Red Star News:
During the 13th Five-Year Plan period, cheaper and faster internet access — which is related to people's sense of gain — has brought about many changes to the lives of ordinary Chinese. Could you explain what achievements have been made in this regard in recent years? Thank you.
Wen Ku:
Thank you for your question. Boosting broadband speeds and lowering internet service rates are not only "gifts" for our people, they are also important steps in driving consumption, advancing entrepreneurship and employment, and promoting the transformation and upgrading of the national economy. In 2016, General Secretary Xi Jinping stressed accelerating popularization of information services to offer the general public accessible, affordable and quality services. In this way, hundreds of millions of Chinese people can have a stronger sense of gain in sharing the fruits of internet development. Since the beginning of the 13th Five-Year Plan period, we have done much work in this regard. The main achievements have been as follows:
"Accessible" refers to the availability of internet services; "affordable" indicates lower charges for such services; and "quality services" mean fast and smooth internet connections. To achieve these three goals, we improved the network performance. Currently, China's internet development is leading the world.
First, the network capability has been significantly improved. In 2015, we began speeding up broadband, cutting internet service fees, and vigorously promoting the construction of high-speed broadband, notably fiber optic and 4G. In 2019, the MIIT launched an action plan to pushing both fixed and mobile network into the gigabyte era, as well as increasing both the proportion of broadband users of 100MB or more and the penetration rate of 4G subscribers, accelerated the development of gigabyte fiber optic and 5G, and constantly improved the capacity of broadband infrastructure services. Thanks to the combined efforts of various parties during the 13th Five-Year Plan period, China has established the world's largest information and communication network. Now, our 4G base stations account for more than half of the world's total. Starting from last year, we have also built more than 690,000 5G base stations in under one year.
Second, network rates have multiplied. With technology evolving and upgrading as well as previously existing network infrastructure, our network rates have multiplied. Over the past five years, the share of fiber optic communication users has risen from 34% to 93%. In addition, the proportion of 4G subscribers grew from 7.6% to the current 81%, well above the global average. According to recent data from the Broadband Development Alliance, the average end-to-end download speed for fixed broadband and 4G in China registered a more than sevenfold increase from 2015. The end-to-end rates of our fixed network and mobile network (4G) now stand at 43MB and 29MB respectively, markedly improving the user experience.
In terms of affordability, we have done a lot of work to cut telecommunication prices.
First, people's sense of gain has been enhanced. We encouraged enterprises to introduce various preferential fee programs, cancelled domestic long-distance and roaming charges for cellphones as well as data roaming charges, adopted such measures as "rollover data services" (allowing users to carry forward unused monthly data allowance) and "increasing the internet speed but not service fees," and rolled out the "floor price" scheme to meet the demand of low-income and elderly groups. We have offered the maximum discount to households registered as living under the poverty line and assisted in targeted poverty alleviation with regard to networks. We helped reduce the production and operating costs of enterprises and boosted the development of the real economy. Over the past five years, average charges for fixed broadband and cellphone data in China have dropped by more than 95%, to only a fraction of what they were five years ago on a unit price basis. These diverse measures have benefitted over one billion cellphone and communication users every year, thereby increasing people's sense of gain.
Second, popularization and application of the internet have been advanced. Previously, cellphone users would often search for free Wi-Fi when they visited somewhere new, but they no longer do so because data fees are much cheaper now. This is the benefit that the majority of our users can feel most. The lowering of charges and fees has promoted the popularization and application of the internet. The average monthly data consumption of each user is now 10.86GB, which is 38 times higher than that of 2015. Back then, cellphone users consumed an average of just 287.9MB of data per month, typically only enough for two episodes of a comedy series. Various mobile apps are being popularized rapidly, and basic services such as e-commerce, fast mobile payments as well as innovations in the fields of internet combined with education, healthcare and elderly care are constantly being made, making the government's public services more systematic and efficient.
Furthermore, by deepening integration and application, the digital economy has achieved leapfrog development.
First, it gave birth to the development of emerging industries. The boosting of broadband speeds and lowering rates for internet services has promoted the rapid development of the internet industry. Various applications such as online shopping, online education, mobile payments, and short video sharing have fully influenced our everyday life. There are seven internet companies in total on the latest Fortune Global 500 list, four of them are from China: JD.com, Alibaba, Tencent, and Xiaomi.
Second, it injected new impetus to traditional industries. In recent years, thanks to the strong support of network infrastructure and accelerated integration of information and communication technology and the real economy, more and more industries have become "intelligent." Intelligent manufacturing, intelligent agriculture, intelligent tourism and other new integrations and applications have sped up the transformation and upgrading of traditional industries, helping more and more industries to enter the information highway. Driven by new information and communication technologies and new forms of business, China's digital economy has gained a strong growth momentum. In 2019, the economic aggregate of digital economy reached 35 trillion yuan ($5.23 trillion), accounting for 36.2% of China's GDP and aggregately contributing 67.7% to GDP.
While the urban broadband network is developing rapidly, we are focused on the construction of broadband networks in rural and remote areas. During the 13th Five-Year Plan period, in accordance with the general principle of "the central government guiding with funds, local governments coordinating and supporting, enterprises and entities promoting," the central government increased fiscal investment, and basic telecommunication enterprises actively played their "national team" role and constantly increased investment in rural construction. Over the past five years, thanks to the concerted efforts of all involved parties, more than 98% administrative villages and poor villages in impoverished three regions and three prefectures have been equipped with fiber-optic cables and 4G networks. The speed of fiber optic network in those pilot administrative villages reached 70Mbps and up. The level of information infrastructure has been rising in rural and remote areas, and internet speeds there is just as fast as it is in cities. Emerging industries including rural e-commerce, rural tourism, and intelligent agriculture sprang up, while high-quality public resources extended to rural areas and the "digital divide" between urban and rural areas was markedly narrowed. All of these achievements are praised by the public as "happiness at our fingertips."
On one hand, we will further promote the speed and quality of networks, and speed up its evolution and upgrading. On the other, we will encourage basic telecommunication enterprises to continuously cut fees and improve their quality and level of service to meet all of this year's targets as well as the new demands for the integrated development of information technology with the economy and society in general.
