The 5G test in 2019: How to invest if you don’t want to be left behind? You are in a dilemma!

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Recently, the Ministry of Industry and Information Technology has clarified the 5G operating frequency bands of the three major telecom operators, and senior executives of the Radio and Television Bureau have previously revealed that they have obtained the 5G frequency band operating qualifications. As expected, China's 5G network will issue four 5G licenses within the year.

Under ideal conditions, 5G speed is 100 times faster than 4G, with a peak downlink data rate of 20Gbps and an uplink peak data rate of more than 10Gbps. However, "faster, better, cheaper" has always been a contradiction. The consumption capacity of users and the supply capacity of the industrial chain have far failed to keep up with the rapid advancement of technology.

According to the plan, 5G network will be put into trial commercial use in June 2019. After 6 months of testing, it will be put into large-scale development in December and will be put into large-scale commercial use in 2020. Therefore, for 2019, 5G network is the first year of excitement and anxiety for the entire industry.

How much money will 5G cost?

Without 5G network support, any scenario is just a castle in the air. So, how much do the three major telecom operators that have obtained 5G licenses spend on 5G?

On December 1, the world's first 5G network was put into commercial use in South Korea. China's three major telecom operators are not lagging behind.

In his speech themed "5G connects the new era", Shang Bing, Chairman of China Mobile, mentioned that preparations are being made to establish a 5G joint innovation industry fund with an initial scale of 10 billion yuan to promote the mature development of the 5G industry through fund support and innovation incubation.

According to technical experts from China Mobile, China Mobile's R&D funding for 5G alone is 3 to 4 times that of 4G. At the China Mobile 5G Forum, Zhu Hanwu, deputy general manager of Guangdong Mobile, said that they would invest more than 20 billion yuan in building Guangdong's 5G network. Shang Bing also pointed out that after commercial use in 2020, more funds will be invested in 5G equipment and network construction.

Wang Xiaochu, Chairman and CEO of China Unicom, is cautious about 5G investment. He said that the specific figures of China Unicom's 5G investment are still difficult to predict, mainly because the new 5G technology changes rapidly and the different 5G frequencies also have a great impact on investment, so we still need to wait. Wang Xiaochu emphasized that if there is new investment, it is necessary to pay more financial costs for a period of time.

What’s even more bizarre is that China Telecom has yet to make any public statement on its investment in 5G.

In April this year, the three major operators officially announced the start of 5G network trial launches in 12 cities across the country. These 12 cities are: Beijing, Shenzhen, Qingdao, Hangzhou, Tianjin, Shenyang, Wuhan, Guiyang, Nanjing, Fuzhou, Zhengzhou, Chengdu (other cities are under development). Recently, Huang Yuhong, deputy director of China Mobile Research Institute, revealed that China Mobile is committed to prefabricating MEC into 5G, and has currently carried out pilot projects in more than 20 cities in 10 provinces.

Telecom operators are cautious about 5G investment for two reasons: on the one hand, although the three major operators earn 450 million yuan a day, their net profits are declining; on the other hand, traffic charges continue to decline, and telecom operators seem to have encountered the embarrassment of increasing volume but not revenue.

Faced with the lack of popularity of 5G, where should mobile phone manufacturers go?

According to China Mobile's prediction, during the 5G pre-commercial stage in 2019, there may be more than 30 test and pre-commercial 5G terminals, among which the price of 5G mobile phones is expected to be more than 8,000 yuan, and the price of data terminals may be more than 3,000 yuan.

Wang Hengjiang, deputy general manager of China Mobile Terminal Company, said that by 2020, the price of 5G mobile phones will drop to 1,000 yuan, and data terminals will drop to 500 yuan. When the price reaches 500 yuan, it will be an opportunity for 5G terminals to be widely popularized. This inference makes sense because the 5G industry chain is not mature, and the chip and terminal supply chains are not mature either.

OPPO Vice President Shen Yiren believes that the price of 5G mobile phones "will definitely not be particularly cheap" and even believes that 5G mobile phones are a relatively high-end product because the costs of connecting, debugging, and developing related core components are very high.

When 2G mobile phones first came out, they sold for 30,000 to 50,000 yuan, and when 3G mobile phones first came out, they sold for more than 10,000 yuan. Unlike 3G/4G terminals back then, users were eager to buy 3G and 4G mobile phones in order to enjoy mobile Internet faster in the future. Today, 4G networks basically meet the rigid needs of social networking, games, videos, etc. Will people be eager to try out 5G mobile phones?

The biggest challenge facing traditional mobile phone manufacturers such as Apple, Huawei, Samsung, VO and Xiaomi is how much effort (in R&D, promotion and channels) should be put into developing 5G mobile phones.

If the investment in research and development is insufficient, it may fall behind. According to foreign media reports, Apple has decided to postpone the release of the iPhone that supports 5G networks from the original plan of 2019 to 2020. It can be seen that even Apple is unable to do so.

However, if we go all out on 5G, we may fall into a trap.

At present, domestic mobile phone brands Huawei (including Honor), OPPO, vivo and Xiaomi have entered the "5G Terminal Pioneer Program" launched by China Mobile, and are regarded as the leading camp of domestic 5G mobile phones. They are all expected to launch 5G mobile phones in the first half of 2019. In addition, OnePlus, Lenovo, ZTE and others have also announced 5G mobile phone plans, but due to limited shipments, they are more cautious in R&D investment.

Shang Bing made an optimistic prediction about 5G, saying that in the 5G era, pan-terminals will emerge in an endless stream. "The market space in 2019 is very broad. It is preliminarily estimated that the number of mobile phone replacements will reach 350 million, the number of home smart hardware will exceed 100 million, and the number of industry modules will exceed 300 million.

At the speed of Chinese terminal manufacturers, by 2020, there may be more than 100 5G mobile phones in China, and 5G mobile phones priced at 1,000 yuan may be available in every specialty store. At the same time, if there is a high investment, resulting in huge inventory, it may not be worth the loss. If you want to rely on mobile phones to replicate the success of the 3G and 4G eras in the 5G era, it may be a waste of time.

Unlike 3G, which was all about networks, and 4G, which was all about mobile phones, 5G networks have entered the era of the Internet of Everything. It is no longer a world dominated by operators and mobile phone manufacturers. Telecom operators have long been marginalized, and mobile phone manufacturers can be said to have been eliminated through the test of time. The number of companies that can survive has been reduced from dozens to 3-5, and many more have been eliminated.

Deloitte data shows that the global 5G-driven industry value will exceed 12 trillion US dollars from 2020 to 2035, and China's digital economy accounted for 39% of GDP in 2020. However, we should see that in the 5G era, the 4G networks of the three major operators will not be easily eliminated. After all, 4G licenses have been issued for less than 5 years, and operators have invested hundreds of billions in 4G network construction. They will not easily eliminate 4G networks before the investment is recovered.