In this on Feb 27, 2017 photo, visitors pass in front of the ZTE stand on the first day of the Mobile World Congress in Barcelona in Barcelona. South Korea gave the world a glimpse of the much touted fifth-generation mobile technology (5G) by presenting sports contents via live streams and virtual reality at the recent Pyeongchang 2018 Winter Olympics, leaving visitors in a swoon. (LLUIS GENE / AFP)
South Korea gave the world a glimpse of the much touted fifth-generation mobile technology (5G) by presenting sports contents via live streams and virtual reality at the recent Pyeongchang 2018 Winter Olympics, leaving visitors in a swoon.
Chinese companies have done an excellent job in the first two stages of the tests, and are expected to keep it up in the third stage of 5G research
Fan Xiaobing, Senior Vice-President, ZTE
The 5G magic — higher speeds, lower costs and low latency — promises to manifest itself at the Summer Olympic Games in Tokyo in 2020 by which time it’s expected to take the commercial world by storm.
Major technology sponsors for the Tokyo Olympics, including US semiconductor titan Intel, Japan’s predominant mobile phone operator NTT Docomo and auto giant Toyota, announced their partnerships for the 2020 Games on the eve of the Mobile World Congress in Barcelona, Spain, with plans for a big splash in Tokyo showcasing 5G technology.
Intel aims to blanket the upcoming 2020 Olympics with 5G, turning Tokyo into a “smart city” with even more video streams everywhere, including 4K video in moving cars, and more significantly, “pervasive facial recognition” for stadium access and security.
With Japan and South Korea going out of their way in pursuing 5G development, China, who has been an active player in the global telecommunications sphere for years in the 3G and 4G eras, has also stepped up efforts to take the lead in 5G innovation and grab a bigger share in the global telecommunications industry.
“The central government is positioning 5G development as a national strategy to encourage new growth drivers for China’s economy, such as mobile internet and the internet of things, while boosting the overall value chain in chipsets, components, equipment and materials,” according to a research report from brokerage UBS Securities Co, which is affiliated with Swiss investment bank UBS.
Chinese companies and organizations involved in 5G development — upstream and downstream — are also gearing up to meet the nation’s goal of getting 5G off the commercial launch pad by 2020. With the Chinese mainland having started the third phase of 5G technology research and development tests ahead of schedule in November last year, regulators are likely to issue 5G licenses to domestic telecom carriers China Mobile, China Unicom and China Telecom in the second half of next year at the earliest, Wang Zhiqin, an expert with the Ministry of Industry and Information Technology, told China Daily.
“5G devices will be mature for commercial applications in China next year, while frequency bands are likely to be distributed to telecom carriers in the second half of this year, accelerating the construction of 5G networks. We’ll be among the first batch of countries to issue 5G licenses in the world,” said Wang.
China’s two network equipment manufacturers — ZTE and Huawei, with their cutting-edge technologies and massive market share — are playing a leading role in the international 5G standards-setting body 3GPP (the 3rd Generation Partnership Project). The organization is now working on the first international version of standalone 5G specifications, which will be released in June this year.
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“This year will be a critical year for setting the 5G standards and the development of commercial products. Chinese companies have done an excellent job in the first two stages of the tests, and are expected to keep it up in the third stage of 5G research,” said Fan Xiaobing, a senior vice-president at ZTE.
The three national network operators have announced pre-commercial 5G deployment in 17 provinces and cities this year, aimed at getting pre-commercial 5G telecom equipment ready by the end of 2018.
China Telecom and ZTE, together with mainland technology giant Baidu, have recently finished the first trial of autonomous vehicles under the 5G environment in Xiongan New Area, an important step as the country looks to commercialize 5G services.
However, compared to the 4G era, the adoption of 5G would be slower as the rollout of the 5G network requires huge investments, while the three telecommunication giants have yet to recoup their 4G investments, and the monetization of 5G has not yet matured.
UBS Securities expects capital expenditure on 5G to be more measured compared to the 4G rollout.
“We estimate that until 2020, the total number of 5G base stations will be between 50,000 and 100,000 — far less than that of the 4G era. The telecommunication companies will manage the 5G expenditure at a prolonged and gradual pace so that the network spending will match the revenue to maintain a reasonable return as the three telecommunication giants don’t have much impetus to invest in 5G. The 5G investment will peak in 2021-22, reaching 418 billion to 459 billion yuan (US$73 billion),” the UBS Securities report said.
Wang also reckoned that the cost of building a 5G base station will be at least 1.5 times that of a 4G base station, which will put pressure on telecom carriers. But she said the trend to innovate and apply 5G in a wide range of industries will motivate them to move fast.
Bill Li Zhi-yong, chief strategist at Hong Kong-based business advisory firm Harmony Capital, said one of the major challenges for the industry is to identify the right business model to unlock the incremental 5G opportunities, while finding different sources of capital optimizing the cost of 5G network investment, in addition to solving the technique problems.
“The investment planning for 5G will spread over a long period of time, starting from a low level and increasing year by year. That may give the three carriers a breathing spell,” said Li.