MWC Shanghai 2023 Preview: Four Years of 5G in China

Four Years Since 5G Launched in China: From Success to Sustainable Success

MWC Shanghai 2023 will be held at the end of this month, with executives from telecom operators and mainstream equipment manufacturers set to deliver keynote speeches sharing their insights into development, opportunities, and challenges in the mobile industry.

The event is eagerly anticipated as it will serve as a platform to observe and share on how China has approached 5G technology evolution and fostered a technological ecosystem.

China’s Ministry of Industry and Information Technology first issued commercial 5G licenses to the country’s four major operators – China Telecom, China Mobile, China Unicom, and China Broadnet – on 6th June 2019. Across the next four years, China would go on to make remarkable strides in 5G development, with constantly improving infrastructure, increasingly impressive technological innovations, a steadily expanding industry ecosystem, growing development momentum, and thriving converged 5G applications.

5G now serves as a foundation for streamlining China's overall digital infrastructure and supporting the intelligent digital transformation of industries. As they implement commercial 5G, Chinese operators are accelerating their transition from an investment-driven approach to an innovation-driven approach, allowing them to achieve business success as they develop networks. This has allowed operators in the market to develop successful practices, contributing to the development of the global 5G industry.

China's leadership in 5G adoption speed

China leads the world in 5G network construction, with over 2.64 million 5G base stations as of end-March 2023. All prefecture-level cities and the urban areas of counties receive 5G coverage, and operators have constructed and are sharing over 1.5 million base stations, helping to ensure that  5G networks remain intensive, efficient, and green.

From technical to business success

Compared to the 3G and 4G eras, China has led the world in 5G development from the very start in terms of network construction and technology adoption, while its operators have successfully monetized their 5G networks. All three of China’s major operators reported positive growth in terms of both B2C service revenue and average revenue per user (ARPU) in their 2022 financial reports, citing rapid 5G migration and growth in individual digital life consumptions.

Factors behind the success of commercial 5G

Success in the B2C market has acted as a solid foundation for the development of the 5G industry, but the technology’s long-term benefit lies in its role as a conduit of business growth. Over the first three years of commercial 5G adoption, telecom service revenue increased by 0.8%, 3.6%, and 8%, respectively, year-on-year. In the first four months of this year, revenue continued to see rapid growth, increasing by 7.2% more than the same period last year.

Network quality is the lifeblood of all operators

Operators worldwide can learn from the successful practices of Chinese players. The first step is clearing spectrum resources and establishing utilization strategies. A combination of adequate spectrum resources, reasonable allocation methods, and continuous and efficient supply has laid a solid foundation for the sustainable and healthy development of 5G in China. China chose the Sub 6 GHz IF spectrum as the entry point of 5G, and has realized contiguous large bandwidth of over 100 MHz. This not only guarantees the network performance required for 5G commercialization in the current stage, but reduces the deployment cost of 5G networks.

MWC Shanghai China Capex chart

The second step is massive investment to achieve contiguous coverage. China’s three major operators have constantly promoted the construction of high-quality 5G network infrastructure; as shown in the table above, since obtaining commercial 5G licenses in 2019, these operators have heavily invested in 5G, with the accumulative amount exceeding CNY700 billion (excluding CNY270 billion saved by China Unicom and China Telecom through co-construction and sharing). Supported by these huge investments, a high-bandwidth infrastructure network providing contiguous coverage was quickly built, greatly improving user experience, accelerating 5G user and traffic migration, paving the way for experience-based 5G monetization, and driving the rapid development of 5G application scenarios and the 5G industry ecosystem.

Liu Liehong, Chairman of China Unicom, pointed out that China Unicom regards the construction and operation of ICT infrastructure as the top priority and has unswervingly increased investment into 5G development.

The third step is technical planning to a high standard. At 5G’s inception, there was a lot of uncertainty over how the technology would evolve – but China’s three major operators were resolute in choosing 5G SA networking. By adopting this networking model, they avoided the cost of secondary network reconstruction and enabled 5G to support converged industry applications, thus overcoming the bottleneck for operators' continuous business growth and beginning a new trend for global 5G SA networking. Moreover, during 5G network construction, it is necessary to consider traditional 2G, 3G, and 4G networks with a view to redeveloping spectrum resources and achieving smooth evolution towards an integrated 5G network.

Step four is defining clear industry standards and introducing key technologies promptly. During the early stages of 5G commercialization in China, the R15 standard was adopted on the network side, mainly for eMBB applications, which helped operators rapidly increase their dataflow of usage (DOU) and ARPU. With the deepening convergence of 5G applications, new service requirements are becoming increasingly diversified and complex, positioning 5.5G as the only path for future upgrades and evolution.

Finally, operators must define their core 5G business models to accelerate development. For consumer markets, Chinese operators prioritize superior 5G user experience, improving network coverage capabilities and peak rates to support the experience of service. By offering continuous growth and new experiences, consumers are better disposed to paying extra for 5G.

In business markets, Chinese operators regard secure production, cost reduction, and efficiency improvement as opportunities to make breakthroughs in rigid demand. Technologies such as QoS, DNN customization, and slicing are employed to allow industry customers to flexibly deploy virtual private 5G networks for different industries, thus maximizing the commercial value of 5G for businesses.

MWC Shanghai China deployment chart

In the 5G era, Chinese operators have achieved both technical and business success. Now, with the 5.5G era as the trend of our times, we are confident that Chinese operators will continue to find success in the 5G industry.

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