Over the last three years after the issuance of 5G commercial licenses, China’s service providers have made tremendous progress. As a result, China today has the world’s largest 5G network and the most number of 5G users. But, more importantly, it has achieved rapid financial growth from 2019 to 2021, touching 1.31 trillion yuan, 1.36 trillion yuan and 1.47 trillion yuan, up by 0.8%, 3.6% and 8.0% year-on-year, respectively.
Chinese service providers have worked tirelessly to build a solid foundation for 5G growth in the country. By April, China had 1.61 million 5G base stations, accounting for more than 62% of the global 5G base station. The last three years have also witnessed robust growth in the number of users. Currently, the country boasts 450 million users, accounting for more than 70% of the global 5G users. While it took 14 months to reach 100 million 5G subscribers, it took just eight months and six months to reach 200 and 300 million, respectively.
Another factor responsible for the tremendous growth in the number of users is the growing ecosystem of 5G devices. Of the 677 5G mobile phones available globally, China has contributed more than 80% of the handset models. As a result, it is not surprising that more and more traffic is being carried on 5G networks. By the end of this year, nearly half of all mobile internet traffic is likely to be carried by 5G networks.
Over the last three years, the Industrial sector in China has emerged as a key user of 5G. More than 5000 industry projects have been implemented till now, and 5G has truly been put into large-scale commercial use in the country. The Chinese operators are now keen to improve the 5G infrastructure and prepare the 5G ecosystem to accelerate the digital transformation of the industry.
Secrets to the 5G commercial success achieved by Chinese operators
The Chinese telecommunications industry has collaborated with all the stakeholders to take the lead in ensuring the fast and sustainable growth of the 5G ecosystem. At a recent event to mark the third anniversary of the issuance of 5G licenses to the service providers in the country, Wang Zhiqin, Vice President of China Academy of Information and Communications Technology (CAICT), highlighted the role of a 5G application development contest and how it has evolved over the last three to four years.
"Over the last four years there have been over 20,000 entries and there have been over 8000 organizations joining the contest. While earlier the use cases were about industrial applications now there are applications for smart city, and digital healthcare, among others. Last year there were 12,000 entries and there were entries in ten industries including manufacturing, production, healthcare, transportation, finance entertainment, mining, power, and ports, among others," says Wang Zhiqin.
While a section of the industry continues to lament the lack of killer use cases for 5G, Liu Hong, Head of Technology – China, GSMA, believes that 5G offers critical efficiencies to the operators in spite of this.
"With higher spectrum utilization and more popular terminals, the Chinese 5G ecosystem will continue to lead the global 5G market for quite some time. While it is sad that 5G doesn’t have a killer application yet, as long as its cost per bit is lower, its ARPU [Average Revenue Per User] is higher and its application experience is better, the number of 5G users and traffic will continue to increase more rapidly," says Liu Hong.
There is little doubt that the Chinese industry has gained a competitive edge where 5G is concerned. Even so, the Chinese telecom industry needs to address the challenges with 5G networks to maintain a competitive advantage.
"China’s 5G network is operating for three years and has lived up to the expectations of the world. However, now we have to think about how 5G will develop in future. There are several challenges like indoor coverage and standardization, among others," says Ma Hongbing, General Manager – Technology Innovation Division, China Unicom.
Further, like China Telecom, the Chinese telcos have adopted an innovative approach to gain a leading position in the 5G market. Since the industry is a pioneer, this approach has helped it address network and deployment issues.
"We have attained three achievements in 5G networks. First is network automation enabling flexible operations. The second is we use Big Data to optimize the available data and the third is that the front-end and back-end are streamlined to improve overall network capabilities. We have developed a range of customized solutions that can help us at every step. We are trying to incorporate standardized modules into our system. And we are also thinking how we can improve operational efficiency and service assurance of our entire networks," says Chen Yunqing, Vice President, China Telecom Research Institute.
The role of a robust terminal ecosystem can hardly be over emphasized in the development of China’s 5G ecosystem.
"The number of 5G terminals has increased exponentially over the last three years. Today, out of 800 million 5G terminals, 500 million are from China. China has achieved 5G coverage not only in key towns but in some villages as well. The foundation of the popularisation of 5G terminals provides a base for improving the experience and opens massive revenue-generating opportunities in cloud gaming, AR and VR. We are on the eve of popularization of AR and VR services," says Wang Hengjiang – Deputy General Manager, China Mobile Terminal Company.
A key reason for the growth of 5G in China is the massive 5G business-to-business deployment. One can say that the enterprises lead the 5G ecosystem in China. "The achievements of "high-quality and large-scale development" can be summarized by four characteristics and four changes. The first standard for high quality is the deep integration with core operational scenarios. Industry customers use 5G starting from the original general scenarios such as AGV scheduling to the core scenarios such as remote control, machine vision, and high-precision positioning. The second characteristic is the large scale, both of the network and of the terminals," says Huang Luomeng – Vice President, China Carrier Business Dept., Huawei.
The third characteristic is the solution features. The industry has higher requirements for uplink capacity and network SLA stability. Huawei works with the service providers to come up with differentiated 5G B2B solutions and features. "Last but not the least is the business value. 5G B2B helps carriers upgrade their business from ICT to OICT, opening up a new blue ocean in the B2B market. 5G helps industry customers to break data silos, and industry digital upgrade is accelerated. All partners in the industry chain are creating value from cross industry collaboration and sharing the benefits as a result," adds Huang Luomeng.
As the Chinese 5G ecosystem continues to grow from strength to strength, it has opened up new opportunities for the operators. The global operators will do well to adopt the 5G strategies of the Chinese operators and learn from their experience to accelerate the deployment and faster return on 5G investments.