According to the 15th statistical report on China’s Internet Development published by the China National Network Information Centre (CNNIC), the total number of internet users in the country stood at 94 million at the end of 2004, an increase of 18.2% in the year. Of the total, 42.8 million were surfing the web via broadband networks, with the remainder using traditional narrowband services. The internet penetration rate at the same date stood at 7.2%, up from 6.7% a year earlier. On average, 1.2 million new internet customers were added each month. China accounts for around 11.6% of the total internet customers in the world. The CNNIC went on to say that there were 432,077 registered domain names and 668,900 websites operating at the end of 2004, up from 340,000 and 500,000 respectively a year earlier.
Despite the continued growth for broadband, the demand for traditional dial-up internet access services in China is slowing; average growth stood at around 92% from 1999-2002, slowing to 35% in 2003 and 18.2% in 2004. In contrast, demand for ADSL services has risen considerably, and at the end of 2003 China actually boasted the world’s largest ADSL market, ahead of Japan, the US and South Korea. China Telecom is unsurprisingly the largest player, with approximately 70% of connections under its control, followed by Netcom and Railcom. At the end of 2004 the number of ADSL users stood at around 30 million, a figure which is expected to continue to grow sharply in coming years.
Another area winessing high growth is the market for voice-over-internet protocol (VoIP) services; these began to appear in 1999, but are now widespread and available in all of China’s calling areas. Much cheaper than traditional voice services, VoIP was once considered inferior to traditional wireline telephony in terms of call quality, but this situation has improved greatly in the past three years. Besides principal operators China Telecom, Netcom, Railcom and Unicom, a number of local operators have also got in on the act, namely Jitong Communications (now part of Netcom) and Beijing Communications.