The first call was made to speed up 5G commercial use

5G commercial use is targeted for 2020, and all parties in the industry chain are taking frequent actions. On April 2, ZTE announced that it had successfully made the first 5G call in China and officially opened an end-to-end 5G commercial system scale field site. At the same time, the first 5G international standard version will be officially released in June this year. As the core technology of future communications, artificial intelligence and the Internet of Things, the attractive market prospects of 5G are prompting companies to accelerate product implementation.

Gearing up

On April 2, ZTE officially announced that it had cooperated with China Mobile Guangdong Company to successfully make the first 5G call in China based on the 3GPP R15 standard in Guangzhou, and officially opened an end-to-end 5G commercial system scale field site. It is reported that the first 5G call made this time is based on ZTE's global 5G end-to-end system for commercial use and complies with the latest 3GPP R15 standard.

ZTE joined China Mobile's 5G Joint Innovation Center in 2016. The Pre 5G Massive MIMO jointly created by the two parties has been commercialized on a large scale. In 2017, the two parties jointly defined the 5G pre-commercial technical specifications, built the Guangzhou 5G pre-commercial experimental network, completed a number of key tests, and verified the coverage, rate, capacity and other system performance indicators of the 3.5GHz frequency band 5G new air interface prototype and 5G key technical solutions.

Coincidentally, Huawei's rotating chairman Ken Hu said last week: "As far as 5G is concerned, end-to-end technology has basically matured and the standards are ready. Based on this, we believe that 5G is now ready to start."

According to reports, Huawei has conducted technical tests with 30 operators around the world and built pre-commercial networks. It is currently focusing on 5G end-to-end solutions and took the lead in demonstrating them at this year's Barcelona Communications Exhibition. "We plan to launch 5G smartphones in 2019, which is the focus of the end-to-end solution. Now is the stage of large-scale product investment in 5G. Huawei invested 4 billion yuan in 2017 and will further increase investment in 2018," said Hu Houkun.

The three major operators play a vital role in the development of 5G in China. In addition to the cooperation with ZTE, China Mobile also released 5G commercial product prototypes and test results, and clarified the "End-to-End Technical Requirements for 5G Large-Scale Trials". China Mobile previously officially announced the 2018 5G large-scale trial plan - field tests will be carried out in five cities, including Hangzhou, Shanghai, Guangzhou, Suzhou, and Wuhan, with more than 100 5G base stations built in each city; 5G business and application demonstrations will be carried out in 12 cities or regions, including Beijing, Xiongan New Area, Chongqing, and Lanzhou.

Last month, China Unicom announced the most accurate 5G timetable so far: 5G network trials in 2018, pre-commercial use in 2019, and official commercial use in 2020. In terms of 5G trials, China Unicom submitted an application to the Ministry of Industry and Information Technology in January this year, planning to conduct 5G trials in seven cities or regions including Beijing, Nanjing, and Xiongan New Area.

According to China Telecom's plan, small-scale 5G field trials will be carried out in 2017-2018, and large-scale and pre-commercial trials will be carried out from the second half of 2018 to 2019. 2020 is the time for the official commercialization of 5G. By then, China Telecom will deploy 5G on a large scale in key cities and key areas and carry out commercial use. At present, China Telecom has announced that the 5G innovation demonstration network trial will be launched in six cities or regions, including Lanzhou, Chengdu, Shenzhen, Xiong'an New Area, Suzhou, and Shanghai, with 6-8 stations in each city. At present, it is mainly conducting wireless networking capabilities and solution verification in the 3.5GHz frequency band.

The wind rises here

5G is an extension of 4G, but unlike 4G, 5G is not a single wireless access technology, but a truly integrated network. Compared with 3G/4G technology, 5G technology has high transmission rate, large network capacity, and short latency. It can improve network energy efficiency by more than 100 times, provide basic resource support for the Internet of Everything, and will also bring huge industry profits.

According to the "China 5G Industry Development Prospects Forecast and Industry Chain Investment Opportunity Analysis Report" released by the Prospective Industry Research Institute, starting from the official commercialization of 5G in 2020, it is expected to drive about 484 billion yuan in direct output and 1.2 trillion yuan in indirect output that year. By 2030, the direct output and indirect output driven by 5G will reach 6.3 trillion yuan and 10.6 trillion yuan respectively, with an average annual compound growth rate of 29% and 24% respectively.

