I believe in the end the Chinese mega-farms are either way doomed if they can't get access to some sorta fiber optic connection or relocating their operation to somewhere else, because once we reach the transactions limit something needs to be done otherwise the whole Bitcoin will collapse
It has nothing to do with connection equipment and everything to do with the Great Chinese Firewall and a smaller increase in block size was seen as been acceptable by both the exchanges in question so it actually seems to me that an 8MB block size limit will satisfy all parties (as Gavin has already said he'd be okay with 8MB).
Cutting out the Chinese would not actually be a very good idea for something that is designed to be a world-wide revolution in person to person payments and a non-inflationary store of value.