It has been evident over the past several months that China's major broadband operator Great Wall Broadband Network wants to part ways with its past strategies.

　　It introduced a new investor back in April. Then in June it named Sun Ziqiang the general manager.

　　The decisive move didn't come until late August when Sun Ziqiang declared that his company would put a hold on building more networks and instead strive towards being a content provider.

　　"In the future Great Wall Broadband Network will strengthen content services and develop itself into a content provider," Sun said in a recent forum held in Shanghai.

　　As the first step, the Beijing-based company will in early October put forward a broadband comprehensive service platform together with ICPs (Internet content providers) like sina.com, 163.com and tom.com. It's also in talks with various partners about offering cable TV programs to its broadband users.

　　A leader in China's broadband market, Great Wall Broadband Networks' struggle for rebirth tells us a lot about the industry.

　　The riddle

　　Last year was known as the Year of the Broadband in China. Lured by boundless profits, enterprises sent broadband network construction to an unprecedented height.

　　In major cities, broadband operators like Great Wall Broadband Network, Bluewave Broadband Networks and China Netcom fought for the right to lay their networks into homes and office buildings.

　　However, so far tangible benefits remain out of reach. A recent survey among 1,000 Internet users in Shanghai, Guangzhou, Beijing and Nanjing shows that in the four cities, that only 4.8 percent of internet users have broadband connections.

　　In many homes, networks of 100M run right past the front door. But despite broadbands availablity, residents are still opting for dial-up connections.

　　Over the past two years, Great Wall Broadband Network has been the most aggressive about laying lines to connect users' homes with the backbone networks.

　　In the 27 cities where broadband is available, vast networks can provide services to 15 million users.

　　However, so far there are only 100,000 registered users.

　　Sun Ziqiang admitted that the company needs at least 220,000 registered users to break even. The company reportedly made 20 million yuan (US$2.42 million) in revenue last year, but posted a loss of 200 million yuan.

　　The former China Netcom, was another keen investor in broadband network construction.

　　Over the course of two years, China Netcom borrowed approximately 12 billion yuan which it invested in broadband network construction.

　　However, it generated only 480 million yuan in revenue last year.

　　Li Jianchao, an analyst with China Securities Market Research and Design Center, pointed out that with broadband business in deep slump, China Netcom had great difficulty quickly generating sufficient cash flow from broadband to repay its loans, hence an urgent necessity to get a listing on the domestic bourses to raise funds.

　　Why not broadband?

　　According to Brookings Institution, a U.S. research firm, once broadband network service is popularized in the US, it will contribute US$500 billion to the country's economy every year.

　　Likewise in China, broadband is often linked to rosy prospects. The country already has more than 33 million Internet users.

　　According to estimates, there are 10 million potential corporate users whose demand for network access service alone amounts to 240 billion yuan.

　　Yet the current picture remains bleak.

　　Sun Yan, a manager with Shanghai Telecom, said that high prices and scarce applications were the main problems.

　　In Shanghai, it costs around 500 yuan for a user to open an account with operators of broadband networks.

　　Moreover, 120 to 130 yuan are additionally needed every month to access the Internet via the broadband networks.

　　If a household that spends less than three hours on the Internet, broadband access is more expensive than narrowband.

　　More importantly, VOD (video on demand), online medicare and online video conference, and other applications that broadband was to deliver have failed to materialize.

　　Applications on broadband network are mostly the same as those of its narrowband counterpart.

　　For what's available on the broadband, such as reading news, searching, downloading and sending emails, users can economize by simply logging on to a Web site via telephone line.

　　As early as 2000, some domestic portalsin China launched services targeting broadband users.

　　However, they seem reluctant to commit more investment into this sector.

　　Huang Wenjie, an IT expert, said that domestic portals, daunted by the difficulty of generating a profit from narrowband services already in existence for years, balked at the huge investments needed for broadband contents and the premature market conditions.

　　"The rationale is simple. If 33 million users can't bring profits, how can two million broadband users?" Huang said.

　　The solution

　　Without good contents and applications, broadband networks will remain a traffic-free expressway.

　　In a buyers' market where the users are already are flooded with choices, it's up to the network operators to provide a solution.

　　Hou Ziqiang, a famous expert on broadband, was quoted by China Economy Time as saying that to be profitable, a broadband eco-system must be put in place with the widespread participation of content providers.

　　As for the fees, the operators can mimic the successful experiences of SMS (short message service) by providing an open platform which allows content providers to develop all kinds of businesses.

　　The operators will be responsible for charging the users and dividing the fees with the content providers, who in turn pay the operators for network access.

　　As is testified by the re-positioning of Great Wall Broadband Networks, some operators are starting to buy into such philosophy.

　　Recently, Guangdong Telecom teamed up with various Web sites to tap the broadband resources.

　　Broadband online games, VOD, online stock brokering and online medicare are among the services available to the province's 400,000 broadband users and 6 million Internet users.

　　Meanwhile, a price war seems to be simmering among the operators.

　　In Fuzhou, Fujian Telecom has lowered access fees from 300 yuan to 100 yuan. More operators are expected to follow suit.

　　Yankee Group, from the U.S., estimates that by 2006, there will be 19 million broadband users in China. The group believes China has huge potential for expansion in this field.