5G Innovation:

CHINA
By Sean Kinney

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JUNE 2019
 FEATURE REPORT

Introduction of Industry and Information with a roadmap for divvying up

In the U.S., where federal law-
makers like to characterize 5G as
a race America has to win, Presi-
dent Trump’s administration has
broached the idea of a nationalized
5G strategy. That plan has drawn re-
bukes from legislators, the Federal
Communications Commission and
the telecom industry–all of whom
prefer a private sector-led approach.
However, that’s not the case in
China. In 2013, the Chinese Ministry
Technology, the National Develop- millimeter wave spectrum in
ment Reform Commission and the place. Chinese technology com-
Ministry of Science and Technolo- panies have developed compat-
gy established the IMT-2020 5G pro- ible silicon, smartphones, cloud,
motion group that has guided three core, software and radio access
phases of development: key tech- network equipment, and carriers
nologies testing, technology verifi- have worked in lock-step to pre-
cation and 5G system verification. pare for widespread commercial-
Simultaneously, the govern- ization expected in 2020.
ment has allocated mid-band This level of national ecosystem
spectrum for system testing and development gives China a strong
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

near- and long-term, according to
Steve Lo and Kevin Lee of EY, who
authored a detailed report on the
state of 5G in China titled, “China
is poised to win the 5G race.” From
that paper, “Proactive government
support and industrial capital
investments has helped shape a
self-sustained 5G environment in
China...With the top-down national
pledge and commitment, China is
already in a leading role in the 5G
development, from setting the stan-
dard, R&D, network infrastructure
technology, building the industry
chain to engaging in focused use-
case scenarios.”
And, with a growing consumer
class, a massive industrial base and
focused planning efforts, it would
seem China is poised to monetize 5G
for both consumers and enterprises.
China’s 5G strategy
Just as the country does with
major civil infrastructure projects,
economic development ambitions
and international relations, Chi-
na is taking a highly-strategic ap-
proach to 5G overseen by a litany
of government agencies working
with telecom infrastructure ven-
dors and the nation’s three carriers,
China Mobile, China Telecom and
China Unicom.
During a recent trip to Shanghai,
a local tour guide explained to RCR
Wireless News why this centralized
approach to governance is neces-
sary. “In China we have 56 differ-
ent languages, different cultures,
different customs. We need a strong
central government. If our cen-
tral government was weak, China
would be separated.”
FEATURE REPORT
As it relates to 5G, China’s IMT
2020 5G promotion group dates
back to 2013. Early steps in this re-
alization process included assessing
technology trends, exploring the
feasibility of using spectrum above
6 GHz for mobile communications,
and honing recommendations ap-
plicable to the 2020 timeframe and
beyond. Around 2016, stakeholders
began laying out technical per-
formance requirements and eval-
uation criteria and methodology,
which, in approximately 2018, gave
way to proposals for the Interna-
tional Telecommunications Union,
a part of the United Nations that
establishes global telecom stan-
dards as informed by the work of
group’s like the one in China, the
3GPP, ETSI and so forth.
Another key driver of China’s
3
 FEATURE REPORT
focus on 5G, beyond just using
wireless connectivity to open new
revenue streams, is the pressing
need for capacity. In an interview
with RCR Wireless News, Huawei’s
5G Product Line President Chaobin
Yang provided a regionalized break-
down of what different markets
need out of 5G.
“According to our analysis, the
global market can be divided into
three categories: The first category
includes China, South Korea, Japan
and Gulf countries in the Middle
East. Their current 4G network
is already congested, so there is a
need for 5G...The second category
includes Europe and the United
States. Their LTE development
Mobile subscriptions Q3 2018 (million)
North America
Latin America
Westen Europe
Central and
Eastern Europe
Middle East
Africa
APAC (excluding
China and India)
China
India
Source: Ericsson Mobility Report
4
hasn’t been that great, so there is
some need for 5G in some areas of
those countries. But it will not be a
huge need as it is in the first catego-
ry. The rest of the countries belong
to the third category.”
The idea of 5G as a fix for con-
gested LTE networks is borne out
by the numbers. According to the
Ericsson Mobility Report, pub-
lished in late 2018, China has more
mobile subscribers than any other
country and is adding new sub-
scribers at a faster rate than any
other country.
Based on the global appraisal
conducted by Ericsson researchers,
China added 37 million new mo-
bile subscriptions in Q3 last year
380
680
515
580
410
1,045
for a total of 1.545 billion out of a
worldwide total of 5.7 billion. The
country has a mobile penetration
of 111%.
In terms of the outlook for 5G
subscriptions, Ericsson predicts
China, along with Japan and South
Korea, will see early uptake. “With
global mobile data traffic forecast
to increase more than five times be-
tween 2018 and 2024, key drivers for
5G deployment include increased
network capacity and decreased
cost per byte. 5G subscription up-
take is expected to be faster than
for LTE,” the report authors wrote.
The company expects there to be
some 1.5 billion 5G subscriptions at
the end of 2024.
1,575
1,545
1,175
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 FEATURE REPORT
Spectrum allocation
China Mobile, China Telecom and
China Unicom are currently car-
rying out a number of 5G trials in
urban areas across China. In De-
cember 2018, China’s Ministry of In-
dustry and Information Technolo-
gy (MIIT) had issued nationwide 5G
trial licenses to the country’s three
mobile operators.
China Unicom said it has been ap-
proved to use the 3.5 GHz to 3.6 GHz
frequency band for a nationwide
5G trial rollout until June 2020.
The telco said that it will gradually
cease to use the frequency in the
2.555 GHz to 2.575 GHz range that
it had been using for 5G trials and
progressively return it to the MIIT.
China Telecom was allowed to use
the 3.4 GHz to 3.5 GHz frequency
6
range to carry out 5G trials in main-
land China. Under the agreement
with the Chinese government, Chi-
na Telecom will return its 2.635
GHz to 2.655 GHz spectrum over the
same timeframe.
Meanwhile, China Mobile, the
country’s largest operator, has been
approved to use spectrum in the
2.515 GHz to 2.675 GHz and 4.8 GHz
to 4.9 GHz ranges for its nationwide
5G trials. The 2.5 GHz spectrum will
include frequencies to be re-farmed
from China Mobile’s existing TD-
LTE spectrum.
On the millimeter wave front,
China has not yet allocated
frequencies to mobile operators
but has identified candidate bands
in the 24.75-27.5 GHz and 37-42.5
GHz ranges; this is consistent with
millimeter wave bands that are
either currently deployed, auctioned
or set to be auctioned as depicted in
the following graphic on page 7.
Taking stock of 5G trial activity
According to the China Academy
of Information and Communica-
tions Technology, the country will
invest between $134 billion and
$223 billion in 5G between 2020 and
2025 generating an economic value
as high as $3.7 Trillion with opera-
tors realizing some $283 billion in
attendant revenue.
Huawei, the country’s flagship
technology company, says it has
shipped more than 70,000 5G base
stations, many domestically, in ser-
vice of carriers China Mobile, China
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.

