From 4G to 5G, is there only a 1G gap? Four major issues that need to be solved for 5G commercial use

Recently, the State Council issued the "Guiding Opinions on Further Expanding and Upgrading Information Consumption to Continuously Release Domestic Demand Potential", proposing to fully release domestic demand potential, deploy the expansion and upgrading of information consumption, accelerate the fifth-generation mobile communication (5G) standard research, technical trials and industry promotion, and clearly stated that it will strive to launch 5G commercial use in 2020.

In fact, in addition to China, many countries around the world have released 5G roadmaps: Russia has always regarded 5G development as one of its priorities. According to the plan, the first batch of 5G users will appear in the capital Moscow in 2021; the British government announced its 5G development strategy in March 2017; in addition, South Korea intends to take the lead in using 5G communications during the 2018 Winter Olympics; and as the host of the 2020 Tokyo Olympics, Japan plans to officially provide 5G communication technology services in 2020...

Just as everyone is ready to embrace the 5G era with open arms, has anyone ever thought about whether 5G is really that easy to implement? Is there only a 1G gap from 4G to 5G? The answer is obviously no. In fact, the commercialization of 5G technology still faces multiple challenges.

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It is still difficult to unify global communication standards

Industry standards have always been a headache for many emerging industries, and 5G, the next generation of communication technology, is no exception. In July this year, China, the United States, Europe, Japan, and South Korea will unify communication standards around the next generation of ultra-high-speed wireless communication 5G technology, and plan to reach an agreement on frequency standards around 2020 in order to popularize common equipment and related products in the global market.

However, in order to compete for the communications industry and out of considerations of national interests, the 5G standard will inevitably cause a big competition during the unification process. Who doesn't want to take the initiative and occupy a dominant position in the 5G market? From this point of view, the unification of global communications standards may still have a long way to go.

Spectrum resource shortage problem still exists

As we all know, in the field of mobile communications, spectrum resources are the core resources that drive industrial development. For now, although Xiaolingtong has made way for operators' 4G spectrum at a faster pace, the spectrum resource problem has not been completely solved. With the advent of the 5G era, the market demand for spectrum resources will continue to grow, and the shortage of spectrum resources will become more serious.

Data shows that my country's spectrum demand is expected to reach 1490MHz-1810MHz in 2020; considering that the potential candidate frequency bands for IMT in the future mainly include 3300-3400MHz, 4400-4500MHz, 4800-4990MHz and 3400-3600MHz, it is not difficult to see that the contradiction between supply and demand of spectrum resources in the 5G era will be more prominent.

The contradiction between high investment and slow return

Earlier, Morgan Stanley listed China Mobile and China Unicom as "not recommended investment stocks among Asian telecom stocks" because "the capital investment in 5G business is too large and its return rate is low."

Indeed, to meet the needs of the 5G era, operators will adopt higher frequency bands and nationwide spectrum, which will undoubtedly significantly increase capital investment. Morgan Stanley predicts that China Mobile's capital expenditure will reach 480 billion yuan between 2019 and 2023. Since 5G is not expected to be commercialized quickly after 2020, China Mobile's internal rate of return will eventually be lowered. At this stage, the contradiction between investment and return is obviously difficult to reconcile. Some companies will be more cautious about 5G investment, or even withdraw and wait and see, which is not conducive to promoting the rapid growth of 5G.

Faster speeds bring higher data rates

Putting aside the above technical and financial issues, for the majority of users, 5G charges are obviously what they are more concerned about. While 5G brings faster network speeds and higher communication quality, will the price soar?

It is important to know that the construction of 5G base stations requires a large amount of capital investment. From this point of view, the data charges will not only decrease but not increase as many consumers expect. Moreover, for operators, increasing data charges can improve performance and achieve greater profits.

However, with the approach of 5G and the intensification of market competition, operators will not only increase investment in technology and funds, but will also reduce prices to win more market share. From this point of view, the growth rate of 5G tariffs in the future will not be too large, and the problem of soaring costs will not exist for a long time.