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2019

06/20

How can China take the lead in the 5G era?

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[For global telecommunications service providers, they are reluctant to lose China, an important market. We believe that, thanks to the world's broadest market for consumers and industrial and enterprise customers, Huawei and other Chinese local technology giants are expected to continue to lead 5G innovation and development by relying on R&D investment barriers over the past years. After the leap from following to surpassing in the 4G era, China is expected to continue to lead the world and win the first chance in the 5G era. ]


On June 6, the Ministry of Industry and Telecommunications officially issued a 5G commercial license. China Mobile, China Unicom, China Telecom and China Radio and Television received one operation license respectively. China officially entered the 5G era and became the fifth country to open 5G services after Korea, the United States, Switzerland and the United Kingdom.


China's 5G licence issuance exceeds market expectations in two aspects: first, in terms of time, the market generally expects China to formally issue 5G commercial licences by the end of the year, which is about half a year ahead of schedule; second, in terms of licence number, besides the traditional three major operators, China Radio and Television has also obtained a licence.


What is the difference between the 5G era? Compared with the previous mobile communication technology, the most important change of 5G is that the transmission rate will be greatly increased. In some key technical indicators, such as user experience rate, delay, connection density and so on, 5G is more than 10 times higher than 4G. The three most important application scenarios of 5G include enhanced mobile broadband (eMBB), large-scale Internet of Things (mMTC) and ultra-reliable low-delay communication (uRLLC).


Enhanced mobile broadband is an upgrade to the 4G mobile broadband scenario. Because of the faster transmission rate and better user experience, it can meet the requirements of large area seamless coverage and higher traffic density.


Large-scale Internet of Things (IOT) communication refers to the fact that 5G can help more transmission devices access the network because of its faster transmission speed. It is mainly oriented to the IOT scenario. It is expected that the number of sensors accessing the network will increase explosively.


Ultra-reliable low-delay communication means that 5G can create new business models for more vertical industries, such as automatic driving, industrial automation, telemedicine and so on, because of its low-delay characteristics.

1G to 5G: From Following to Surpassing


From the development course of mobile communication technology from 1G to 4G, it is basically a system-level iteration cycle for ten years. Overall, the overall pace of Chinese players from 1G to 4G is slow, but they are catching up with each other step by step.


1G era: led by the United States, domestic popularity is relatively late. The first mobile communication system was born in Chicago, USA, using analog signal transmission. Due to the limitation of transmission bandwidth, mobile communication can not achieve long-distance roaming. Therefore, countries have formulated their own communication standards, without a unified global standard. In the 1G era, China is almost in a completely backward state. In the early 1980s, the mobile communication industry was still blank, and in the late 1980s, the cellular mobile communication system began to be used.


2G Age: Europe leads, and China was built in the 1990s. In the era of 2G, Europe first started the research of GSM communication standard, invested heavily in GSM communication network, and set up international roaming standard, and then stood out. GSM in Europe has become the most widely used mobile communication standard all over the world. Other systems include TDMA, CDMA and so on. At that time, Chinese enterprises started relatively late in the field of wireless communication and had no voice in the world. China's mobile communication equipment and technology were monopolized by foreign countries.


In the era of 3G (the United States, Europe and China go hand in hand): The cross-border parallelism of multiple standards in different regions is a major feature of the era of 3G. The European-led 3GPP organization has developed the 3G standard of WCDMA, which is the highest coverage of base stations in the world. The United States led the establishment of 3GPP2 organizations to compete, and launched the CDMA2000. In 2000, the TD-SCDMA standard led by China Datang Telecom was established as the mainstream of 3G by ITU (International Telecommunication Union). In early 2009, the Ministry of Industry and Information Technology officially issued the 3G license, and China entered the 3G cycle. Although China has been able to formulate its own communication standards in the 3G era, it still lags behind the European and American markets in terms of progress.


4G era (breakthrough in China): Global operators have decided to adopt LTE as the fourth generation communication standard. In the 4G cycle, China reversed its long-standing weakness in the field of standard-setting and achieved a breakthrough in the voice of the international communication community. In February 2013, China Mobile's TD-LTE trial was launched five years after the international 4G standard was formulated, leading the licence issuance at the end of the year. Unlike in the 3G era, there are still several months of preparation and trial period between licence issuance and formal commercial use. Under the background of complete construction and operation of communication infrastructure, operators will start formal commercial use immediately after licensing.


