Outlook for domestic 5G development in 2021 (Part 2): Challenges

Relying on its significant advantages of high speed, low latency and large capacity, 5G is now becoming the creator of smart life and smart production. Through the "Internet of Everything", it has effectively promoted the high-quality development of the digital economy. Based on this, my country is very enthusiastic about the development of 5G.

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According to the first article in the series, "Prospects for Domestic 5G Development in 2021 (I): Current Situation", we have a clear understanding of the real situation of domestic 5G development. Whether it is in terms of policies, enterprises, technology, market or base station construction, the achievements have undoubtedly been gratifying.

However, even though my country has many opportunities for 5G development and its development speed and results are very encouraging, it still faces many challenges in 2021.

1. High construction and operation costs

For the development of 5G in my country, the first challenge is cost pressure.

The foundation of 5G development is base station construction, which includes macro base stations and micro base stations. To achieve basic coverage of 5G networks, the number of base stations to be built each year is close to one million, which is undoubtedly a huge investment. At the same time, the investment in optical transmission, core network, edge computing, etc. needs to be considered during the construction process. According to relevant data, in the ten years of 5G development, my country's total investment is expected to exceed 1.6 trillion yuan, and the cost is very huge.

Of course, not only does construction cost money, but after a large number of base stations and facilities are built, application and operation also cost money. Due to its own characteristics, 5G has a huge demand for electricity. The power consumption of a 5G base station is almost 2.5-3.5 times that of a 4G base station, and the electricity cost is also very shocking. Previously, due to the huge power consumption and operating costs of 5G base stations, many regions shut down base stations at night, and such measures have caused heated discussions online.

Based on this, facing the huge construction and operation costs today, it is undoubtedly a test for my country's 5G development in 2021. In the future, my country needs to reduce construction costs through the transformation of old base stations on the one hand, and reduce electricity costs through the construction of ultra-high voltage, intelligent upgrades of power grids, and electricity subsidies on the other hand. In addition, it is necessary to accelerate the pace of 5G commercialization to avoid excessive idle base stations and increase cost pressure.

2. Unclear Business Application Model

Secondly, my country's 5G development still faces commercial challenges.

For current operators, facing the pressure of "speeding up and reducing fees" and homogeneous competition, how to earn back the investment in 5G construction through commercial use, and even explore a stable way to make profits, is the top priority of development. In the past, traffic-based and information-based services were two options, but at present, there are not many users who are really willing to use 5G, and the service has only launched 5G messages, and all models are not yet clear.

At the same time, my country has just started exploring 5G commercialization. On the one hand, the technical maturity of 5G supporting industry applications needs to be improved, and it is estimated that it will take 1-2 years to meet the standards. On the other hand, the supporting industries for 5G applications still need to be cultivated. The price of 5G terminals is too high, and industries such as VR/AR and 8K are just starting. There are various problems in the integration of traditional industries, which still need to be explored continuously.

Based on this, in 2021, my country's operators need to think more and make more decisions regarding the commercial development of 5G, and need to find a way to truly achieve profitability as soon as possible. At the same time, the industry also needs to accelerate the formulation of 5G standards and the improvement of 5G technology, accelerate the rise and maturity of 5G supporting industries, and accelerate the exploration of 5G commercial space and value, so as to create a clear path for 5G to truly enter people's production and life.

III. The international environment is grim

Again, my country's 5G development is currently facing threats from the international situation.

At present, although my country is leading the world in 5G construction and has certain advantages in the overall development of 5G, 5G is an industry that requires global division of labor and cooperation to develop. It is difficult for my country to meet all the supply chains of chips, smartphones, and base stations by its own efforts. The globalization trend of 5G supply chain is very obvious. In this context, the stability of the international situation is very important.

However, the reality is not what we want. At this stage, the United States has imposed multiple sanctions on Huawei, a key company in my country's 5G field, not only restricting its 5G cooperation with various countries, but also cutting off its supply of chips and 5G-related accessories, which undoubtedly restricts Huawei's further development. In addition, the United States has also used "national security" as an excuse to build a wall that hinders the development of my country's 5G internationally. The situation is not optimistic.

In this context, my country must first adjust its mindset for 5G development in 2021 and not panic because of international suppression and sanctions. After that, my country needs to increase support for key enterprises, accelerate breakthroughs in key technologies, deepen the improvement of key industries, and make up for the shortcomings of its own development through self-reliance and self-improvement. In addition, my country must continue to uphold an open attitude and explore exchanges and cooperation with other countries.

4. The industrial ecosystem has not yet been established

Finally, my country's 5G development still faces problems in the industrial ecology.

At present, my country's 5G base station construction is not perfect enough, 5G network has not yet achieved full coverage across the country, and 5G application supporting development is still in its early stages, and all aspects of development are not mature enough. In this context, it is not realistic for 5G to empower thousands of industries. Some existing cooperation is basically led by operators, and there is an urgent need for accelerated collaboration among all parties. In particular, some strong companies should actively play a leading role.

In addition, in terms of promoting the standards for 5G converged applications, there are also problems such as slow formulation process and lack of relevant standards, which also restrict the implementation and popularization of 5G in my country. In this context, on the one hand, the Chinese government needs to strengthen guidance and support, and on the other hand, industry enterprises need to deepen exchanges and cooperation, and through the joint efforts of both the government and enterprises, jointly promote the establishment and improvement of 5G converged application standards.