Post-700MHz Era: New Game Plan for 5G Competition

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After more than eight months of negotiations, on January 26, under the joint witness of senior officials from the Central Propaganda Department and the Ministry of Industry and Information Technology, China Radio and Television and China Mobile officially signed the "5G Strategy" cooperation agreement.

As soon as the news came out, it was widely circulated: representatives of both parties signed the agreement, which means that the super combination of "China Mobile + Radio and Television" officially launched the 700MHz 5G network co-construction and sharing, helping my country's 5G high-quality development to reach a new level.

The new 5G game and the ambitions of “Tianlian”

700MHz is known as the golden frequency band, with advantages such as low loss, wide coverage, and strong penetration. Using 700MHz to build a network can achieve 5G coverage at low cost and high efficiency, and solve the problem of indoor coverage. The Ministry of Industry and Information Technology has mentioned many times that my country will build a high-quality 5G network in 2021. Wang Zhiqin, deputy director of the China Academy of Information and Communications Technology, believes that the next five years will be a critical period for the development of 5G in my country. It is necessary to accelerate the construction of 5G networks and gradually achieve wide-area coverage, continuous coverage of large cities, and deep indoor coverage. Therefore, 700MHz will be of great use, and the construction of the 700MHz 5G network is just in time.

Unlike the three major players in the 4G era, in the 5G era, the Ministry of Industry and Information Technology has issued four licenses. In September 2019, China Telecom and China Unicom signed a 5G network co-construction and sharing agreement, becoming close comrades-in-arms; in May 2020, China Mobile and China Broadcasting Corporation announced their cooperation, and the "2+2" 5G competition pattern was initially formed. The signing of this cooperation agreement marks the official start of the co-construction and sharing of 5G networks by China Mobile and China Broadcasting Corporation, and the "2+2" pattern has officially taken shape.

However, the two sides of the "2+2" are not completely evenly matched. By the end of 2020, China Mobile had opened more than 390,000 5G base stations, and China Telecom had built 330,000 co-built and shared 5G base stations; China Mobile had 165 million 5G package users, China Telecom had 81.89 million 5G package users, and China Unicom has not yet released relevant data. China Mobile is more than enough to fight two alone, and now with the blessing of the 700MHz golden spectrum, it will be even more powerful.

It is reported that the top management of China Unicom has been actively trying to get a share of the 700MHz feast. The signing of the 10-year cooperation agreement between China Mobile and China Broadcasting Corporation has undoubtedly dealt a heavy blow to China Unicom. "With strong resource endowment and strong financial strength, the competition landscape will be further unbalanced," said an insider of China Unicom.

Apply for a review, or look for another way? Industry insiders believe that since China Mobile and China Broadcasting Corporation have already started working on 700MHz, China Telecom and China Unicom should also speed up their actions on 1800MHz. After all, the frequency clearance work for 2G and 3G for these two companies is much easier than that for China Mobile.

China Radio and Television: The first step in the long march

For China Radio and Television, although the alliance with China Mobile will be a godsend, some specific issues cannot be avoided.

From the perspective of market timing, the other three operators have accumulated a certain amount of experience, while China Radio and Television is basically starting from scratch. Although cooperation with China Mobile can alleviate the problem of a short time window for 5G construction, China Radio and Television still needs to quickly build the network and release numbers for operation as soon as possible. It is reported that China Radio and Television has determined the principle of building and operating 700MHz in 2021. The State Administration of Radio, Film and Television is also actively promoting the 700MHz frequency clearance, and will mobilize the industry to clear the frequency and build at the same time to support the development of 5G.

From the perspective of market differences, China Radio and Television, a latecomer, must avoid direct competition with the three major operators in order to attract users to join the network at a time when the penetration rate of mobile users is as high as 113.9 units per 100 people. In addition, the special industry nature of China Radio and Television also determines the different angles from which it conducts its business. As Zhu Yonglei, deputy director of the State Administration of Radio, Film and Television, said, the radio and television system must face up to the current changes in the way people obtain information through the Internet, especially the mobile Internet, and make the introduction of radio and television to mobile phones the main responsibility and business of radio and television practitioners. When building the 700MHz 5G network, 5G radio and television signals should be tested simultaneously, and efforts should be made to achieve a new form of radio and television that is "accessible to everyone" and "accessible to mobile". At present, China Radio and Television is already focusing on promoting the technical improvement, standard establishment, and business testing of 5G NR broadcasting services.

The biggest headache for China Radio and Television is the funding issue. According to China Radio and Television's plan, 400,000 base stations will be built in 2021, and 480,000 base stations will be jointly built with China Mobile during the planned cooperation period. In 2021, China Radio and Television took many measures to raise 5G funds. The parties involved in the establishment of China Radio and Television Network Co., Ltd. invested a total of 22.9 billion yuan, but there is still a gap between the construction fees, electricity fees, tower service fees, operation and maintenance fees, and transmission leasing fees required for China Radio and Television to build 240,000 base stations.

The long march has just taken the first step. China Radio and Television, a new 5G player "born with a silver spoon in its mouth", still needs to solve many problems.