Amidst the dawn of the 5G era, Chinese operators have emerged as trailblazers, achieving remarkable triumphs in both the technical and business domains. The forthcoming MWC Shanghai 2023, a magnificent ICT extravaganza scheduled from June 28 to June 30, promises to be an unparalleled event where esteemed executives from telecom operators and leading equipment manufacturers will converge to impart their profound insights on the ever-evolving landscape of the mobile industry.
The industry eagerly awaits this highly anticipated gathering, viewing it as an invaluable platform to witness firsthand China's ingenious approach to 5G technology evolution and the nurturing of a thriving industry ecosystem.
A Four-Year 5G Milestone
In June 2019, China's Ministry of Industry and Information Technology granted commercial 5G licenses to the country's major operators: China Telecom, China Mobile, China Unicom and China Broadnet. Since then, China has made remarkable progress in 5G development, bolstering infrastructure, technological advancements and an expanding industry ecosystem. This growth has fueled the momentum of 5G applications, fostering the convergence of various sectors.
Today, 5G acts as a pivotal foundation for China's digital infrastructure and data management, facilitating intelligent digital transformation across industries.
Crucially, Chinese operators have shifted their focus from an investment-driven approach to an innovation-driven one during the implementation of commercial 5G. This transition has led to their business success as they continue to develop robust networks and gain confidence in their achievements. China's operators have garnered substantial experience and made significant contributions to the global 5G industry.
China's Leadership in 5G
China has emerged as the global leader in 5G network construction. By March 2023, they had built an impressive 2.64 million 5G base stations, covering all cities and urban areas. Notably, more than 1.5 million of these base stations are shared among different operators, ensuring efficient and environmentally-friendly 5G networks.
The impact of 5G on China's connectivity is evident in their remarkable download speeds, ranking 9th globally with a downlink speed of 110.1 Mbit/s and an uplink speed of 25.58 Mbit/s, more than double the global average.
Moreover, the number of 5G mobile phone users in China had soared to 620 million, accounting for approximately 37% of the population. Additionally, leading cities like Hangzhou are witnessing a steady increase in 5G enhanced mobile broadband (eMBB) traffic, surpassing 50% of total traffic.
5G Monetization Fuels Business Success
Chinese operators have spearheaded the monetization of 5G networks, attaining resounding business success and instilling a sense of confidence. In their 2022 financial reports, China's major operators showcased positive growth in B2C service revenue and average revenue per user (ARPU), propelled by the rapid 5G migration and increased digital consumption.
Similarly, mainstream operators in international markets experiencing rapid 5G growth, such as Zain Group, LG U+ in South Korea and stc in Saudi Arabia, have all witnessed steady revenue growth over the past five years. Indeed, 5G has emerged as a significant contributor to the mobile service revenue growth of operators worldwide.
In the long term, the true advantage of 5G for operators lies in its role as network infrastructure that fuels overall business expansion. It is worth noting that during the initial three years of commercial 5G adoption, telecom service revenue experienced year-on-year growth of 0.8%, 3.6% and 8%, respectively, reinforcing its impact on the industry.
Factors Behind Commercial 5G Success
Chinese operators have relentlessly pursued the goal of constructing 5G networks with extensive coverage, enhanced capabilities, faster speeds and superior quality to deliver an exceptional user experience.
This commitment remains the cornerstone of their current and future 5G business success in China. These operators have amassed invaluable lessons and successful practices that can serve as guiding principles for their global counterparts.
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Spectrum utilization strategies. China's strategic approach to spectrum resources has played a pivotal role in sustainable 5G development. By selecting the Sub 6 GHz IF spectrum, China has achieved wide bandwidth of over 100 MHz, ensuring optimal network performance and cost-effective 5G deployment.
Furthermore, China Unicom's Chairman Liu Liehong envisions regulatory authorities fully unlocking the value of private network frequency resources, fostering the rapid adoption of 5G+ Industrial Internet within enterprises' core production processes. A notable milestone in this endeavor was China Unicom's collaboration with Huawei and other partners to establish the country's first 5G-Advanced low-latency flexible production line at Great Wall EA, seamlessly integrating the 5G+ Industrial Internet into core production processes.
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Massive investments. China Mobile, China Telecom and China Unicom have made significant investments in the construction of robust 5G network infrastructure, driving the advancement of high-quality connectivity. Since obtaining commercial 5G licenses in 2019, these operators have collectively invested over CNY700 billion, enabling the swift establishment of a high-bandwidth infrastructure network that ensures seamless coverage.
This substantial investment has not only enhanced the user experience and facilitated the migration of users and traffic to 5G but has also paved the way for the monetization of experience-driven 5G services. Furthermore, it has propelled the rapid development of diverse 5G application scenarios.
- Technical planning. In a resolute move, China's three major operators embraced 5G standalone (5G SA) networking. This strategic effort eliminated the need for costly secondary network reconstruction and enabled seamless support for converged industry applications. This decision not only unlocked new avenues for operators' sustainable business growth but also set a global trend for 5G SA networking. Additionally, during 5G network construction, careful consideration was given to traditional 2G, 3G and 4G networks, allowing for the effective redevelopment of spectrum resources and a smooth evolution towards an integrated 5G network.
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Industry standards and introduction of key technologies. Initially, the adoption of the R15 standard focused on enhancing eMBB applications, enabling operators to swiftly boost their data usage and ARPU. As 5G applications continue to converge and diversify, the future lies in 5.5G, which will serve as the sole path for upgrades and evolution.
China Mobile's General Manager Dong Xin emphasized the group's unwavering commitment to collaborate with industry partners, driving the evolution of 5G towards integrated networks that incorporate cooperative air and ground surveillance, intelligence and integrated sensing and communications. This steadfast pursuit aims to maintain China's leading position in 5G development.
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Core 5G business models for B2C/B2B. In consumer markets, Chinese operators prioritize delivering an exceptional 5G user experience by enhancing network coverage and peak rates and supporting high-definition and multi-view services. Their aim is to provide consumers with continuous growth, the excitement of exploration and, ultimately, increase the user’s willingness to pay.
In business markets, Chinese operators seize opportunities to make strides in meeting rigid demands such as secure production, cost reduction and efficiency improvement. Leveraging technologies like QoS, DNN customization and slicing, they enable industry customers to deploy flexible virtual private 5G networks tailored to specific industries. This approach maximizes the commercial value of 5G for businesses.
By Elvi Correos, Senior Journalist, Telecom Review Middle East