Already, seven ministries and commissions under the State Council have called for construction of more than 80 million fiber optic broadband ports by 2011, leaving ample room for investments. The three major telecom operators in China—China Telecom, China Unicom and China Mobile—are expected to build more than 25 million broadband ports in the next year alone. The huge demand will generate annual revenue of up to 118.1 billion yuan ($17.3 billion) for the cable network industry, a skyrocketing increase from last year's 50 billion yuan ($7.3 billion).

Content providers and technology suppliers will also benefit. In the long run, cable TV and telecom operators will compete for a leadership role as content and service providers instead of network capacity kings. Content providers will dominate the market once the three networks are truly integrated. And while operators vie for high-quality content and programs, the competition could boost copyright sales and in turn create a more viable market for cartoon producers.

The initiative will create a huge demand for network access services, too. Network access providers such as Beijing Bewinner Communications Co. Ltd. and Talkweb Information System Co. Ltd. will witness noticeable boosts to their business as consumers look for ways to access new content.

A Multi-Faceted Boost

The network-convergence initiative will provide a new growth momentum for the broadcasting and TV industry in its new media business. Upgrades to cable networks have accelerated since 2009 to offer users access to digital signals and bi-directional transmission of digital signals. Bi-directional transmission of digital audio and video signals will facilitate interaction between TV program producers and viewers in the near future. As high-definition TV sets gain popularity, revenues for the TV manufacturing industry look promising, expected to exceed 200 billion yuan ($29.3 billion) this year.

A total of 39.5 million IPTV set-top-boxes will be sold in 2010 and 98 million smart phones will be sold in 2015.

Revenues from China's entertainment and media industries, spurred by the convergence initiative, will increase to $133 billion by 2014, with an average annual increase of 12 percent, much higher than the world average of 5 percent.

(Source: CCID Consulting)

The Convergence In Progress

1997 The concept of a three-network-convergence was first proposed at the National Informationization Work Conference

March 2006 The Outline of the 11th Five-Year Plan for Economic and Social Development stipulated that China should actively promote a three-network-convergence.

January 2008 The State Council proposed an acceleration of communications infrastructure construction, involving broadband networks, digital TV networks and next generation Internet services.

February 2009 The State Council approved the incentive plan for the electronic information industry and mentioned again the importance of pushing forward the convergence.

May 2009 The State Council prioritized the convergence to allow broadcasting and telecom operators to enter each other's businesses as part of China's onging reform efforts.

January 13, 2010 The State Council decided at an executive meeting to accelerate the fusion among broadcasting, Internet and telecommunication networks, and set goals for different phases, as well as five focuses and a scheme for the convergence.

March 5, 2010 While delivering the government work report, Premier Wen Jiabao emphasized that substantial progress should be made in pushing the convergence.

June 6, 2010 The pilot program for network convergence was approved and became effective as of July 1.