Three highlights of the RedCap industry in 2023: New blue ocean of IoT and the journey of commercial use

With the continuous evolution and development of cellular IoT technology, the era of the Internet of Everything is coming. 5G RedCap (Reduced Capability), as the key evolution direction of cellular IoT technology, is an important puzzle for 5G to achieve low, medium and high speed full-scenario IoT. It will be put into large-scale commercial use in 2023, opening the journey of 5G IoT to "billions".

Look at the scenario: RedCap has a wide range of application scenarios, and the demand for 5G native capabilities drives the first wave of application deployment

In June 2022, the 3GPP R17 protocol standard was frozen, defining the 5G RedCap technology for medium- and high-speed IoT scenarios. RedCap can significantly reduce the cost of 5G terminals by streamlining the number of terminal antennas and transceiver bandwidth, while inheriting 5G native capabilities such as large capacity, low latency, high reliability, and network slicing, achieving the best balance between performance and cost. There are three main types of RedCap application scenarios:

Video surveillance: In urban management, industry and agriculture, there is a demand for real-time video surveillance to deal with security risks and enrich management methods. By integrating 5G terminal modules with surveillance cameras, an easy-to-deploy, low-cost backhaul method is provided for video surveillance.

Wearable devices: Wearable devices mainly include smart watches, smart bracelets, medical monitoring equipment, etc., and generally require the devices to be small in size and low in power consumption.

Industrial wireless sensors: There is a large demand for data collection in the industrial field, including pressure sensors, temperature and humidity sensors, etc., which have high requirements for end-to-end service latency and availability.

In addition to the above three scenarios, vehicle-mounted T-Box, power equipment, home broadband entry-level CPE, etc. will also become important scenarios for RedCap's future applications.

In the industry field, 5G native capabilities such as large bandwidth, low latency, high reliability, and network slicing are often the rigid needs of the industry. As a lightweight 5G technology, RedCap can significantly reduce the end-side cost of 5G in the industry while ensuring that functional performance meets industry needs. Therefore, industry applications such as industry, electric power, and campus video surveillance will become the first wave of application markets for RedCap.

In the consumer sector, high-definition cameras for personal security scenarios have certain bandwidth requirements. RedCap cameras can fully utilize the advantages of 5G's large capacity and reduce bit costs, and are expected to become the standard for future wireless video surveillance. As module costs decrease, applications such as Internet of Vehicles and smart wearables will gradually adopt RedCap to replace the original 4G IoT technology.

Looking at the space: RedCap achieved one million connections in the first year of commercial use, and will break through the new blue ocean of IoT with 100 million connections in the next three years

In 2022, China achieved the first "things surpass people" in the number of users of cellular mobile communication systems. By the end of 2022, the number of cellular IoT terminal users representing the number of "things" connected reached 1.845 billion. The current structure of "people" connections tends to be stable, and "things" connections will become an important engine for operators' business growth.

As the best technology for medium- and high-speed IoT, RedCap will bring new development opportunities to operators. According to industry insiders, RedCap will start large-scale commercial use in 2023, and the number of connections in the first year of commercial use is expected to exceed one million. As the cost of terminal modules decreases and the network evolves to higher standards, RedCap will gradually replace 4G IoT and become the main delivery force of medium- and high-speed IoT. The number of connections will reach 100 million in the next three years. The application scenarios are as follows:

According to Omdia statistics, China's annual camera shipments will reach 150 million in 2024, of which 10% to 20% will be wireless. It is estimated that the scale of the wireless-based video surveillance industry can reach tens of millions.

According to TSR statistics, China's cellular smart wearable device shipments are expected to exceed 80 million by 2025.

The Ministry of Industry and Information Technology clearly stated in the "Guidelines for the Construction of 5G Fully Connected Factories" that during the 14th Five-Year Plan period, it will target ten key industries including manufacturing, mining, and ports, and promote 10,000 companies to carry out 5G fully connected factory construction. In the manufacturing field, the average number of 5G terminals connected to each factory can be calculated as 100 to 400. It is expected that the scale of 5G fully connected factory terminals will exceed 3 million in the next three years.

According to the Deloitte research report and the "5G-Enabled Smart Grid Application White Paper" data statistics, it is estimated that by 2027, the cumulative shipments of 5G terminals in the domestic power industry will exceed 50 million.

According to a report released by Strategy Analytics, electric vehicle production will grow at a compound annual growth rate of 26% between 2021 and 2026, and shipments will be close to 54.1 million units by 2029.

Industry perspective: RedCap network first is the only way forward, and accelerated ecological development will help scale commercial use

Since the 5G RedCap standard was frozen, it has continued to attract widespread attention from all parties in the industry, and many industry partners have high hopes for RedCap. The industrial value of RedCap has been recognized by many industries including manufacturing, electricity, ports, mining, steel, etc.

After more than three years of 5G commercial use, China has built the world's largest 5G commercial network, with more than 2.2 million 5G base stations, accounting for more than 60% of the world's 5G base stations. RedCap can reuse widely covered 5G base stations to quickly realize the scale opening of the network. At present, the China Academy of Information and Communications Technology and the three major operators have completed multiple rounds of RedCap technical verification, and the conditions for large-scale commercial use of RedCap networks are ripe. Looking back on the development history of the NB-IoT industry, it is not difficult to find that promoting the network-first strategy and building a high-quality network with ubiquitous coverage are the key to seizing the development opportunities of the Internet of Things industry.

In the early stages of industry development, RedCap module costs are expected to save 50% compared to traditional 5G eMBB modules. With large-scale applications, module costs will gradually catch up with LTE CAT4 modules within 3-4 years. Currently, many ecosystem partners have planned RedCap chips, modules, and application terminal products. It is expected that the first wave of core-module-end ecosystem terminals will be released in the first half of 2023 and support RedCap end-to-end commercial verification. In the second half of the year, all parties in the industry will accelerate the improvement of the RedCap ecosystem and continuously improve supply capabilities to support RedCap end-to-end large-scale commercial deployment.

RedCap creates a new blue ocean of 5G IoT, and the "light" wind helps all industries and sectors sail with full sails. Looking forward to 2023, RedCap will become one of the key development directions of the mobile industry. With the concerted efforts of governments, operators, equipment manufacturers, terminal manufacturers and even industry customers, it will gradually achieve large-scale commercial use of networks, rapid increase in connections, and accelerated maturity of the ecosystem, adding vitality to the further large-scale application of 5G and helping the industry's digital transformation to "lighten its load".