From the perspective of output structure, in the early stage of 5G commercialization, equipment manufacturing income brought by network equipment investment will become the main source of 5G direct economic output. It is estimated that in 2020, the total revenue of network equipment and terminal equipment will be about 450 billion yuan, accounting for 94% of the total direct economic output.

Once the 5G network is officially put into commercial use, it will not only usher in a new round of development for the communications industry, but will also drive multiple emerging industries with a scale of trillions of dollars. For example, the advancement of 5G will greatly accelerate the penetration of in-vehicle networking terminals. Data shows that the global market share of connected cars is expected to reach 350 million in 2022, accounting for 24% of the market, and the sales of new cars with networking functions will reach 98 million, accounting for 94% of the market.

According to statistics from the China Academy of Information and Communications Technology, as of August 2017, the number of China Unicom's Internet of Vehicles users exceeded 20 million, the number of China Telecom's Internet of Vehicles users was 11.06 million, and the number of China Mobile's Internet of Vehicles users was 27 million.

In addition, 5G's two characteristics of high reliability and low latency and low power consumption and large connection will effectively promote a variety of applications such as telemedicine, industrial control, remote driving, smart cities, smart homes, etc. into people's lives.

Competition in the global 5G industry will become increasingly fierce. According to Dr. Wang Tan from the National Radio Monitoring Center, in the evolution of mobile communications, my country has continuously changed its role and has successively experienced the stages of "2G tracking, 3G catching up, and 4G synchronization". In the 5G era, my country took the lead in establishing the IMT-2020 (5G) Promotion Group in the Asia-Pacific region and actively exported its views to international standard organizations such as the International Telecommunication Union.

Due to the early development of R&D and the formation of extensive industrial cooperation, China's 5G technology level is now comparable to that of foreign companies in many fields, and even has obvious advantages in some key technologies. According to previous assessments by international organizations, my country has also acquired the ability to lead the formulation of 5G standards.

High cost

According to the work arrangements of relevant international standard organizations, the latest version of 5G international standards will be officially released in June 2018. By then, major global telecom operators, telecom equipment manufacturers, mobile device manufacturers and other upstream and downstream enterprises in the industry chain will officially launch 5G commercial network deployment based on 5G international standards. Industry insiders generally believe that the release of the latest version of 5G international standards means that the global 5G industry will start running.

It is understood that since October last year, major telecommunications companies and multiple standard proposers in various countries have successively submitted 5G standard plans to relevant international standard organizations, and all countries have expressed that they will follow the unified standards to formulate 5G technical standards. According to the work arrangements of relevant international standard organizations, at the end of last year, the above-mentioned 5G standard plans will be frozen. After consultation among all parties, the first 5G international standard will be formulated on this basis and officially announced in June this year.

However, for enterprises, the new generation of mobile communication technology brings business opportunities, but also brings considerable operating costs. Wu Chunyong, CEO of Fusion Network, pointed out that the investment payback period of a telecommunications network is often 7-8 years. The time when operators built 4G was only about five years away from the last 3G network. This means that before 3G is profitable, operators started 4G construction, and before the 4G investment payback period is over, 5G is being launched in a hurry. Such a huge "overdraft construction" will make operators feel heavy construction and operation pressure.

According to data from the Forward-looking Industry Research Institute, the total network investment is expected to reach US$411 billion, or about RMB 2.8 trillion, from 2020 to 2030, which is 3.5 times that of 4G networks. Wei Leping, director of the Telecommunications Technology Committee of China Telecom Group Corporation, pointed out that based on the acceptable cost of operators, the total network investment is expected to be US$180 billion, or about RMB 1.22 trillion, from 2019 to 2025, which is 1.5 times that of 4G network investment.

Li Zhengmao, vice president of China Mobile, said at the 2018 Mobile World Congress that 5G network construction is difficult and requires large investments. Due to factors such as high commercial frequency bands and difficulty in adding new sites, it is very difficult to achieve continuous network coverage even if mid-frequency bands are used. In terms of cost, large-scale antennas make 5G base stations more expensive, and core networks and transmission networks need to be newly built or renovated on a large scale. All operators need to explore low-cost solutions.

"At present, the development of 5G is still in the stage of technological innovation and requires increased investment. It is too early to talk about investment recovery now," said Hu Houkun.

More importantly, as the countdown to 5G commercialization begins, the research and development of 6G has also been put on the agenda. According to Miao Wei, Minister of Industry and Information Technology, in an interview last month, my country's research on 6G has already started at the end of the year and the beginning of the next year.