The latest report of "5G Snapshot: China": Understand China's 5G development layout in one article

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The global economy has been put on hold due to the spread of the novel coronavirus, but the global 5G speed does not seem to be slowing down. 5G's high speed and low latency mean that it is very suitable for providing network support for high-tech fields such as smart networks, autonomous driving, and remote robotic surgery. Compared with the tariff issues in various trade agreements, it is more important to take the lead in the competition of wireless communications.

5G occupies a primary position in the "new infrastructure" and is also a key word in the proposals of experts from all walks of life during the two sessions. "Using 5G-V2X as the starting point to build a smart city with all things connected", Xu Heyi, chairman of BAIC Group, "The first lesson of 5G rural education" by Yu Minhong, chairman of New Oriental, and "5G new infrastructure" by Zhang Yunyong, general manager of China Unicom. The report on the development of China's 5G technology will let more people understand China's "5G speed".

The next 5G era is coming, and the fourth industrial revolution is driving digital transformation

The next generation of wireless is here, and several countries around the world have taken the lead in the fierce 5G race. By the end of this year, telecom companies in 18 countries will have launched 5G networks, and more than one-fifth of countries will have launched 5G services.

Leading the development and deployment of 5G in the world has become a top priority for many countries. Any country that becomes a global 5G standard setter will gain important opportunities for the development of its future industrial Internet.

5G will revolutionize the technology industry and become the backbone of the fourth industrial revolution. The global leader in the new standard may also become the leader in Internet technology. 5G is a game-changing technology: compared to 4G, it is 100 times faster and has 120 times lower latency.

In fact, with a 5G connection, people are expected to save about one day per month from everyday Internet activities, such as faster streaming and downloading of movies, TV shows, music, games and social media.

The transformative power of 5G far exceeds today’s promise. The next-generation 5G standard will power billions of new internet-connected devices, driving the adoption of transformative technology at a speed that will reshape the business world.

The popularization of 5G technology will promote innovation in the following technologies: Internet of Things and smart home, virtual reality VR and augmented reality AR, Internet and autonomous driving, and telemedicine.

5G will lead the fourth industrial revolution and drive digital transformation

Securing national global leadership in 5G development, and the resulting lead in internet development, could win countries decades of competitive advantage.

We can refer to 4G, the predecessor of 5G: the United States' leadership in 4G has brought a $100 billion increase in GDP, an 84% increase in Internet-related jobs, and $125 billion in revenue to American companies. If the United States had not taken the lead in the 4G era, none of this would have existed. The leading position in the 4G competition has brought the United States many advantages in innovation and has spawned very powerful new companies, industries, and business models - many of which are the world's first in their fields.

As Qualcomm President Cristiano Amon has said, without America’s achievements in 4G, there would be no companies like Uber, Instagram, and WhatsApp, at least not as we see them today.

Gaining leadership in 5G is even more important given its enormous commercial potential, with the standard expected to have a greater economic and social impact than 4G. All told, 5G technology is expected to contribute $2.2 trillion to the global economy over the next 15 years.

China's 5G network deployment

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China is the world's largest mobile market and is expected to become the world's largest 5G market by 2025, with 460 million 5G connections.

By then, 5G services from China's three major state-owned operators, China Mobile, China Telecom and China Unicom, will cover 65% of the population, and 5G connections will account for 29% of China Mobile's total connections. China has been committed to achieving large-scale commercial deployment of 5G in 2020 for many years, and as of October 2019, China is working hard to deploy 5G commercial services.

The China Academy of Information and Communications Technology (CAICT) estimates that China will invest between 900 billion and 1.5 trillion yuan (about $134 billion to $223 billion) in developing 5G networks from 2020 to 2025.

China's expected 5G construction and deployment

China has missed the development opportunities in the 3G and 4G eras, and it is crucial to catch up with the fast train of 5G development. In 2012, two years before China Mobile launched 4G services, China joined an international initiative to promote 5G research and development.

5G development has been at the core of the Made in China 2025 policy roadmap and the 13th Five-Year Plan. Being the first to enter the market is important for China, and for every country that wants to get ahead in the competition, especially in terms of enhancing global leadership.

