One million new 5G base stations will be built next year. Is that a lot?

The latest news shows that my country has built a total of 718,000 5G base stations. Although the construction plan for the number of 5G base stations next year is still being formulated, since my country's 5G network construction will be steadily promoted in accordance with the principle of moderate advancement, many industry insiders predict that more than 1 million new 5G base stations will be built across the country in 2021.

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Wu Hequan, an academician of the Chinese Academy of Engineering, predicted that as the pace of commercialization accelerates, the cost of base station construction will be further reduced, 5G construction will be fully accelerated in 2021, and more than 1 million new 5G base stations are expected to be built nationwide. CICC also believes that the three major operators will build 100,000 new 5G base stations in the fourth quarter of this year, and there will be nearly 800,000 5G base stations by the end of the year, and 800,000 to 1 million new stations will be added next year.

Although looking at the world, if the Chinese market builds one million 5G base stations a year it will definitely be unparalleled, but whether from the perspective of the heavy responsibility of 5G, the capabilities of operators, and the willingness to open up new businesses and new growth points, if my country builds 1 million new 5G base stations next year, it will not be too much.

Responsibility: Helping to build an "accelerator" for the development of the digital economy

We often say that with great power comes great responsibility.

Today, 5G is no longer just a new generation of mobile communication technology, but also shoulders the important task of enabling the digital transformation of thousands of industries. Moreover, 5G will also become a "connector", "multiplier" and "accelerator" for economic and social development.

The information and communication industry to which 5G belongs is a strategic, basic and pioneering industry that comprehensively supports economic and social development. As an important enabling technology for a new round of digital transformation, 5G is closely integrated with industries such as big data, artificial intelligence, and the Internet of Things, and will jointly promote the high-quality development of my country's economy in the new era.

In particular, as the protagonist of the new infrastructure, 5G investment will not only directly bring about the rapid development of the telecommunications operations, equipment manufacturing and information services industries, but also, through the linkage effects between industries, drive various industries to expand investment in information and communication technology applications, enhance the incremental effect driven by investment, and accelerate the development of the digital economy.

According to the China Academy of Information and Communications Technology, 5G is expected to drive China's digital economy growth by 15.2 trillion yuan from 2020 to 2025. The integrated development of 5G and new ICT technologies such as artificial intelligence and big data will promote profound changes in the production organization mode, resource allocation efficiency, and management service model of the digital economy.

Market research firm IDC predicts that by 2022, 5G will promote the creation of mixed reality, autonomous landscapes and edge-based ecosystems, which will drive 25% of socioeconomic growth in China's digital economy. By 2023, one-third of smart city scenarios will be affected by 5G.

The importance and responsibility of 5G to the development of the economy and society, especially the digital economy, are evident, and perfect 5G network coverage is the basis for achieving all this. Therefore, it would not be an exaggeration if another 1 million 5G base stations were built across the country next year.

Capable: TCO is controllable and operators resume positive growth

The importance of continuing to build 5G base stations for the digital transformation of thousands of industries and economic and social development is self-evident. As the main body of 5G investment and operation, can operators, who have been saying for many years that "increasing volume but not revenue", continue to do so?

From the perspective of CAPEX, operators still have strong capital expenditure and investment capabilities. Judging from the financial report data for the first three quarters of this year, facing challenges such as market saturation, fierce market competition and the epidemic, the three major operators actively responded, accurately prevented and controlled the epidemic, accelerated the comprehensive digital transformation, and innovated communication supply. The three major operators all achieved positive revenue growth and realized "turning crisis into opportunity."

According to the financial report data, in the first three quarters of 2020, China Mobile's operating income in the first three quarters was 574.4 billion yuan, up 1.4% from the same period last year; the profit attributable to shareholders was 81.6 billion yuan, down 0.3% from the same period last year, and the decline in net profit continued to narrow. Thanks to the recovery of revenue and good cost control, the profit attributable to shareholders in the third quarter achieved positive growth year-on-year. China Unicom achieved overall revenue of 207.349 billion yuan in the first three quarters, up 4.4% from the same period last year; EBITDA was 73.7 billion yuan, up 0.8% from the same period last year; and the profit attributable to equity holders was 10.824 billion yuan, up 10.2% from the same period last year. China Telecom achieved operating income of 292.614 billion yuan in the first three quarters, up 3.5% from the same period last year; of which service revenue was 280.868 billion yuan, up 3.5% from the same period last year; EBITDA was 92.210 billion yuan, up 0.3% from the same period last year; and the profit attributable to shareholders was 18.706 billion yuan, up 1.7% from the same period last year.

From the perspective of OPEX, although the energy consumption of 5G base stations is astonishing, several times that of 4G base stations, and the high electricity costs of 5G base stations have become a major problem that needs to be solved urgently in operating costs, with the introduction of innovative technologies such as AI artificial intelligence and 5G peak-shaving and valley-filling base stations, 5G electricity costs are no longer as high as originally imagined.

