5G enters a critical development period: Accelerating base station coverage costs and continuous breakthroughs in applications

In 2020, my country's large-scale 5G construction entered the "fast lane". It currently has the world's largest 5G commercial network. By the end of the year, more than 70 5G base stations will have been built and SA network coverage will have been fully launched.

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On December 24, 2020, Wen Ku, spokesperson of the Ministry of Industry and Information Technology, said at a press conference held by the State Council Information Office that the number of 5G users grew very fast in 2020, and the number of 5G terminal connections has exceeded 200 million. As of now, 144 million 5G mobile phones have been shipped. In 2020, 580,000 new 5G base stations were added, of which 330,000 were co-built and shared, and all cities and prefectures have 5G network coverage.

Looking back on the year of 5G commercialization, C-end products have grown rapidly, users have continued to increase, and B-end industry pilots have become more in-depth; at the same time, policy dividends have continued to drive the industry forward. On December 22, 2020, the Ministry of Industry and Information Technology organized China Telecom, China Mobile, and China Unicom to hold a 5G frequency use symposium, and issued 5G medium and low frequency band frequency use licenses to the three basic telecommunications operators.

However, the curtain of 5G has just been opened, and the transformation of the industry is slow and lasting. A communications industry insider told the 21st Century Business Herald reporter: "5G is still an infrastructure, and it does not bring business upgrades like 4G. 4G is a direct upgrade of 3G communications, but 5G is another concept. 4G came with the emergence of mobile Internet, and many facilities happened to be mature, bringing visible changes to daily life, but the development of 5G is different. It will not happen in a short period of time for 5G to bring about earth-shaking changes in life. What is more important is to look at the development of 5G applications from various vertical industries."

The "White Paper on China's 5G Development and Economic and Social Impact (2020)" (hereinafter referred to as the "White Paper") released by the China Academy of Information and Communications Technology pointed out that the development of the 5G industry will enter a critical period in the next 2 to 3 years. This period is not only a period for cultivating the 5G application ecosystem, but also an important window period for manufacturers to accumulate strength and accelerate transformation and growth.

Urban 5G base station construction

From the perspective of hardware base station construction, the current 5G base station construction can be described as "working hard and fast", and the competition among major cities for the first 5G city is becoming increasingly fierce. According to incomplete statistics from reporters, Shanghai and Shenzhen are currently at the forefront in terms of the cumulative number of 5G base stations. According to published data, Shenzhen has built about 46,000 5G base stations and achieved full coverage of 5G independent networking; Shanghai has more than 25,000 5G outdoor base stations and more than 31,000 5G indoor small stations, and plans to build 34,000 new outdoor 5G base stations in the next three years; Guangzhou has built about 25,000 5G base stations, and plans to build a total of 80,000 5G base stations by 2022.

The above-mentioned "White Paper" data shows that from the distribution area of ​​domestic base station construction, the eastern coastal areas are ahead of the inland areas, and the south is ahead of the north. The number of 5G base stations built in Guangdong, Jiangsu, Zhejiang, Henan, Shandong, Shanghai, Beijing, Sichuan, Chongqing and other provinces and cities exceeds 20,000.

Relevant support policies from various places are still being introduced. On December 22, 2020, the Shenzhen Development and Reform Commission issued the "Several Measures on Vigorously Promoting the Development of 5G Innovative Applications", which supports and encourages the core technology research in the 5G application field, the construction of innovative carriers in the 5G application field, the industrialization development of 5G core products, and the large-scale application of 5G modules and chips. For example, core technology research is carried out for the "neck" links such as wireless technology, network and business, key components, testing and instrumentation in 5G vertical industry applications. Focusing on the research and development and manufacturing of high-frequency devices, array antennas, optical communication chips, and ultra-high-definition image sensors in 5G communications, a number of major equipment and key component research and development projects are planned, and funding is provided at a rate not exceeding 40% of the total project investment, with a maximum of 300 million yuan.

Against the backdrop of strong policies, cities continue to formulate plans to promote the implementation of 5G, while operators are also accelerating deployment. However, it will take a long time to perfect the commercial network.

"Based on the development experience of 3G and 4G, it usually takes 3 to 4 years from the start of commercial use to the deep coverage period. On November 20, 2020, China Mobile announced that it would increase its investment in 5G and achieve good coverage of urban areas and some key towns across the country in 2021. It is expected that operators will gradually stop large-scale construction of 4G networks in 2020 and focus entirely on 5G networks," the white paper said. "From the perspective of networking methods, the construction of 5G networks by my country's basic telecommunications companies is still accelerating with independent networking as the goal. It is expected that independent networking will be fully commercialized in 2021. From the perspective of construction strategy, in the next 2 to 3 years, operators will take the development of vertical industry markets as an opportunity to further expand the industry application market. Adopting a strategy of giving equal importance to consumer-oriented and industry-oriented network construction, key coverage will be given to industries with demand."