CAICT (China Academy of Information and Communications Technology)'s forecast for the development of China's 5G market shows that by 2025, the scale of China's 5G market will reach 1.1 trillion yuan (about 166 billion US dollars), accounting for 3.2% of mainland China's total GDP.

It is estimated that by 2030, 5G will contribute about 5.8% to China's GDP growth, create 8 million jobs, and increase economic output by 2.9 trillion yuan (about 420 billion US dollars).

Between 2020 and 2025, the direct and indirect economic revenues generated by the commercial use of 5G networks in China are expected to reach 10.6 trillion yuan (1.5 trillion U.S. dollars) and 24.8 trillion yuan (3.6 trillion U.S. dollars), respectively.

It is estimated that from 2020 to 2030, the total 5G-related revenue generated by Internet companies and application developers will reach 10.7 trillion yuan (about 1.6 trillion US dollars).

The Chinese government has introduced a series of supportive policy measures to promote the development of 5G

China has long been committed to promoting the development of a global unified 5G standard. In 2013, the Ministry of Industry and Information Technology and the National Development and Reform Commission established the IMT-2020 (5G) Promotion Group, which consists of nearly 60 industry experts dedicated to promoting 5G research. Since then, they have been cooperating with governments and industry associations in many countries and regions, including the United States, South Korea, Japan, and the European Union, on 5G.

The IMT-2020 (5G) Promotion Group plays a leading role in 5G development, enabling China to own a larger share of the intellectual property behind 5G universal standards; as of May, 30% of international patents held by Chinese companies were related to 5G connectivity standards.

In addition, the IMT-2020 (5G) Promotion Group conducted its own 5G trials and completed the third phase of non-standalone (NSA) trials based on 3GPP Release 15 standards in October 2018.

China's National Development and Reform Commission has issued 5G licenses to three domestic licensed operators and reduced the fee per megahertz for 5G licenses. At the same time, the fees for the first three years will be waived, and full fees will be restored after the license is issued for seven years.

The issuance of commercial 5G licenses comes shortly after MIIT issued 5G trial spectrum licenses to accelerate 5G commercialization in 2020. In December 2018, MIIT issued low- and mid-range 5G test frequency licenses to three state-owned mobile network operators, allocating different frequency bands to each MNO: China Mobile received spectrum licenses in the 2.6GHz and 4.9GHz bands, China Unicom received spectrum in the 3.5GHz to 3.6GHz band, and China Telecom received spectrum in the 3.4GHz to 3.5GHz band.

Then in June 2019, the Ministry of Industry and Information Technology opened the 5G commercial licenses originally planned to be issued in October to operators in advance to accelerate the commercial deployment of 5G.

China's 5G technical standards

Standards: The 5G standalone (SA) architecture is the main deployment target in China, but operators are also testing SA (standalone) and NSA (non-standalone) architectures.

China is promoting SA specifications to ensure the construction of state-of-the-art infrastructure. The SA approach requires a large amount of upfront investment to build a new 5G network, including base stations, backhaul links, and core networks. SA 5G networks enable 4G and 5G services to run in parallel, eliminating the complexity of LTE integration and facilitating economies of scale.

On the other hand, the NSA model utilizes existing infrastructure and is supplemented by targeted small-cell deployment in high-density areas, allowing it to reach the market faster than the SA model.

This is why, although China initially focused on the SA model, it also adopted the NSA model in order to speed up 5G deployment.

Spectrum: China will first launch low-frequency 5G and supplement it with high-frequency. Compared with previous networking technologies, 5G networks require a large number of adjacent spectrum blocks in the millimeter wave spectrum and mid-frequency bands to fully realize their potential.

High-band spectrum: So far, no commercial millimeter wave spectrum has been allocated for 5G, although the Ministry of Industry and Information Technology approved two millimeter wave bands, 24GHz to 27GHz and 37GHz to 42GHz, for research and testing in July 2017.

China is expected to allocate spectrum in the mmWave band by 2020 or 2021, by which time it could approach the leading country, the United States, in the amount of mmWave spectrum available for commercial mobile services.

