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5G Innovation:

CHINA
By Sean Kinney

Report Sponsor:

JUNE 2019
FEATURE REPORT

Introduction of Industry and Information with a roadmap for divvying up


In the U.S., where federal law- Technology, the National Develop- millimeter wave spectrum in
makers like to characterize 5G as ment Reform Commission and the place. Chinese technology com-
a race America has to win, Presi- Ministry of Science and Technolo- panies have developed compat-
dent Trump’s administration has gy established the IMT-2020 5G pro- ible silicon, smartphones, cloud,
broached the idea of a nationalized motion group that has guided three core, software and radio access
5G strategy. That plan has drawn re- phases of development: key tech- network equipment, and carriers
bukes from legislators, the Federal nologies testing, technology verifi- have worked in lock-step to pre-
Communications Commission and cation and 5G system verification. pare for widespread commercial-
the telecom industry–all of whom Simultaneously, the govern- ization expected in 2020.
prefer a private sector-led approach. ment has allocated mid-band This level of national ecosystem
However, that’s not the case in spectrum for system testing and development gives China a strong
China. In 2013, the Chinese Ministry initial commercial deployment, position in 5G value creation both

China’s 5G development timeline


2015 2016 2017 2018 2019 2020
1st phase – Key 2nd phase – Technical 3rd phase – System
technology verification solution verification verification

Technology 1st phase


technology R&D
2nd phase of 5G trial Started 3rd phase of
trial trial completed
concluded 5G testing

Finalize 5G Finalize 5G
standard – standard –
Standard release 15 release 16
(1st draft) (final draft)
Source: MIIT, SCMP, China Daily

Build trial 5G
Network network
Expand 5G networks

Issue 5G commercial
Rollout 5G
launch with
licenses
coverage in large-
and mid-sized cities

Technology R&D trial Product R&D trial

2
FEATURE REPORT

near- and long-term, according to China’s 5G strategy As it relates to 5G, China’s IMT
Steve Lo and Kevin Lee of EY, who Just as the country does with 2020 5G promotion group dates
authored a detailed report on the major civil infrastructure projects, back to 2013. Early steps in this re-
state of 5G in China titled, “China economic development ambitions alization process included assessing
is poised to win the 5G race.” From and international relations, Chi- technology trends, exploring the
that paper, “Proactive government na is taking a highly-strategic ap- feasibility of using spectrum above
support and industrial capital proach to 5G overseen by a litany 6 GHz for mobile communications,
investments has helped shape a of government agencies working and honing recommendations ap-
self-sustained 5G environment in with telecom infrastructure ven- plicable to the 2020 timeframe and
China...With the top-down national dors and the nation’s three carriers, beyond. Around 2016, stakeholders
pledge and commitment, China is China Mobile, China Telecom and began laying out technical per-
already in a leading role in the 5G China Unicom. formance requirements and eval-
development, from setting the stan- During a recent trip to Shanghai, uation criteria and methodology,
dard, R&D, network infrastructure a local tour guide explained to RCR which, in approximately 2018, gave
technology, building the industry Wireless News why this centralized way to proposals for the Interna-
chain to engaging in focused use- approach to governance is neces- tional Telecommunications Union,
case scenarios.” sary. “In China we have 56 differ- a part of the United Nations that
And, with a growing consumer ent languages, different cultures, establishes global telecom stan-
class, a massive industrial base and different customs. We need a strong dards as informed by the work of
focused planning efforts, it would central government. If our cen- group’s like the one in China, the
seem China is poised to monetize 5G tral government was weak, China 3GPP, ETSI and so forth.
for both consumers and enterprises. would be separated.” Another key driver of China’s

3
FEATURE REPORT

focus on 5G, beyond just using hasn’t been that great, so there is for a total of 1.545 billion out of a
wireless connectivity to open new some need for 5G in some areas of worldwide total of 5.7 billion. The
revenue streams, is the pressing those countries. But it will not be a country has a mobile penetration
need for capacity. In an interview huge need as it is in the first catego- of 111%.
with RCR Wireless News, Huawei’s ry. The rest of the countries belong In terms of the outlook for 5G
5G Product Line President Chaobin to the third category.” subscriptions, Ericsson predicts
Yang provided a regionalized break- The idea of 5G as a fix for con- China, along with Japan and South
down of what different markets gested LTE networks is borne out Korea, will see early uptake. “With
need out of 5G. by the numbers. According to the global mobile data traffic forecast
“According to our analysis, the Ericsson Mobility Report, pub- to increase more than five times be-
global market can be divided into lished in late 2018, China has more tween 2018 and 2024, key drivers for
three categories: The first category mobile subscribers than any other 5G deployment include increased
includes China, South Korea, Japan country and is adding new sub- network capacity and decreased
and Gulf countries in the Middle scribers at a faster rate than any cost per byte. 5G subscription up-
East. Their current 4G network other country. take is expected to be faster than
is already congested, so there is a Based on the global appraisal for LTE,” the report authors wrote.
need for 5G...The second category conducted by Ericsson researchers, The company expects there to be
includes Europe and the United China added 37 million new mo- some 1.5 billion 5G subscriptions at
States. Their LTE development bile subscriptions in Q3 last year the end of 2024.

