How likely is it that 700M will be jointly built and shared in rural areas?

At the online investor exchange meeting for the initial public offering of A shares of China Telecom held recently, China Telecom Chairman Ke Ruiwen said that China Telecom is currently actively promoting the joint construction and sharing of 700M in rural areas.

There have been calls and discussions about the construction of 5G in rural areas and the use of 700MHz for co-construction and sharing. There are even similar voices: China Telecom and China Unicom will share 700MHz by leasing or roaming on different networks to participate in the 700MHz industry chain, especially in rural areas.

So, how likely is it that 700M will be built and shared in rural areas?

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2:2 status quo: China Telecom hopes to build and share 700M in rural areas

In March this year, the CPC Central Committee and the State Council issued the "Opinions on Comprehensively Promoting Rural Revitalization and Accelerating Agricultural and Rural Modernization", which proposed the implementation of the digital rural construction and development project: promoting the synchronous planning and construction of rural gigabit optical networks, fifth-generation mobile communications (5G), and mobile Internet of Things with cities; improving the telecommunications universal service compensation mechanism, and supporting the construction of information and communication infrastructure in rural and remote areas.

The construction of 5G in rural areas is urgent but also a difficult problem.

It is understood that in order to achieve the same coverage effect when building 5G in rural areas, the number of base stations required for 700MHz in wide coverage scenarios is 1/5 of that for 2.6GHz, 1/6 of that for 3.5GHz, and 1/9 of that for 4.9GHz. If a 5G network with the same coverage level as the existing 4G is built, 700MHz can reduce the investment in wireless equipment, optical cables, transmission systems, etc. by about 190 billion yuan compared to 3.5GHz, and save about 20 billion yuan in operating costs such as electricity and rental fees each year.

Therefore, Wang Xiaochu, Chairman of China Unicom, said at the China Unicom 2020 Performance Report Conference: "Co-building and sharing the 700MHz frequency is an opportunity for the four telecom operators. If the four jointly build or use this frequency in remote areas such as rural areas and on roads and railways, it is equivalent to sharing this part of the cost evenly, making it more efficient in remote areas such as rural areas, which is beneficial to any company!"

During the National People's Congress and the Chinese People's Political Consultative Conference this year, Zhang Yunyong, member of the National Committee of the Chinese People's Political Consultative Conference and general manager of the product center of China Unicom Group, also proposed in his proposal to use the 700MHz frequency band in rural areas to build a nationwide low-frequency 5G shared access network, which will be shared and used by four basic operators. "This will avoid duplication of construction and maintain relatively balanced development of the industry. It will promote fair competition and sustainable development, benefit all rural users, ensure consistent user experience and data security, ensure sharing upon opening, and determine a reasonable settlement mechanism and price through negotiation. Jointly promote all-network 5G 700MHz terminals for the nationwide low-frequency 5G shared access network and 5G terminal modules and applications for the development of digital villages."

This time, China Telecom Chairman Ke Ruiwen also publicly stated that China Telecom is currently actively promoting the co-construction and sharing of 700M in rural areas.

However, according to the 700MHz frequency band frequency use plan released by the Ministry of Industry and Information Technology, most of my country's 700MHz low-frequency resources have been allocated to China Radio and Television for the construction of 5G. In addition, there are 2x10MHz (733-743/788-798MHz) and uplink 5MHz (748-758MHz) that have not yet been assigned.

At the beginning of this year, China Mobile and China Radio and Television officially signed a co-construction and sharing agreement to build a simplified 5G network that can cover the whole country and realize the nationwide coverage of the radio and television 5G network as soon as possible. According to the plan: this year, China Radio and Television will complete the deployment of 400,000 700MHz stations with China Mobile within the year; 480,000 stations are planned to be opened in the first half of 2022, and 5G broadcasting services will be fully supported; full network coverage will be achieved within two years. Now that the equipment selection and technical testing have been completed, the construction of the radio and television 5G 700MHz network is being promoted as planned.

China Mobile has clearly stated that it will promote the further implementation of 700MHz co-construction and sharing in 2021 and realize the commercial use of 700MHz and VoNR terminals.

The possibility of four companies sharing is not high

Independent telecom analyst Fu Liang said in his article that before the 700MHz 5G network is put into large-scale commercial use, it is impossible for the four companies to share it, nor is it possible to separate the network and the industry.

"700MHz is one of the few advantageous resources of China Radio and Television, the newly entered fourth largest mobile operator. If a new network can be used by all four operators, China Radio and Television will only have 700MHz, China Mobile will have 2.6GHz, and China Telecom and China Unicom will have 3.5GHz. China Radio and Television is obviously at a disadvantage and it will be difficult for it to get a large enough share from the other three operators. Similarly, if the network and the industry are separated, the 700MHz 5G network will no longer be linked to China Radio and Television's development of users (marketing) and promotion of industry business. The four operators will compete based on the same network foundation, and China Radio and Television will also find it difficult to compete with the other three." said Fu Liang.

Of course, some industry insiders have also suggested that if the 700M 5G network cannot be built and shared, China Telecom and China Unicom can also choose to re-cultivate 850M or 900M channels for 5G. "Because the frequency band is close to 700M, antennas, RPUs, tower platforms and equipment rooms can all use LTE850 or LTE900 facilities, and only two 5G boards need to be added to the BBU frame."