5G development enters its fourth year, and innovation is the key to development

On June 6, 2019, the Ministry of Industry and Information Technology officially issued 5G commercial licenses, and it has been 4 years since then. In the past 4 years, my country's telecom operators have achieved remarkable results in 5G network deployment, business development and technological innovation. The penetration rate of 5G mobile phone users has exceeded one-third. The development of 5G in China has successfully passed the market introduction period and entered the mid-game stage of steady growth.

At the same time, as a global 5G pioneer, Chinese operators are also facing new challenges in many aspects such as 5G deployment and business development. Looking back on the development history of 5G and looking forward to the next evolution direction, we can find that only through continuous technological innovation and ideological liberation can we explore a practical business model and achieve healthy and sustainable development of 5G and even the entire mobile communications industry.

The "locomotive" of global 5G development

Since the launch of the global 5G market, the Chinese market has been in the first camp in the world in terms of network deployment speed, user scale, and exploration and trial of new services. Considering its unique large scale and strong industrialization capabilities, it can be said that China has become the "locomotive" of global 5G development, and has a huge impact and important driving role on the global 5G industry chain.

According to the data from the Ministry of Industry and Information Technology, by the end of April 2023, there will be 2.733 million 5G base stations nationwide, with 19.5 5G base stations per 10,000 people, exceeding the target of "18 base stations per 10,000 people" set by the Ministry of Industry and Information Technology in the "5G Application "Sailing" Action Plan (2021-2023)" for 2023. The 5G networks of the three major operators have covered all prefecture-level cities and county towns across the country, becoming an important information infrastructure serving consumers and supporting social and economic development.

In the public user market, the three major operators' 5G package users have exceeded 1.2 billion by the end of April. Data from the Ministry of Industry and Information Technology during the same period showed that the number of 5G mobile phone users reached 634 million, accounting for 37.1% of the country's mobile phone users. In the 5G industry application market, the domestic industry has also actively explored typical applications and tried targeted solutions in the fields of mining, ports, electricity, medical care, education, etc., and accelerated the deployment of 5G industry virtual private networks for key scenarios. According to information released by the Ministry of Industry and Information Technology, there are currently more than 50,000 5G application innovation cases in my country, 5G has been integrated into 52 of the 97 major categories of the national economy, and a total of more than 16,000 5G industry virtual private networks have been built, laying a solid foundation for 5G to enable the scale development of the industry.

Whether in terms of network scale, user scale, or the breadth and depth of industry applications, China has deservedly become the world's largest 5G market. Relying on the huge domestic market, system equipment manufacturers such as Huawei and ZTE and terminal manufacturers such as OPPO, vivo, and Xiaomi are among the top in the global 5G market and occupy an important position in the industry. It can be said that my country's mobile communications industry has made great contributions to promoting the maturity and development of global 5G.

Challenges remain, the industry should explore innovation in depth

While we are excited about the achievements of the past four years, we must also face the reality that the 5G industry still faces many challenges. In particular, considering that China's 5G development is already at the forefront of the world and there is a lack of international experience for reference, the industry should pay more attention to and actively respond to these challenges. The lessons learned in this process can also provide reference for the development of 5G around the world.

One of the challenges facing the development of 5G is actually hidden in the above-mentioned bright data. Observing the 5G market data, it can be found that there is a big difference between the "number of 5G mobile phone users" disclosed by the Ministry of Industry and Information Technology and the "number of 5G package users" reported by the three major operators. Monthly data shows that although there are certain fluctuations, the ratio of 5G mobile phone users to the total number of 5G package users basically remains at around 50%, which means that nearly half of 5G package users still do not actually use 5G mobile phones. This difference reflects that consumers' actual demand for 5G is not as strong as the industry expected, which will restrict operators' ability to realize 5G commercialization, and thus affect the long-term sustainable development of 5G business.

From June 2019 to April 2023, the average mobile Internet access traffic of Chinese consumers increased from 7.84GB/month to 16.72GB/month; but at the same time, the year-on-year growth rate of mobile Internet traffic also dropped from 107.3% in the first half of 2019 to 13.9% in the first four months of this year, and the absolute value of traffic growth also showed a downward trend. The growth of mobile Internet traffic seems to have peaked, and the popularization of 5G has not changed this trend. Correspondingly, the national mobile data traffic business revenue in 2022 only increased by 0.3% year-on-year, and remained basically flat in the first four months of this year. Since the commercial use of 5G, the mobile business ARPU of the three major operators has stopped falling and rebounded, but as of the end of 2022, only China Unicom has returned to the level of the first half of 2019. It can be seen that telecom operators still face considerable difficulties and challenges in boosting the performance of the public user market with the help of 5G. How to increase the penetration rate of 5G terminals and how to accurately identify user segmentation needs to drive traffic consumption are all issues that operators need to face.