Mid-band spectrum. China has allocated 300 MHz of mid-band spectrum to operators for testing, ranking third among countries in terms of spectrum testing, after Spain and Italy. It is expected that by the end of 2020, China will have about 500 MHz of mid-band spectrum available for use.

Three major network operators in China: 5G layout

China has conducted 5G trials in more than 100 cities since 2016. To celebrate the 70th anniversary of the founding of the People's Republic of China, China's three major state-owned network operators launched the first phase of 5G commercial services in 40 cities in China on October 1, 2019. Each operator will have 30,000 to 50,000 base stations deployed in 40 cities, with base station construction provided by ZTE, Huawei and Ericsson.

China Mobile Communications

Overview: China Mobile is the world's largest wireless network operator (by subscribers and revenue) and has been at the forefront of 5G technology development.

China Mobile participated in the launch of the Shanghai 5G trial network, which covers the entire Hongkou District, the world's first area with both 5G and gigabit broadband coverage, and is equipped with the first railway station with a 5G digital indoor system (DIS). China Mobile also used the 5G SA NR standard to achieve the world's first holographic video call and assisted in China's first 5G-based remote brain surgery. China Mobile's 5G capital expenditure in 2019 was approximately RMB 17.2 billion (approximately US$2.5 billion), exceeding the total 5G capital expenditure of China Telecom and China Unicom.

Operator 5G-related financial analysis:

Wireless network users. At the end of 2018, China’s largest operator had 925 million users, accounting for 60% of China’s connections.

Wireless network revenue. In 2018, the company's mobile business revenue reached 492 billion yuan (about 71 billion U.S. dollars), a year-on-year decrease of nearly 2%.

Capital expenditure: In 2018, China Mobile's capital expenditure was RMB 167 billion (approximately US$24 billion), a year-on-year decrease of 6%.

In December 2018, following the approval by the Ministry of Industry and Information Technology to adopt the 2.6GHz and 4.9GHz frequency bands nationwide, China Mobile began conducting 5G pre-commercial trials and application trials in 17 cities in 2019. According to Wang Xiaoyun, general manager of China Mobile's technology department, operators are using these trials to conduct real-time tests of 5G-authorized applications that were previously conducted in laboratories to resolve some technical difficulties in commercial use.

China Mobile is preparing to launch its own internally developed 5G devices, including the Forerunner One 5G mobile smart terminal released at MWC 2019. After obtaining a 5G commercial license in June this year, China Mobile announced plans to purchase 10,100 smartphones from five domestic manufacturers, including Huawei, ZTE, Xiaomi, Oppo and Vivo, for 5G testing.

As China enters the 5G era, China Mobile aims to gain a firm foothold in the Internet of Things.

China Mobile IoT, a subsidiary of China Mobile, had 551 million IoT connections at the end of 2018, increasing its IoT connections by 58% (about 322 million) in 2018 alone. For context, this is 5.5 times the total number of IoT services provided by China Telecom at the end of 2018 (100 million). The company has partnered with companies such as Singtel, Etisalat, Vodafone, NTT DOCOMO and AT&T to further enable global business customers to connect and deploy their assets and products in China and around the world.

China Mobile has also used its expertise to build a 5G highway in the central Chinese city of Wuhan, which includes 5G applications such as smart toll booths and real-time traffic forecasts. China Mobile has deployed 31 5G base stations in Wuhan and plans to install 2,000 more by the end of 2019.

China Mobile's 2.6GHz spectrum will save the company money, as the lower frequency band is usually used for 4G but can also be used for 5G. Compared with the higher-band spectrum that the Ministry of Industry and Information Technology has licensed to China Unicom (3.5GHz-to-3.6GHz) and China Telecom (3.4GHz-to-3.5GHz), China Mobile's lower-band spectrum has wider regional coverage.

This will effectively reduce China Mobile's total cost of deploying new networks and provide 5G services to more users than its competitors. China Mobile invested approximately RMB 150 billion (approximately US$21.7 billion) in capital expenditures in 2019 - a year-on-year decrease of more than 10% from 2017 and a decrease of nearly 16% from 2016.

China Unicom

Overview: China Unicom is the second largest operator in China and the first operator in China to launch public 5G trial services in the country.

