IPTV users in China increased to 612,000 in Q1, driven 36 percent higher than the quarter before primarily by increasing uptake in Shanghai, Henan and Heilongjiang.

These three areas accounted for 35.9 percent, 24.5 percent and 18.1 percent of the total market, respectively, according to a report from Analysys International. The researcher said Shanghai's IPTV use shot up the most of any area with a quarter-on-quarter growth rate reaching 150 percent.

Market researcher iSuppli Corp. estimates that by 2008 there will be 3.6 million IPTV users in China and by 2010, the figure will be 17.4 million. But those targets may be optimistic.

China Telecom, the country's largest fixed-line operator and the leader in the IPTV market, is targeting one million users by 2008 or 2009. Shanghai, with its 2.2 million broadband users, will be a major source of new users. It's being targeted with an aggressive marketing campaign and the goal is to sign up 40 percent to 50 percent of broadband users.

The IPTV network gear market was led by UTStarcom, Vcom and ZTE, which accounted for 97.7 percent of the total market. UTStarcom, the leader, grew 32.9 percent quarter on quarter, while ZTE had the highest growth rate, at 46.3 percent quarter on quarter.