Mobile subscriptions Q3 2018 (million)

North America 380

Latin America 680

Westen Europe 515


Central and
580
Eastern Europe
Middle East 410

Africa 1,045
APAC (excluding
1,575
China and India)
China 1,545

India 1,175

Source: Ericsson Mobility Report

4
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FEATURE REPORT

Spectrum allocation range to carry out 5G trials in main- millimeter wave bands that are
China Mobile, China Telecom and land China. Under the agreement either currently deployed, auctioned
China Unicom are currently car- with the Chinese government, Chi- or set to be auctioned as depicted in
rying out a number of 5G trials in na Telecom will return its 2.635 the following graphic on page 7.
urban areas across China. In De- GHz to 2.655 GHz spectrum over the
cember 2018, China’s Ministry of In- same timeframe. Taking stock of 5G trial activity
dustry and Information Technolo- Meanwhile, China Mobile, the According to the China Academy
gy (MIIT) had issued nationwide 5G country’s largest operator, has been of Information and Communica-
trial licenses to the country’s three approved to use spectrum in the tions Technology, the country will
mobile operators. 2.515 GHz to 2.675 GHz and 4.8 GHz invest between $134 billion and
China Unicom said it has been ap- to 4.9 GHz ranges for its nationwide $223 billion in 5G between 2020 and
proved to use the 3.5 GHz to 3.6 GHz 5G trials. The 2.5 GHz spectrum will 2025 generating an economic value
frequency band for a nationwide include frequencies to be re-farmed as high as $3.7 Trillion with opera-
5G trial rollout until June 2020. from China Mobile’s existing TD- tors realizing some $283 billion in
The telco said that it will gradually LTE spectrum. attendant revenue.
cease to use the frequency in the On the millimeter wave front, Huawei, the country’s flagship
2.555 GHz to 2.575 GHz range that China has not yet allocated technology company, says it has
it had been using for 5G trials and frequencies to mobile operators shipped more than 70,000 5G base
progressively return it to the MIIT. but has identified candidate bands stations, many domestically, in ser-
China Telecom was allowed to use in the 24.75-27.5 GHz and 37-42.5 vice of carriers China Mobile, China
the 3.4 GHz to 3.5 GHz frequency GHz ranges; this is consistent with Telecom and China Unicom work to-
wards 2020 commercialization.
Chaobin of Huawei said those
70,000 base stations are based on
3GPP Release 15 and 97% of them
can support massive MIMO.
Discussing the market opportu-
nities in China, he said operators
will first see consumer revenues
followed by enterprise. “In the first
stage of 5G deployment, the benefits
will first be found in the consumer
market. It is clear that 5G can pro-
vide a much better user experience.

6
FEATURE REPORT

Source: Qualcomm Technologies, Inc

We estimate that user experience the second stage of 5G deployment, Information and Communications
will be improved by 10 times. At the with the development of IoT and Technology, the country’s three
same time, it will greatly reduce the the growing need for ultra-low la- mobile network operators–China
cost per bit for operators, which we tency, the operators will gradually Mobile, China Telecom and China
estimate that it will reduce by 10 find new opportunities from differ- Unicom, stand to generate $283 bil-
times. Therefore, in the first stage of ent verticals.” lion in revenues from 5G services
5G deployment, operators can profit According to financial projections between 2020 and 2025.
from the consumer market. During from the China Academy of That return comes on the back

7
Featured Companies

of what CAICT estimates to be in- industrial companies, including trial, Ericsson and China Unicom
vestments of between $134 billion automaker Dongfeng Motor, manu- are developing 5G-based harbor
and $223 billion in standing up 5G facturer ZPMC, Huawei and Aliba- automation services at the Qing-
networks in the massive country. ba, to examine private 5G network dao Port; based on field trials, au-
To get a better understanding of applications. China Unicom has set tomation solutions can cut down
how the three operators will realize up trial networks in Beijing, Shang- on port operations labor costs by
hundreds of billions in new service hai, Gunagzhou, Shenzhen, Nanjing, some 70%.
revenues, let’s take a look at recent Hangzhou and Xiong’an New Area. “We would like to cooperate with
trial activity. Crunching the numbers in terms major 5G equipment suppliers and
First and foremost, there are con- of how 5G will drive broader eco- leading industrial equipment sup-
sumer-facing use cases like stream- nomic development, CAICT fore- pliers to create differentiated val-
ing increasingly high-quality video casts a cumulative direct and indi- ue to enterprise customers,” Zhang
to handsets. China Mobile, work- rect value associated with the new Yong, GM of the China Unicom Re-
ing with Huawei and CCTV, has levels of network enablement at search Institute said. “The Qingdao
recently been testing out live 4K more than $5 trillion by 2025. 5G smart harbor project is a pilot of
streaming over what the partners Artificial intelligence is simul- 5G industrial cooperation.”
refer to as a “dual-band conver- taneously viewed as a technology
gent network” comprising multiple that will be opened up by 5G, and Conclusion
gNodeBs in Beijing. something that will be necessary While there’s not universal ac-
In a press release, Huawei said the to not only operate 5G networks cord on the ‘5G as a race’ paradigm,
video had a resolution of 3840×2160 but also derive value from them. To there are clear benefits to China’s
pixels at 50 frames per second. that end, China Unicom is working government-led approach that can
“Real 4K video transmission con- with Ericsson to explore the inter- position the company to capitalize
sumes a large amount of band- section of the two. on not just consumer-facing use cas-
width,” according to the technology The carrier and vendor are work- es but the digital transformation
giant. “The transmission rate on a ing on AI-based managed services spanning enterprise and industry
5G network can reach 10-100 times with an eye on improving network that 5G will enable.
that on a 4G network. This caters quality and, in turn, user experi- As Lo and Lee put it: “While other
for the ultra-high bandwidth and ence. The duo are setting up an AI markets are catching up, China will
ultra-low latency required by…real lab to research applications around enjoy the dominance due to its com-
4K live streaming.” network design and optimization manding influence throughout the
Moving away from consumer that will inform production deploy- value chain. Leading and shaping
applications, China Unicom has ments on Unicom’s network. this technology will bring enormous
put together a consortium of 32 In another industrial-facing economic advantages for years.”
Featured Companies

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