Is 5G cooperation the starting point for operators’ value return?

After the 5G licenses were issued, the market generally predicted that China Unicom and China Telecom would cooperate to build 5G networks. A few days ago, China Unicom announced a cooperation announcement with China Telecom to build and share 5G networks. At the Tianyi Smart Ecosystem Expo held on September 19, China Telecom Chairman Ke Ruiwen said that the two sides have reached a consensus on 5G access networks and transmission networks, and the group can use the money saved to innovate 5G technology and services in order to provide differentiated services to customers.

It should be said that what the chairman of China Telecom said was very realistic. Co-construction and sharing will indeed save money and energy. These saved resources can be put to better use, that is, "saving money for business and technological innovation."

[[277905]]

Why are operators raising the banner of cooperation again in the 5G era?

In the 3G/4G era, the biggest regret of operators is that they failed to develop Internet applications and instead became communication pipelines. The dilemma of the three major operators with increasing volume but no increase in revenue shows no sign of being alleviated.

Why are operators unable to provide good Internet services? There are many reasons, but the important factors can be summarized into two: one is the lack of cooperation awareness, and the other is the lack of money.

There is a consensus that operators lack cooperation. In reality, the three major operators have caused too many grievances in their fight for new customers, and it is even more difficult to talk about cooperation. Whether it is address book applications, mobile payments, social software, or converged communications, VoLTE, video ringtones, it is not uncommon for operators to "undermine each other", and the final result is to "fatten" Internet companies.

With the development of 5G, operators have begun to change their minds. Network co-construction and sharing can greatly enhance the cooperation awareness among operators. China Unicom cooperates with China Telecom, and it is likely to cooperate with China Mobile in the future. Together with China Broadcasting Corporation, operators are very likely to form a closer competitive and cooperative relationship, and use the data islands between Internet giants to do their own general business, thereby realizing value return.

In addition, many people may question that operators are short of money, but this has always been a big problem for China Telecom and China Unicom.

For example, China Mobile has developed a series of Internet applications such as Fetion, Hebao, and Migu Video. Although they are not very popular in the market, they have occupied a certain space and popularity. In contrast, most of the Internet businesses of China Unicom and China Telecom have not been successful. The main difference here is funding.

China Mobile's revenue from 2015 to 2018 was 668.3 billion yuan, 708.4 billion yuan, 740.5 billion yuan, and 736.8 billion yuan, respectively, while China Unicom could only maintain 270 billion yuan and China Telecom was around 360 billion yuan. China Mobile's revenue is much higher than the sum of China Telecom and China Unicom. Obviously, China Mobile has more financial resources to "burn money" on various applications, but facing the Internet giants who spend money like water, China Mobile is still helpless, and the final market effect is not good, not to mention China Telecom and China Unicom, which are short of money.

China Mobile's financial report shows that from 2014 to 2017, China Mobile's 4G network investment was 80.6 billion yuan, 79.1 billion yuan, 83 billion yuan and 65.7 billion yuan respectively. By 2018, in just five years, China Mobile's investment in 4G networks had exceeded 360 billion yuan. In comparison, China Unicom's 4G network investment from 2015 to 2017 was 33.5 billion yuan, 25.9 billion yuan and 18 billion yuan, and China Telecom's 4G network investment from 2015 to 2017 was 49.3 billion yuan, 41.1 billion yuan and 34.4 billion yuan. China Mobile's investment exceeded the sum of the two companies' investments.

Relevant research institutions predict that the number of 5G base stations will be twice that of 4G in the future, and the main investment of operators in 5G network construction may reach 1.23 trillion yuan, an increase of 68% over 4G investment. Under the huge pressure of revenue and investment, operators can only truly reduce costs and have sufficient capacity to develop 5G applications through co-construction and sharing.

Ke Ruiwen said that 5G is completely different from 4G, 3G and 2G. 5G is a more open network, so it is an inevitable trend to carry out 5G co-construction and sharing. The industry also hopes that the three operators can really work together to build and share, free up their hands to do a good job in 5G applications, create new business models, truly benefit the people, truly benefit the long-term and healthy development of the industry, and truly make due contributions to the development of China's information industry.