In the 5G era, what is the way out for the three major operators that are crying poor?

As 2017 was coming to an end, news about 5G became more frequent. Major media outlets reported the following three major events: "my country released its 5G mid-band spectrum plan, launched the third phase of 5G technology research and development trials, and the first 5G international standard was officially completed and frozen." On December 21, at the 78th plenary meeting of the International Telecommunication Standards Organization 3GPP RAN, the first 5G NR version was officially released, becoming the world's first commercially deployable 5G standard.

The 5G standard successfully caught the tail end of 2017 and was officially born! The birth of this standard has become an important milestone in the 5G standardization process. It also marks that the 5G standard and industry process has entered a substantial acceleration stage, and the time to 5G commercial use is getting shorter and shorter.

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It is a forced opportunity, but also an opportunity. The three major operators are determined not to fall behind.

It is understood that my country has performed particularly well in promoting 5G: in 2017, it announced the completion of the second phase of 5G trials; it was the first to release mid-band frequencies; and its network architecture technology became an international standard. China's role in the global communications field has also changed accordingly, from participating in the formulation of 4G standards to leading some 5G technical standards, and beginning to become the leading force in 5G technical standards. This shows that China's communication technology strength is constantly improving, and its voice in the formulation of communication technology standards has significantly increased! my country is also considered to be the first country to commercialize 5G.

As the main force in 5G network construction, China Mobile, China Unicom and China Telecom, the three major operators, have also successively announced their own construction plans to clarify the next step of 5G progress.

The reporter learned that China Telecom Group has taken the lead in opening 5G pilot base stations in six cities including Xiongan, Shenzhen, Shanghai, Suzhou, Chengdu and Lanzhou; China Mobile, as the only rapporteur and chief editor of the protocol, has become the setter of the 5G standard wireless air interface technology standards; China Unicom has taken the lead in three 3GPP standard projects, and has jointly completed field functional verification with Huawei, ZTE, Nokia and other manufacturers, actively preparing for the commercial use of 5G.

The competition for 5G cake is full of difficulties

As 5G development is in full swing and has become an irreversible development trend, operators, as the pioneers and main force, are under great pressure and face a double backlog.

(1) Funding shortage is the biggest obstacle. The current situation of "increased volume but not increased revenue" is a true reflection of the three major operators. According to data from the Ministry of Industry and Information Technology, my country's total telecommunications business volume increased by 69% year-on-year in 2017. Compared with the high-speed growth of business volume, the growth rate of business revenue in the telecommunications industry can only be described as dismal. From January to November, business revenue increased by only 6.5% year-on-year. On the one hand, compared with 2G/3G/4G, 5G uses a higher frequency band, and the coverage range of a single base station will become smaller. Simply put, under the same coverage area, the number of 5G base stations will far exceed that of 4G. According to Wei Leping, director of the China Telecom Science and Technology Committee, the number of 5G base stations may be 2 to 3 times that of 4G. This means that the investment in network construction of 5G is much higher than that of 3G and 4G. On the other hand, 4G was not officially commercialized until 2014, and the current consensus in the industry is: 5G pre-commercialization will be realized in 2019 and official commercialization will be realized in 2020. Compared with 2G, which has been developed for 10 years and has not yet been decommissioned, the cost recovery period left for 4G is too short, and funds are difficult to turn around. According to relevant research reports, my country's 5G full coverage is expected to have a cumulative investment of about 2.3 trillion yuan, which is four times the investment scale of 4G. Among them, China Mobile is expected to invest 1 trillion yuan in 5G, China Telecom will invest 662.8 billion yuan, and China Unicom will invest 577 billion yuan.

There is no doubt that funds will become a huge burden for the three major operators to carry out 5G construction. As 5G draws closer, funds are also the most urgent problem that needs to be solved.

In response to this, the industry has called for the government to increase its policy support for operators and create a good capital turnover environment for operators, otherwise it will be difficult for operators to continue investing in the 4G and 5G industries in the short term.

(2) On November 28, 2017, the National Development and Reform Commission issued the “Notice on Organizing and Implementing the 2018 New Generation Information Infrastructure Construction Project”, requiring:

• It is clearly stated that 5G network construction will be carried out in no less than five cities in the frequency band below 6GHz, with no less than 50 5G base stations in each city to form continuous coverage in densely populated urban areas;
• The number of 5G terminals in the entire network shall be no less than 500;
• Provide users with 5G broadband data services with a speed of no less than 100Mbps and millisecond-level latency;
• At least two types of typical 5G services and applications will be developed, including 4K high-definition, augmented reality, virtual reality, and drones.

At the same time, the NDRC stated that the three major operators' 5G large-scale network construction and application demonstration projects should focus on municipalities, provincial capitals, and major cities in the Pearl River Delta, Yangtze River Delta, Beijing-Tianjin-Hebei region, and carry out 5G large-scale network construction.

To a certain extent, this has put considerable pressure on operators.

Time is short and the task is heavy. Where is the way forward?

In fact, not only are operators actively preparing for 5G construction, but equipment manufacturers have also made outstanding progress in 5G, especially Huawei and ZTE. Huawei is at the forefront of the world in terms of standard influence, product development, and pre-commercial deployment. In September 2017, Huawei completed the 5G core network technology verification test of China Mobile Research Institute with excellent results, laying a solid foundation for the future large-scale commercial use of 5G. ZTE is also not far behind, and has jointly launched a 4.5GHz band 5G substantive experiment in Shibamon, Minato-ku, Tokyo with Japan's SoftBank. At the same time, it has also cooperated with Italian operators WindTre and OpenFiber to build Europe's first 5G pre-commercial network in the 3.6-3.8GHz band.

As a first-tier domestic manufacturer, Huawei has made rapid progress in 5G. It is understood that Huawei is promoting 5G pre-commercial use worldwide, including Beijing, Shanghai, Seoul, Milan, Tokyo, Vancouver, Toronto, London and other places. In November, ZTE, China Mobile and Qualcomm jointly announced the successful launch of the world's first end-to-end 5G new air interface system based on the 3GPP R15 standard. In addition, China Unicom has completed the field function verification in cooperation with Huawei, ZTE, Nokia and other manufacturers, and started the construction of 5G field test environment in core cities such as Shanghai and Shenzhen to promote the maturity of the industrial chain. Huawei and ZTE's voice in 5G has been greatly improved, and they have begun to be favored by international operators.

In this era where the Internet dominates the economy, 5G is of great significance. With its high speed, large capacity and low latency, it will stimulate the development of the Internet and wireless Internet industry. Therefore, whoever obtains advanced technology first will occupy the commanding heights. In order to gain the absolute right to speak in the 5G era, facing many difficulties, even if the road is long and difficult, operators must rise to the challenge!

To achieve the goal of 5G commercialization in 2019, the three major operators and equipment manufacturers really have little time left. In the future, whether the two sides will adopt a separate action strategy or further strengthen cooperation to promote 5G R&D and commercial development, everything is unknown!