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China is picking up the pace of 5G deployment once again in 2021 after a quieter Q4
In less than a year since launching 5G, China is said to have amassed over 110 million 5G subscribers, dwarfing rivals around the world.
By the end of September, China’s three major mobile operators – China Mobile, China Unicom, and China Telecom – had managed to roll-out 600,000 5G base stations, easily accomplishing their 2020 targets with months to spare. Since then, deployments have slowed, in part due to fears over US sanctions placed on Huawei, but reports suggest that they are set to redouble their efforts by the start of 2021, planning to deploy one million base stations next year.
But, while this seemingly massive adoption of the new technology has been vocally celebrated by China, the reality of the technology’s scale and effectiveness has been questioned.
While 110 million 5G subscribers is no small feat, it should be remembered that this amounts to a small fraction of the country’s 1.6 billion mobile subscribers. In contrast, when it comes to the lead in 5G adoption, neighbouring South Korea makes a strong case for first place, having around 7.86 million 5G subscribers in July, around 11.3% of its total mobile subscriber base.
Equally, due to the short-ranged nature of 5G, the 600,000 base stations deployed this year will need to be replicated and even exceeded for many years to deliver ubiquitous coverage. According to a report by state-run press agency Xinhua, around 10 million 5G base stations will be required to give coverage equivalent to that of current 4G.
But beyond the excruciating capex of deploying 5G at such as scale, the cost of running the technology will also be a growing issue for Chinese telcos in coming years. Due to the nature of its RAN equipment, 5G will consume around three times more energy than 4G, meaning operators utility bills are set to skyrocket; some sources estimate that the annual energy bill for a 5G network delivering similar coverage to the current 4G network would reach almost $30 billion.
Thus, 5G’s rosy outlook in China is beginning to be exposed as problematic to say the least. Massive deployment costs, coupled with high running costs and relatively low user demand could see the telcos’ huge investments prove relatively fruitless.
Speaking at the China International Information and Communication Exhibition in Beijing earlier this week, the head of Huawei’s carrier business, Ryan Ding, said that China’s 5G situation was currently “fake, dumb and poor,” noting “a gap in user experience, coverage and creating commercial closed-loop."
But this week could also have seen China’s 5G empire receive something of a boost. China remains Apple’s second largest market and the long-awaited release of the 5G-capable iPhone 12 is expected to greatly increase consumer demand for 5G; many Apple loyalists are expected to have postponed upgrading to a 5G capable phone in anticipation of this release, which has seen multiple delays this year.
However, this too is no sure thing, as the new iPhone itself has been criticised for its high price tag, especially considering the purchase does not include a charger or earbuds.
Lastly, as always this year, geopolitics could be a factor here. As US sanctions on Huawei continue to pile up, China has said that it has created its own ‘entity list’, set to scrutinise and sanction US companies that it deems a threat to national security. While a list of companies whose names have been added to the list has not yet been forthcoming – many suggest China will wait until the outcome of the US Presidential election before making a decision – Apple, as a key US tech company, could well be in the firing line.
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