The large-scale replication of 5G private network applications urgently needs policy support

Since the license was issued on June 6, 2019, my country's 5G has gone through a four-year journey. In the past four years, my country has made remarkable achievements in 5G network construction, application innovation, and user expansion. By the end of April 2023, my country had 2.733 million 5G base stations and 634 million 5G mobile phone users, bringing significant economic benefits and social value to the high-quality development of all industries.

Despite the encouraging results, the problems of limited industry coverage and slow scale replication of 5G to B remain prominent. After achieving the breakthrough from "0 to 1", the leap from "1 to N" is still a long way to go. "For 5G to B applications to achieve the acceleration of quantitative change and the sublimation of qualitative change, it is inseparable from the support of policies," said an operator.

The high cost makes it prohibitive for small and medium-sized enterprises

As we all know, 5G private networks have the characteristics of high equipment costs and complex network operation and maintenance, which makes the cost-effectiveness unattractive and affects the willingness of enterprises to adopt 5G private networks to a certain extent. In addition, the needs of vertical industries are differentiated and fragmented, making it difficult for terminal equipment manufacturers to realize scale value and ensure profitability. The above issues have attracted widespread attention from all parties in the industry. In recent years, with the continuous innovation and breakthroughs in my country's 5G key technologies, the comprehensive cost of 5G to B has continued to decline. For example, the unit price of 5G modules has dropped from more than 2,000 yuan at the beginning of 5G commercial use to 400 to 500 yuan now.

Even so, compared with the 100-200 yuan 4G module, the cost of 5G modules is still high. In addition, in terms of CPE, the unit price of 4G is 200-300 yuan, while the unit price of 5G is as high as 800-1000 yuan. And this is just the price of a module. In a complex 5G private network, hundreds or thousands of modules, CPEs, etc. may need to be deployed. In the end, the high cost of 5G private networks has deterred many small and medium-sized enterprises.

"The prices of industrial 5G chips, modules and gateways have been on a downward trend, but they are still higher than the expectations of small and medium-sized enterprises. We need to further improve the supply level of 5G industrial equipment and reduce costs." Tang Libo, deputy director of the Institute of Technology and Standards of the China Academy of Information and Communications Technology, said. Liu Yuan, deputy general manager and senior expert of the 5G private network product department of China Mobile Internet of Things Company, also said that high hardware costs and limited categories have become bottlenecks in the development of 5G to B.

Not long ago, Zhao Zhiguo, chief engineer of the Ministry of Industry and Information Technology, said that the 5G large-scale application project will be implemented in 2023 to promote the in-depth development of industry applications. In the view of a senior industry expert, in order to promote the large-scale application of 5G, in addition to continuing to work hard to reduce 5G costs, the country also needs to tilt its policies and support operators from the top-level design.

Policy tilt creates a positive cycle effect

"In order to effectively promote the construction of 5G private networks, the state can provide support in terms of the assessment system. For example, the operator's 5G private network investment cannot be included in the profit assessment, helping operators to reduce their burden and go into battle with light equipment. The reduction in the cost of 5G private networks will also help reduce the usage costs of industry users, thereby forming a positive cycle effect and accelerating the scale development of 5G to B." The aforementioned expert believes.

There are precedents for such policies. For example, in order to encourage enterprises to increase their investment in innovation, my country has deployed tax reduction policies to support enterprise innovation, deducting the R&D expenses of enterprises before tax, encouraging enterprises to increase investment and enhance their innovation capabilities. In 2022, my country will further increase the tax reduction for enterprise R&D, and increase the current 75% pre-tax deduction for R&D expenses to 100%, further enhancing the enthusiasm of enterprises for R&D. Encouraged by the policy, enterprises continue to increase their innovation efforts.

my country has invested a lot in 5G network construction. According to the Ministry of Industry and Information Technology, my country's 5G network investment will reach 184.9 billion yuan in 2021 and 180.3 billion yuan in 2022. If the government reduces the burden of network construction for operators through policies such as tax reduction and exemption, it will provide important support for accelerating 5G to B.

In addition, building lightweight networks and moving 5G to the cloud are also feasible ways to reduce the cost of 5G to B. "The current 5G network is designed for the public network, and often has excess capacity and is not suitable for the production needs of enterprises. Deploying lightweight equipment and providing services on demand can greatly improve the cost-effectiveness." Yang Guang, senior chief analyst at Omdia, gave an example that for a medium-sized park, being able to support 2,000 devices is enough to meet its needs. In addition, promoting the cloudification of 5G private networks and adopting an on-demand expansion approach can also significantly reduce the cost of 5G private networks. According to Alibaba's experience, the use of ultra-lightweight 5G core networks to deploy 100 base stations and access 200 users for small and medium-sized enterprises has reduced the overall cost by 70% compared with traditional methods.

I believe that in the end, with the support of policy support, technological innovation and other factors, 5G to B can achieve cost reduction and complete scale replication "from 1 to N".