Look up to the sky with 5G, keep your feet on the ground with 4G

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October 28 news: Although 5G has already entered the market, 4G is still the main source of revenue for operators, and this trend will be difficult to completely reverse for a long time. In the case that 5G is not up to the task, solid operation of 4G is still the main task of operators. After all, current development capabilities cannot be achieved by expectation.

1. 5G is still in the paving stage, and the ability to make money is still being developed

5G has long been a hot topic in the whole society. Especially as the competition between China and the United States continues to accelerate, 5G has become the focus of national scientific and technological competition and even international status competition. In addition to various expectations for 5G, there are also endless discussions about whether 5G is a trap and whether it is over-built.

It has been nearly a year and a half since the 5G license was issued, and it has also been nearly a year since the three major operators launched 5G packages simultaneously. Although the 5G "Four King Kongs" including China Radio and Television are making every effort to accelerate the pace of 5G construction, objectively speaking, 5G is still a long way from becoming a major force.

Recently, the three major operators have released their operating reports for the first three quarters of this year. Data shows that China Mobile and China Telecom have more than 114 million and 63 million 5G package users respectively. Although China Unicom's 5G-related user data has not yet been released, the total number of its 5G package users should be similar to that of China Telecom.

While operators are increasing the development of 5G users, they are also mainly increasing the construction of 5G networks. Public information shows that the three major operators have basically completed the 5G construction plan at the beginning of this year in October. From a full-year perspective, the number of 5G base stations opened is expected to be close to 700,000.

Although the relevant development achievements of 5G are very outstanding, 5G is still a long way from having the ability to make money. Any attempt to build, develop and make money at the same time, and use this to support the construction of 5G networks, is suspected of being too harsh, after all, 5G technology and scenarios are still maturing.

To be honest, 5G is still at the stage of looking up to the sky. We should be more optimistic about the future of 5G and be fully prepared for the long-term coexistence of 5G and 4G. Just like although we have entered the post-4G era, the 3G network has not been completely withdrawn.

2. Although the 4G era has entered its later stages, there is still potential to be tapped

Data released by the Ministry of Industry and Information Technology show that by the end of September, the three basic telecommunications companies had 1.293 billion 4G users, up 2.3% year-on-year, accounting for 80.8% of the total number of mobile phone users, an increase of 0.7 percentage points from the end of last year. It should be said that the growth of 4G users has not stopped.

In addition to the increase in users and penetration, traffic growth, mainly represented by 4G, is still in double digits. Data from the Ministry of Industry and Information Technology also shows that in the first three quarters, the three basic telecommunications companies achieved mobile data and Internet business revenue of 468.8 billion yuan, a year-on-year increase of 2.7%.

Although the traffic volume growth rate and revenue year-on-year growth have declined significantly compared to 2017, the current growth is still considerable compared to the huge scale of 4G. If we only look at the growth rate, the traffic revenue growth in the first three quarters is equivalent to the total revenue of SMS business for the whole year.

Currently, 4G users and traffic are both growing, and how to maintain or continue this growth trend has become an absolute priority for operators. When unlimited data is forced to be removed from the shelves and the price of traffic cannot be raised, stimulating traffic business growth has become the only way out.

3. Stimulating HD content consumption may become a breakthrough in traffic management

While traffic maintained positive growth, user DOU experienced a short-term correction. Data from the Ministry of Industry and Information Technology showed that the average mobile Internet access traffic (DOU) per household in September reached 10.86GB/household, a year-on-year increase of 29.4%, 2.27GB/household higher than December of the previous year, but 0.39GB/household lower than August.

If the user DOU is further adjusted, it will inevitably lead to a decline in traffic revenue. Here we need to remind everyone that the decline in user DOU in September occurred when the overall traffic increased. Therefore, this warning is of great significance.

In the current context of consumer Internet, the best way to stimulate user traffic growth is to break through to video, especially to stimulate HD video consumption. Whether it is adding online HD movie promotion, supporting HD short video applications such as TikTok, or even HD games, operators actually have few means available.

Whether or not operators can lead the development of big video + big traffic in the post-4G era has become a major issue related to their sustainable development. Moreover, this does not conflict with the operators' continued efforts to accelerate the penetration of rural user markets, especially to increase traffic consumption of low-DOU users.

4. Increase Internet user penetration and expand the scale of data traffic consumption users

Data from the Ministry of Industry and Information Technology show that by the end of September, the three basic telecommunications companies had developed 1.336 billion mobile Internet users, with a penetration rate of 83.5% among mobile phone users, up 1.3 percentage points from the end of last year. The increase in Internet user penetration will help expand the base of business consumers.

To allow users who are not suitable for feature phones to use smartphones, and to allow users who do not know how to use the Internet to learn how to use the Internet, operators need to increase subsidies to speed up the replacement of feature phones, and also learn from China Unicom to push users to upgrade to 4G users in disguise by disconnecting 2G networks.

In addition, for low-spending users in rural areas and other lower-tier markets, operators need to cultivate users’ traffic usage from the beginning. After all, the penetration rate of 4G networks has reached 98%, and finding ways to monetize existing 4G network capabilities is an effective way for operators to increase their return on assets.

In the current situation of insufficient high-definition video content, it is a natural operation to further expand the scale of mobile Internet users. However, in the context of the overall sluggish macroeconomic situation, it is naturally difficult to try to make money from low-income people. Even so, this operation cannot be relaxed.

The emergence of 5G does not directly break the existing pattern of 4G, and the reconstruction, innovation and breakthrough of 5G will be very different from the past. After all, 5G focuses more on 2B. In the long run, the development of 4G and 5G complementing each other is a more reasonable trend. If 4G is the present, then 5G is the future, and everyone needs to plan for the long term.