The curtain is about to be raised on 5G commercial use, will the industry be reshuffled?

Recently, Miao Wei, Minister of Industry and Information Technology, said in an interview with CCTV reporters that temporary 5G licenses will be issued in several cities in 2019, allowing large-scale networking to be realized first in some cities and hot spots, while accelerating the industrialization process of terminals and network construction; by the second half of 2019, mature 5G terminals, including mobile phones and tablets, will be put on the market, and the pace of 5G application in education, medical care, elderly care and other fields will also be accelerated.

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Referring to the 3G and 4G eras, it took 4 months and 8 months respectively from the start of trial commercial use to formal commercial use. It can be said that once the 5G temporary license is issued, it means that the curtain of 5G commercial use has been opened halfway.

Looking back at previous generations of mobile communications, they always lead to a certain degree of reshuffle in the industry, such as operators, equipment manufacturers, terminal manufacturers, etc., and also cause changes in global industry competition. The upcoming 5G industry may be no exception, which is specifically manifested in four aspects.

China's overall 5G industry: from following to collaborating, officially embarking on the global synchronization track.

From 1G to 4G, China's commercialization process lagged behind developed countries and regions. Compared with the world's leading commercial countries or regions, China's 2G and 3G lagged behind by 8 years, and 4G lagged behind by 4 years. In exchange for time, the lagging behind in the commercialization process of mobile communications has resulted in catching up in core technologies and an increase in the right to speak in the international industry. In particular, in the 5G era, China will for the first time achieve synchronization with the world in the field of mobile communications. Relevant enterprises in China's industrial chain will be able to simultaneously grasp the domestic and international markets and more effectively showcase themselves in the 5G market.

Telecom operators: China Mobile's advantage may be difficult to shake.

In the 4G market, China Mobile is already the king, with the number of users and revenue far ahead of China Telecom and China Unicom. In the 5G market, such advantages are expected to continue to be retained. There are three main reasons. First, when 3G/4G were launched, the demographic dividend still existed, while when 5G was launched, the domestic market was basically a highly saturated market. The source of 5G users will mainly be the migration of 4G users. The possibility of users migrating from 4G to 5G in the same operator is much higher than changing operators. Secondly, although in terms of frequency allocation, China Telecom and China Unicom have obtained the 100MHz frequency band near 3.5GHz, where the global industry is relatively mature, while China Mobile has obtained the 160MHz frequency band of 2.6GHz and the 100MHz frequency band of 4.9GHz, where industry support is relatively weak. On the surface, this seems to be the pattern of the 3G era, that is, China Mobile needs to shoulder the responsibility of prospering the industrial chain. But in fact, under the same standard, the workload of different frequency bands is not huge; and China Mobile's scale will also attract strong support from all enterprises in the industry chain; in addition, China Mobile's acquisition of this frequency band has long been expected by the industry, and related work has been carried out in an orderly manner. ***, China Mobile's capital scale is unmatched by the other two operators. In the 5G era, which increases network investment by 40% over 4G, strong capital means that the network quality can be quickly improved to a good level and more users can be attracted.

Equipment manufacturers: The situation for foreign companies is not optimistic.

Since 2018, domestic communication equipment companies such as Huawei have been affected by international politics and faced great impact in the international market. Therefore, the 5G equipment procurement of the three major domestic operators is particularly important to them. It is a challenge and an opportunity. The construction of communication infrastructure has never been a simple business issue. Foreign countries have banned Chinese companies, and the procurement of the three major domestic operators will inevitably tilt towards domestic communication equipment companies. It can be said that foreign manufacturers who were able to occupy a place in the domestic communication equipment market will not be optimistic in this 5G construction.

Terminal manufacturers: The value of technological first-mover advantage is highlighted.

The 3G era relied on assembly, the 4G era relied on design, and the 5G era will rely on the technical background of terminal companies. On the one hand, because various terminal companies are rushing to race in the 5G race, whoever has the technical background, such as chip manufacturing capabilities, will be able to launch terminals that are in the mainstream price range and can be mass-produced. On the other hand, the ZTE incident in 2018 showed the great uncertainty in the future. Only companies with a relatively deep technical background can safely survive possible black swan and gray rhino events.