In 2019, China Unicom added another 8 billion yuan (about US$1.2 billion) to its budget for 5G services on top of its capital expenditure of 58 billion yuan (about US$8.4 billion).

Operator 5G-related financial analysis:

Wireless network users. As of the end of 2018, the operator had 320 million mobile subscribers, accounting for nearly 21% of the national user base.

Wireless network revenue. In 2018, operators’ mobile service revenue grew 5.5% year-on-year to RMB 165.1 billion (US$23.9 billion).

Capital expenditure. In 2018, China Unicom's capital expenditure reached RMB 44.9 billion (US$6.5 billion), an increase of nearly 7% year-on-year.

In April 2019, China Unicom's 5G commercial network test achieved full coverage in 7 cities, and provided partial coverage in 33 other cities through hotspots.

In December 2018, the Ministry of Industry and Information Technology allocated the 3.5GHz to 3.6GHz frequency band to China Unicom. Therefore, China Unicom's 5G service initially relied entirely on the mid-band spectrum. In order to promote commercial trials of 5G networks, the operator is providing 5G services to specific users and providing devices that can access 5G to encourage everyone to join the 5G service.

Devices: China Unicom plans to eventually support 15 smartphone models and consumer electronic equipment (CPEs) from more than a dozen brands, including Huawei, Oppo, vivo, Xiaomi, and ZTE.

China Unicom will support a range of 5G-driven medical applications and promote changes in the medical ecosystem at home and abroad.

China Unicom helped build Zhuhai's first 5G smart hospital island base, Guishan Island Smart Hospital, to provide remote high-end medical resources and treatment methods for patients in remote areas. Guishan Island Smart Hospital is more than an hour away from the nearest city center hospital and is the first 5G center to provide real-time professional diagnosis remotely from mainland hospitals. Just one month later, China Unicom supported remote ultrasound scans of patients 60 kilometers away: its 5G network enables doctors to remotely operate and monitor medical services through robotic arms and large screens.

China Unicom has established a 5G Application Innovation Alliance, which consists of 32 industrial enterprises with 5G applications. The alliance's main initiatives include raising 10 billion yuan (US$1.4 billion) to incubate 5G-related projects and helping 20 professional companies in the 5G industry chain. The operator has developed a 5G International Cooperation Alliance to explore international 5G roaming services with Telefonica, NTT, Orange and BT Group. China Unicom has also established a 5G Joint Innovation Laboratory to work with partners to explore and demonstrate 5G applications in 10 key industries such as new media, telemedicine, industrial Internet, and Internet of Vehicles.

China Telecom

Overview: China Telecom is eyeing 2019 for pre-commercial 5G trials and expects to build around 200,000 5G base stations by the end of the year – allocating RMB 9 billion (US$ 1.3 billion) of its RMB 78 billion (US$ 11.3 billion) capital expenditure in 2019 for 5G networks.

Operator 5G-related financial analysis:

Wireless network users. As the third largest operator in China by the end of 2018, it had 303 million users, accounting for just over 19% of the country’s users.

Wireless network revenue: In 2018, China Telecom’s mobile business revenue was 167.7 billion yuan (US$24.2 billion), up 9.1% from the previous year.

Capital expenditures. In 2018, capital expenditures were RMB 74.9 billion (US$10.8 billion), down 15.5% year-on-year—2018 was the third consecutive year of capital expenditure declines.

In December 2018, the Ministry of Industry and Information Technology allocated carrier spectrum in the 3.4GHz to 3.5GHz band, and the network trial will initially rely entirely on mid-band spectrum. SA (independent network group) is the company's main goal, but NSA (non-independent network group) and SA (independent network group) scale trials will also be conducted.

China Telecom has made strategic deployments in the fields of automobiles, manufacturing and environmental protection through 5G technology. In May 2019, China Telecom and BAIC Group signed a strategic cooperation agreement to cooperate in the fields of 5G, intelligent networks, smart logistics, new retail, data communication technology and information infrastructure to jointly build an intelligent connected vehicle (ICV) ecosystem. China Telecom also participated in the development of a trial run of a 5G-powered remote control car, during which the remote operator was able to control the car by watching real-time feedback on road conditions supported by the 5G network.