On December 28, 2020, Xiao Yaqing, Minister of Industry and Information Technology, stated at the National Industrial and Information Technology Work Conference that in 2021, the construction and application of 5G networks will be promoted in an orderly manner, 5G coverage in major cities will be accelerated, and co-construction and sharing will be promoted, with more than 600,000 new 5G base stations to be built. Xiao Yaqing stated that 5G construction should be used as a driving force to coordinate the deployment of data centers and computing facilities. At the same time, 10 key industries will be focused on, 20 typical industrial application scenarios will be formed, industrial 5G private network pilots will be carried out, and 5G millimeter wave frequency planning for some frequency bands will be released in due course.

How to break through the bottleneck of cost and application areas?

While 5G infrastructure is being built and laid ahead of schedule, high costs and insufficient applications remain problems that need to be solved urgently.

The aforementioned communications industry insider said: "On the one hand, key costs have not yet been reduced to the critical point. On the other hand, the supporting industries around key costs are still climbing their own ladder. Why didn't Apple work in 2G and 3G? That's because it was not ready. Android, the Internet, and touch screens were not ready either. The coincidence of history is that in just one or two years, all the elements were ready, and it has developed rapidly since then. Now some costs of 5G have been reduced, but key costs have not yet come down, such as large-scale base station deployment, energy consumption, etc."

Previously, a communications practitioner told reporters that some areas shut down 5G base stations at night to save electricity, but in fact users' communication needs are strongest at night.

At the same time, B-side applications seem to be flourishing, but there are limited areas that are truly targeted and solve pain points in industry scenarios. Manufacturing and industrial Internet are promising directions, but there is still a long way to go to achieve large-scale applications. 5G is not "plug and play". It is a very complicated process to transform the digital system through 5G technology. This is closely related to the digital foundation of the enterprise, whether there is capital investment, and the willingness of the management. At the same time, the 5G era needs to find a new business closed loop to bring new impetus to the development of the industrial chain.

On the one hand, the White Paper mentioned that despite the rapid development of network construction and the number of users, 5G networks are still in the early stages of scale coverage, with a user penetration rate of just over 10%. 5G consumer applications are still in the early stages of introduction, and innovative applications are still in the process of cultivating services, still focusing on enhancing the application experience of 4G services. All parties are actively exploring video applications based on enhanced mobile broadband. For example, telecom operators are actively promoting 5G plus video entertainment applications, and Internet companies are developing consumer application layouts, including AR/VR live broadcasts.

On the other hand, other supporting technologies such as artificial intelligence, autonomous driving, and industrial Internet of Things are all increasing their production capacity. 5G is a part that is running parallel to them and they need to develop together.

Lu Yong, senior vice president of Huawei and president of China, has found in practice that whether it is remote control, image recognition, or unmanned aerial vehicle applications, it is impossible to rely solely on 5G connection capabilities. 5G can only produce a fusion effect and realize the value of 5G when it is coordinated with other capabilities such as smart terminals, industry terminals, cloud computing, AI, and combined with industry information systems.

"In the mining areas of Shandong and Shanxi, remote control based on 5G has enabled many workers to no longer have to go down the mine to perform underground operations hundreds of meters deep. In the future, jobs involving 'three highs' (high risk, high repetition, and high precision) will be increasingly done by machines as the information infrastructure improves and innovates," said Lu Yong in an interview with a reporter from 21st Century Business Herald.

Compared with casting a wide net on the B-side, Huawei is currently more focused, especially in-depth development of mining, power grids, ports, steel and other fields; ZTE has realized the use of "5G to manufacture 5G" in the Nanjing Binjiang Smart Factory, and the Tianjin Port Smart Port has used 5G to realize remote control of quay cranes, etc., and will continue to deploy in 15 industry fields such as industry, education, medical care, media, and transportation.

Next, 5G will be more deeply integrated into the industrial Internet. For example, 5G industry terminals and modules will usher in new development opportunities. According to ABI Research data, global IoT cellular communication module shipments will grow to 1.25 billion pieces in 2023 and exceed 4G modules in 2024. At the same time, the White Paper predicts that innovative consumer applications with 5G characteristics may grow in scale from 2022 to 2023, and the scale growth period of 5G industry applications is expected to appear after 2023. 2021-2023 will still be the introduction period of 5G industry applications, and industry applications will be gradually put into commercial use in batches.