In the face of the epidemic, 5G construction should not only be accelerated, but also increased!

Since the outbreak of the novel coronavirus pneumonia, people's production and life have been greatly affected, and it has also brought shocks to China's and even the global economy and ICT market. However: "Life can be affected by the epidemic, but we must not be defeated by it!"

Under the premise of good epidemic prevention and control, it is also crucial to resume work and production in an accurate and orderly manner and to promote economic and social development. The information and communication industry is a strategic, basic and leading industry that fully supports economic and social development. The information and communication industry's good work in resuming work and production can not only have a good demonstration and driving effect on the resumption of work and production of enterprises across the country, but also play an important role in supporting and guaranteeing the work. Among them, 5G will play an important role.

How operators promptly assess the impact of the epidemic, formulate and optimize 5G network construction plans has become the key to effectively leveraging 5G construction to "stabilize investment" and drive the development of the industrial chain.

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How important is 5G?

Under the shadow of the epidemic, 5G plays an increasingly important role both for the information and communication industry itself and for the overall economic and social development.

On the one hand, 5G is crucial in promoting economic and social development, especially 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.

On the other hand, focusing on the ICT industry itself, 5G is a "big project" that affects the rise and fall, and even the survival, of manufacturers in the information and communication industry chain.

5G is increasingly becoming a long-tail market, involving multiple links in the industry chain, including operators, equipment manufacturers, chip manufacturers, mobile terminal manufacturers, foundry manufacturers, software manufacturers, application manufacturers, service manufacturers, etc. To put it bluntly, many people are counting on the 5G project to "support their families."

In special periods, how do operators formulate and optimize their 5G network construction plans?

It can be seen that 5G is really important. As the main force in 5G construction and operation, operators’ timely assessment of the impact of the epidemic and how to formulate and optimize 5G network construction plans are of great importance for “stabilizing investment” and driving the development of the industrial chain.

Looking back at the time when 3G was commercially available, it coincided with the global financial crisis. At that time, the capital expenditure of the telecommunications industry became an important driving force for the industry to go against the current. But now, although the three major operators are actively promoting the resumption of 5G construction and production, and accelerating the pace of 5G, especially independent networking construction, compared with the first year of 3G/4G large-scale commercial use, the current 5G network construction volume is not high in comparison - China Unicom is unswervingly implementing the co-construction and sharing of 5G networks, requiring provincial companies to highlight key points and accelerate 5G construction. In the first half of the year, it will strive to complete the construction of 100,000 base stations in 47 cities and cities with China Telecom, and strive to complete the construction of 250,000 base stations across the country in the third quarter, completing the annual construction target one quarter ahead of the original plan; China Mobile has fully completed the construction of the first phase of 5G projects, and has recently fully launched the equipment testing and procurement of the second phase of 5G projects. China Mobile strives to achieve the goal of 300,000 5G base stations by the end of 2020.

Although the three major operators have stated that they will accelerate the construction of 5G networks, the current scale of 5G network construction is still not strong enough for the rapid development of the industry and the promotion of investment, which is mainly reflected in the following three aspects:

First, user experience must first ensure wide coverage before a high-quality network can be possible.

In order to achieve wide coverage, increasing the scale of network construction, especially the number of base stations, is the most direct and effective path.

In the face of a series of negative impacts brought about by the epidemic and the very high cost of 5G network construction, some operators who are in the pain period of performance continue to choose to save 5G investment costs through innovative methods such as co-construction and sharing. This is understandable for listed companies that need to assess the return on assets, but whether the number of 5G base stations co-constructed and shared by China Telecom and China Unicom can meet the needs of wide coverage, user experience and market competition is still worth discussing. Co-construction and sharing is a good thing in itself, but can the total number of 5G base stations jointly built by the two companies be considered to be further expanded? At the same time, as the world's largest operator, China Mobile should also go further in the construction of 5G base stations and play a more active role as a model.

Second, the market pie will only get bigger if players are full and have more energy.

The tempting 5G cake is a long-awaited feast for players in all links of the industry chain, including system equipment vendors. If the construction volume and investment of 5G base stations are not enough to support the survival and growth of industry players, the pressure will be transmitted to the entire industry chain. For example, the market generally predicts that due to co-construction and sharing, the scale of 5G base station construction of the two operators of China Telecom and China Telecom will shrink, and 5G investment will be compressed at the same time. The performance of major equipment manufacturers including Huawei, ZTE, Ericsson, Nokia, and supporting infrastructure suppliers such as China Tower will inevitably be affected to a certain extent.

In the current volatile international environment, the Chinese market should become a solid backing for national enterprises such as Huawei, ZTE, and China Information and Communications Technology, and should also become an open market for foreign equipment manufacturers such as Ericsson and Nokia to continue to increase their investment in China, so as to play a more positive role in "stabilizing investment" and driving the development of the industrial chain. Operators are indeed facing great investment pressure, but they should overcome difficulties, actively strive for more policy support, and resolutely expand the 5G market pie.

Third, 5G is not just 1G more than 4G, but is aimed at thousands of industries and the vast ocean.

The driving effect of 5G on China's economy is not only reflected in the superficial investment in network construction, but more importantly, it lies in combining with vertical industries to enable the digital transformation of thousands of industries and jointly create digital economic value.

Just like a coin has two sides, this epidemic has both dangers and opportunities. Operators should promptly sort out and summarize the role of 5G in epidemic prevention and control, accelerate the promotion of new services, new models, and new applications, seize the development opportunities of 5G in online education, online medical care, remote office, intelligent manufacturing, and Internet of Vehicles, release emerging consumption potential, expand online consumption, and promote information consumption, especially in actual combat, test and innovate industry use cases that can truly enable the digital transformation of the industry and can be used at critical moments, and contribute to 5G's true march towards the stars and the sea.