We estimate that user experience
will be improved by 10 times. At the
same time, it will greatly reduce the
cost per bit for operators, which we
estimate that it will reduce by 10
times. Therefore, in the first stage of
5G deployment, operators can profit
from the consumer market. During
the second stage of 5G deployment,
with the development of IoT and
the growing need for ultra-low la-
tency, the operators will gradually
find new opportunities from differ-
ent verticals.”
According to financial projections
from the China Academy of
FEATURE REPORT
Source: Qualcomm Technologies, Inc
Information and Communications
Technology, the country’s three
mobile network operators–China
Mobile, China Telecom and China
Unicom, stand to generate $283 bil-
lion in revenues from 5G services
between 2020 and 2025.
That return comes on the back
7
Featured Companies
of what CAICT estimates to be in-
vestments of between $134 billion
and $223 billion in standing up 5G
networks in the massive country.
To get a better understanding of
how the three operators will realize
hundreds of billions in new service
revenues, let’s take a look at recent
trial activity.
First and foremost, there are con-
sumer-facing use cases like stream-
ing increasingly high-quality video
to handsets. China Mobile, work-
ing with Huawei and CCTV, has
recently been testing out live 4K
streaming over what the partners
refer to as a “dual-band conver-
gent network” comprising multiple
gNodeBs in Beijing.
In a press release, Huawei said the
video had a resolution of 3840×2160
pixels at 50 frames per second.
“Real 4K video transmission con-
sumes a large amount of band-
width,” according to the technology
giant. “The transmission rate on a
5G network can reach 10-100 times
that on a 4G network. This caters
for the ultra-high bandwidth and
ultra-low latency required by…real
4K live streaming.”
Moving away from consumer
applications, China Unicom has
put together a consortium of 32
industrial companies, including
automaker Dongfeng Motor, manu-
facturer ZPMC, Huawei and Aliba-
ba, to examine private 5G network
applications. China Unicom has set
up trial networks in Beijing, Shang-
hai, Gunagzhou, Shenzhen, Nanjing,
Hangzhou and Xiong’an New Area.
Crunching the numbers in terms
of how 5G will drive broader eco-
nomic development, CAICT fore-
casts a cumulative direct and indi-
rect value associated with the new
levels of network enablement at
more than $5 trillion by 2025.
Artificial intelligence is simul-
taneously viewed as a technology
that will be opened up by 5G, and
something that will be necessary
to not only operate 5G networks
but also derive value from them. To
that end, China Unicom is working
with Ericsson to explore the inter-
section of the two.
The carrier and vendor are work-
ing on AI-based managed services
with an eye on improving network
quality and, in turn, user experi-
ence. The duo are setting up an AI
lab to research applications around
network design and optimization
that will inform production deploy-
ments on Unicom’s network.
In another industrial-facing
trial, Ericsson and China Unicom
are developing 5G-based harbor
automation services at the Qing-
dao Port; based on field trials, au-
tomation solutions can cut down
on port operations labor costs by
some 70%.
“We would like to cooperate with
major 5G equipment suppliers and
leading industrial equipment sup-
pliers to create differentiated val-
ue to enterprise customers,” Zhang
Yong, GM of the China Unicom Re-
search Institute said. “The Qingdao
5G smart harbor project is a pilot of
5G industrial cooperation.”
Conclusion
While there’s not universal ac-
cord on the ‘5G as a race’ paradigm,
there are clear benefits to China’s
government-led approach that can
position the company to capitalize
on not just consumer-facing use cas-
es but the digital transformation
spanning enterprise and industry
that 5G will enable.
As Lo and Lee put it: “While other
markets are catching up, China will
enjoy the dominance due to its com-
manding influence throughout the
value chain. Leading and shaping
this technology will bring enormous
economic advantages for years.”
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