operators and broadcasters to venture into the other’s territory. However, progress has been slow due to a lack of capital in the cable TV industry and its fragmented industry structure, Fitch said.

Little change in landscape
The agency said CBN’s licensing alone is unlikely to change the competitive landscape of the telecoms industry. Cable TV operators have more than 230 million cable TV subscribers and already provide broadband services, but they have failed to grab a significant share of the broadband market. A year ago the country had only 15 million cable broadband subscribers, compared with China Telecom’s and China Unicom’s 180 million broadband subscribers.

It will take considerable capital and time to narrow the network quality gap between telecoms and cable TV operators. Operators may lose some market share to cable TV operators, but this should be offset by growing IPTV revenue, Fitch said.

As Beijing’s plan is to promote entry of broadcasting and telecoms operators into each other’s business, it may only be a matter of time before telecoms operators are given IPTV licences. Even without their own IPTV licences, the three telecoms operators plan to boost their IPTV subscribers to 100 million in 2016 (up from 45.9 million last year), relying on their broadcasting partners.

CBN is likely to remain much smaller than the telecoms operators, restricting its ability to compete with them. Fitch said China Mobile will continue to dominate the mobile market, while China Telecom and China Unicom will continue to maintain their leadership in the broadband markets in southern and northern China, respectively.