In the field of 5G industry applications, although operators have carried out a large number of extensive explorations and practices together with industry partners, and have made great progress in both deployment quantity and operating income, they still face challenges in deployment costs, business models, and standard compliance in actual applications. Operators and the industry also need to conduct more in-depth exploration and innovation in many aspects such as technical capabilities, product solutions, business models, and even regulatory standards.

Only innovation can promote development

These explorations and innovations must first be reflected in the improvement of network capabilities. At the beginning of 5G deployment, operators generally regarded high-quality experience as the main selling point of 5G, but as the number of users gradually increases, the mobile network experience will inevitably deteriorate. Ookla's network speed test report shows that from the first quarter of 2022 to the first quarter of this year, the median downlink rate of the 5G networks of the three major operators has declined to varying degrees, with the largest drop of nearly 10%.

At the same time, the continuous expansion of the user base also puts higher requirements on 5G network coverage. This requires operators to maintain efficient investment in 5G networks, continuously improve network capabilities and meet user needs by introducing new technologies and product solutions. The recently launched 5G network cross-network roaming trial commercialization is also an effective measure to quickly expand 5G network coverage, which helps operators maintain a balance between expanding 5G network coverage and maintaining reasonable capital investment.

The improvement of network capabilities is not only reflected in performance indicators such as speed and coverage, but also in the expansion of network capability boundaries. For example, accurate indoor positioning and the passive Internet of Things and intersensory integration capabilities proposed in the 5G-Advanced standard will help operators better serve industry users and deepen 5G industry applications. It is worth the joint efforts of the industry to promote the early maturity of the relevant industry ecosystem.

At the same time, operators also need to think about how to use 5G network capabilities to better provide differentiated services. Omdia's global consumer survey shows that 40% of consumers want faster uplink data rates, and in China this proportion is as high as 51%, which is basically the same as the proportion of those who want to increase downlink data rates. It can be seen that with the development of mobile Internet services such as live video, consumers' demand for network experience is also gradually evolving. The mobile live broadcast package provided by Guangdong Unicom using the 5G QoS mechanism is a relatively successful exploration in this direction, showing that operators still have great potential to tap in terms of using network capabilities to provide differentiated services, provided that they accurately grasp the needs of segmented users and can effectively use the network's refined service capabilities.

In terms of industry applications, the RedCap industry ecosystem is gradually maturing, lightweight, targeted product solutions are continuously launched, and large-scale applications continue to be carried out, which is expected to accelerate the maturity and development of the 5G industry application ecosystem.

However, we must also see that enterprise users generally hope to integrate 5G platforms more closely with their own IT systems, so that they can more effectively control and manage 5G private network platforms. This requires innovative solutions in terms of network capabilities, and also requires operators and even industry regulators to be more open-minded, starting from the overall development of the 5G industry, giving enterprise users more autonomy and control space, stimulating the enthusiasm and creativity of enterprise users in deploying and using 5G industry solutions, and fundamentally promoting the maturity and development of 5G industry applications.

Looking ahead and preparing for a rainy day

At present, 5G technology standards have entered the 5G-Advanced stage. With the upcoming World Radiocommunication Conference at the end of this year, the 6G standardization cycle will also gradually begin. The development of the mobile communications industry has entered a new stage of inheriting the past and ushering in the future, and is expected to start a new journey with both opportunities and challenges.

On the one hand, it has become a global consensus that mobile communication networks are important information infrastructure, and the mutual penetration and integration of mobile communications and vertical industries is also a general trend, which has expanded a broader development space for the mobile communication industry. On the other hand, the global mobile communication industry is currently facing difficulties such as weak growth in the public user market, slow start-up of the industry application market, and bottlenecks in technological innovation. The differences in the development rhythm and technical routes of various regional markets, and even the evolution of the geopolitical environment, have also cast a shadow on the construction of a global unified 6G ecosystem.

Under such circumstances, the industry needs to maintain strategic focus and plan for the future prudently. While making full use of 5G and 5G-Advanced platforms to verify the new generation of technologies and business applications, it is necessary to formulate reasonable and feasible industrial development strategies and technology development goals based on the business needs and supply chain conditions of major regional markets, and truly be guided by market demand and business models to achieve long-term sustainable development of the mobile communications industry.

As a global 5G development pioneer, the Chinese industry can consider increasing the output of its accumulated capabilities and experience in network deployment, business development, and market operations. On the one hand, it can drive the development of 5G in other regional markets, narrow regional development differences, and contribute to the maintenance and development of a unified global industrial ecosystem. On the other hand, it can also be a precautionary measure. If global industry "fragmentation" eventually occurs, it can gain a larger market space for the domestic industry. In short, in the four years since the issuance of 5G commercial service licenses, China's 5G industry has achieved remarkable results, but it is also facing constant challenges. Only with the concerted efforts and continuous innovation of the upstream and downstream of the industrial chain can the long-term healthy development of the mobile communications industry be achieved.