Andrew Schmitt on FTTH in China
[tease] (emphasis added)
… China will play the greatest role in creating future disruptions in the component and equipment areas. This is simply because of the staggering demographics involved with the ongoing industrial transformation of China. There are currently 200 million broadband subscribers worldwide, 37 million of which are in China. The United States has roughly 50 million subscribers – or 17 subscribers for every 100 people. China has 3 subscribers for every 100 people, and they have four times as many people than the US.
The massive migration of labor to urban areas is creating the biggest greenfield telecom installation opportunity in history. Three hundred million Chinese will migrate to the cities in the next 15 years — the equivalent of creating a Los Angeles/Orange County/San Diego urban each year until 2021.
The size of the Chinese market, the relative low cost of labor (labor costs dominate FTTH installs), the recent reduction in FTTH equipment costs, and the Chinese propensity and enthusiasm for marquee infrastructure projects leads us to believe that China will be the prime mover behind the FTTH marketplace going forward. We’ve written in the past that China will play a very disruptive role in the supply of optical transport equipment in the Metro and long haul areas. The ascendancy of FTTH in China will impact optical access identically – much in the way recent widespread deployment of DSL within China has vaulted Huawei to be the #2 supplier of DSL equipment globally.