The third phase of bidding for 5G main equipment has seen an increase in quantity and a decrease in price. China's 5G construction has shown three major changes

The results of the bidding for 5G wireless main equipment (2.1G) of China Telecom and China Unicom have been announced. So far, the bidding for 5G Phase III wireless main equipment of the four operators has been completed. In this regard, IDC released a research report showing that the biggest feature of the third phase of 5G main equipment bidding is "increase in quantity and decrease in price". China's 5G construction has shown three major changes: the demand for network coverage is greater than high-speed access, the demand for reducing operation and maintenance costs is higher than access capacity, and 5G investment is shifting from wireless main equipment to other directions.

The IDC report pointed out that in 2021, the four operators bid for a total of 722,000 wireless main equipment stations (of which China Mobile and China Broadcasting Corporation's 480,000 700M 5G base stations were completed in two years), with an investment of more than 58 billion yuan. Compared with last year's 5G Phase II bidding (the three operators bid for a total of 480,000 stations with an investment of 70 billion yuan), the obvious change is "increase in quantity and decrease in price".

In addition, the entry and exit of equipment vendors and changes in market share in this bidding are the focus of market attention, but IDC believes that changes in technology and products will have a more far-reaching impact on China's future 5G construction. Overall, IDC believes that this bidding has the following three major changes:

The demand for network coverage is greater than high-speed access. From the equipment spectrum of this tender, it can be seen that China Mobile's 5G base station uses 700M spectrum, while China Telecom's 5G base station uses 2.1G spectrum. Using a lower spectrum can effectively improve the coverage and depth of the network, which is also a prerequisite for improving the universal service of 5G networks, thereby improving the existing 5G user experience. In addition, 2.6G and 3.5G will continue to be used to cover the hot spots in the city (without overlapping coverage with low frequencies).

The demand for reducing operation and maintenance costs is higher than that for access capacity. Judging from the unit price of the equipment in this tender, combined with the recent antenna tender of China Mobile, it can be seen that the equipment capacity of this tender has been fully shifted from last year's 32T32R/64T64R to 4T4R, thereby significantly reducing baseband power consumption and reducing operation and maintenance costs.

5G investment is shifting from wireless main equipment to other directions. Since the models and parameters of wireless main equipment purchased in the third phase of 5G have changed significantly from last year, the comparison of equipment unit prices is not very meaningful. However, overall, under the premise of a slight increase in the overall investment scale of 5G, the investment proportion of 5G wireless main equipment is decreasing. More 5G CAPEX is used in other areas, such as: bearer network, core network and 5G private network solutions.

In response to market changes and adjustments, IDC updated the "China 5G Capital Expenditure Forecast, 2021-2025" report, and refined and prospected 5G expenditure from five dimensions: 5G wireless access network, 5G core network, 5G network function virtualization infrastructure, 5G data communication and 5G optical backhaul.

IDC believes that China's 5G CAPEX market will maintain a steady growth trend. Looking at the current situation of China's 5G, although 5G construction has grown rapidly in 2020, combined with comprehensive considerations of multiple dimensions such as technology, policy, commercialization, and industry standards, IDC believes that China's 5G construction will not be achieved overnight. China's 5G development will continue to ferment as 5G industry applications continue to deepen. The pace of 5G construction by Chinese operators will also advance steadily, and annual investment plans and investment directions will be adjusted year by year in line with market demand. IDC believes that through the continuous exploration and innovation of Chinese companies, operators, and equipment manufacturers, China will continue to lead the global market development in 5G construction and applications.

Cui Kai, assistant research director of IDC China Telecom and Internet of Things Research Department, said: "Looking ahead, China's four major operators will maintain the continuity of 5G network investment, continue to promote the reduction of 5G network equipment unit prices, explore 5G application business models, and improve the ROI (Return on Investment) of 5G networks. The scale of investment in 5G networks depends on the development speed of 5G applications. For the industry market, the digital economy is developing rapidly, especially with the rise of contactless business models after the COVID-19 pandemic. 5G will become one of the important connection technologies in the digital transformation of industries. For the consumer market, finding 5G "killer" applications is a prerequisite for the explosive growth of 5G investment. Finally, accelerating the integration of 5G technology and industry applications, thereby driving the transformation of operators' businesses through network transformation and helping operators break the operating pressure of "being piped", is also the core driving force of 5G construction."