At the same time, with the large-scale commercial use of 5G this year, the cost of base station equipment is also falling rapidly. In addition, the relevant competent authorities have also made it clear that they will support local governments in increasing their support for 5G network construction in terms of site resource acquisition and financial subsidies; and not only the three major telecommunications operators, but also radio and television will participate in 5G construction, adding new investment entities, plus the co-construction and sharing innovation model, etc., all of these positive factors will further reduce the cost of 5G deployment.

Therefore, if another 1 million new 5G base stations are built next year, operators are fully capable of and may even exceed the target again.

Willingness: The necessary foundation for opening up new business opportunities

Moreover, moderately ahead of schedule in building 5G networks and expanding 5G base station deployment as soon as possible are also the strong desire of operators to avoid user churn, improve user experience, find new sources of revenue, and explore new business blue oceans such as vertical industries.

In the ToC market, the 5G trend has become a reality.

First, 5G users account for an increasing proportion of the operator's overall mobile user base, and there is an urgent need to further expand the network scale to retain and develop users. As of the end of October this year, China Mobile's mobile customer base has reached 946.344 million, of which 5G (package) customers have reached 128.793 million; China Telecom's mobile user base has reached 350.16 million, of which 5G package users have reached 71.86 million.

Secondly, the penetration rate of 5G mobile phones in China has further increased, and operators are urgently needed to provide wider, deeper and better 5G network coverage for these 5G terminals. According to data released by the China Academy of Information and Communications Technology, in November 2020, my country's 5G mobile phone shipments reached 20.136 million units, accounting for 68.1% of mobile phone shipments in the same period; 16 new models were launched, accounting for 53.3% of the number of new mobile phone models launched in the same period. From January to November this year, the cumulative shipments of 5G mobile phones in the domestic market reached 144 million units, and the cumulative number of new models launched reached 199, accounting for 51.4% and 47.7% respectively.

In the ToB market, 5G has entered a critical stage of application innovation.

At present, 5G application innovation is flourishing. The trend of coordinated promotion by multiple subjects such as operators, social manufacturing, and vertical industries is accelerating. This year, there are more than 4,200 projects participating in the 5G Bloom Cup, and more than 30% of the projects have entered the commercial implementation stage; at the same time, the industrial Internet is entering a period of rapid development, accelerating implementation practices, and applications covering more than 30 key industries such as raw materials, equipment manufacturing, and consumer goods; new models such as digital design, intelligent manufacturing, networked collaboration, personalized customization, service extension, and lean management are rapidly expanding, and the "5G+Industrial Internet" 512 project is being pragmatically promoted, with more than 1,100 related projects under construction.

For example, as a deep cross-border work of Shaanxi Coal Group, Shaanxi Unicom and Huawei in 5G ToB, in September 2020, Shaanxi Unicom completed the deployment of the coal mining industry private network based on "5G+MEC edge cloud" in Zhangjiamao Coal Mine of Shaanxi Coal Group and put it into commercial operation. At present, Zhangjiamao Coal Mine has realized 5G+VR, 5G+4K high-definition monitoring, 5G+remote control and comprehensive perception of mobile environments such as underground excavation faces and fully mechanized mining faces by relying on Unicom's 5G coal mining industry private network. At the same time, many functions such as equipment remote control, equipment monitoring, and hidden danger investigation are also being connected and debugged. This is the first commercial underground 5G coal mining industry private network in western my country, and it is also the successful incubation and implementation of China Unicom's "5G+Smart Mine" product solution.

For example, Ericsson has joined hands with China Unicom, Qingdao Port and Zhenhua Heavy Industries to realize the technical verification of the world's first 5G smart unmanned port. Through 5G connection, the automated quay crane can be remotely operated in the remote control center and successfully grab the container; Ericsson and Jiangsu Mobile have deployed a 5G premium private network in Ericsson's Nanjing factory, covering a production area of ​​10,000 square meters. Currently, Ericsson Nanjing factory has launched 6 5G applications, including 5G drone inventory, 5G cloud AGV, 5G surveillance cameras, 5G industrial computers, 5GAR training, 5G AR remote expert guidance, etc.

In the future, as more 5G ToB applications are explored and put into commercial use, operators will need to expand 5G network deployment as soon as possible to support them. For communications operators who are also seeking transformation, the new ToB market opened up by 5G is opening up a new blue ocean full of unlimited business opportunities, and 5G base stations are the most basic prerequisite for 5G networks to support the digital transformation of thousands of industries.

To sum up, if my country builds another 1 million new 5G base stations next year, operators still have the responsibility, ability and willingness to do this well.