From 2015 to 2019, the State Council and the Ministry of Industry and Information Technology successively emphasized the development of 5G in their plans for launching. At present, China has taken the 5G commercial pace as one of the key tasks in 2019. Due to the attention of Chinese policymakers, not only in construction, B2B and other application scenarios, but also in 5G construction. For example, on March 29, Miao Wei, Minister of Industry and Information Technology, said that one of the greatest applications of 5G technology in the future is vehicle networking, which has reached a consensus with the Minister of Transportation to rebuild highways. This high degree of policy coherence is difficult for other policymakers to achieve.

Chinese science and technology enterprises are ready for 5G


We believe that the pace of issuance of 5G commercial licences exceeds expectations. On the one hand, it shows that the relevant supporting facilities of 5G industrial chain have matured rapidly and have a commercial basis; on the other hand, more importantly, it also shows the determination of the Chinese government to develop 5G industry.


At present, the progress of 5G in the United States is slow, and China is the world leader in 5G technology. Although the 5G concept has been popular in the major media in the United States for a while, overall, the United States is still in the initial stage of 5G development. Of the four major U.S. telecommunications operators, only Sprint has made a difference in 5G. Overall, the four major U.S. telecommunications operators are cautious about 5G-related capital expenditures.


The biggest problem facing the development of 5G networks in the United States is the shortage of IF spectrum. Asian regulators, including China, Korea and Japan, have allocated IF spectrum to operators. Such spectrum is usually less than 6Ghz, which will become the mainstream 5G spectrum in the world. Considering the problem of millimeter wave propagation, it is expected that 24-28Ghz millimeter wave will play an auxiliary role. However, the current spectrum auction in the United States is mainly focused on millimeter wave, and the time of IF spectrum auction is still uncertain.


Thanks to the rapid development of technology in recent years, Chinese science and technology enterprises are ready for 5G. According to the latest research data of patent analysis company IPlytics, as of March 2019, China ranked first in the number of 5G patent applications in the world with 34%, followed by Korea with 25%.


Take Huawei as an example to examine the technological reserves of Chinese technology giants. Huawei has invested more than 100 billion yuan in R&D, ranking fifth in the world in "EU Industrial R&D Investment Rank 2018". Huawei has invested $2 billion in 5G technology and product development since 2009. It is the only telecommunications company in the world that can provide end-to-end 5G commercial solutions, Huawei said.


Before the U.S. ban on Huawei was announced in May, Huawei had made significant progress in 5G applications in Switzerland, South Africa, Saudi Arabia, Indonesia and other major countries. According to the data disclosed in Huawei's annual report for 2018, nearly half of Huawei's revenue comes from overseas. Europe, the Middle East and Africa account for 28.4% and Asia-Pacific account for 11.4%. It can be said that Huawei has been able to export mature technology to the world.


5G will lead a new wave of Industrial Revolution


We believe that 5G's role in upgrading and reinforcing the 4G mobile Internet is not revolutionary. The breadth and accuracy of 5G network also expand the other two application scenarios. Large-scale Internet of Things communication can access more terminals to the network. The representative application scenarios include: Internet of Things, block chains, smart agriculture, smart city, energy Internet, smart home, remote control, etc. Ultra-reliable low-delay communication can greatly improve the accuracy of communication, and representative application fields. The scene includes autopilot, smart grid, telemedicine, industrial automation and so on.


Taking intelligent driving as an example, intelligent driving based on the Internet of Vehicles is one of the most important application scenarios of the Internet of Things. The requirement for seamless coverage is extremely high. In addition, it requires low network delay and good mobility, which is the advantage of 5G over 4G. More importantly, as more and more cars connect to the Internet, the data of autopilot will increase the global wireless communication traffic by 40 times on the current level. So much data can be transmitted at high speed, only 5G can do it.


Generally speaking, the most important application of 5G is industrial and enterprise application, which is no less important than a new industrial revolution. Any industry can improve its efficiency through 5G. Some industries benefit from 5G technology to derive new application scenarios and business models, which may lead to the introduction of new competitors.


China's 5G market will lead the world

Although small economies such as Korea may lead China in the process of 5G commercialization, China will still be the largest 5G market in terms of market size. China has the largest number of communication network consumers in the world and the most diversified industrial structure, thus providing a test field for 5G related industrial and enterprise applications. According to the Global Mobile Communications Association (GSMA), by 2025, the number of 5G connections in the world will be 1.4 billion, of which China will account for 460 million, surpassing the total of North America and Europe, ranking first in the world.


For global telecommunication service providers, they are reluctant to lose China, an important market. We believe that, thanks to the world's broadest market for consumers and industrial and enterprise customers, Huawei and other Chinese local technology giants are expected to continue to lead 5G innovation and development by relying on R&D investment barriers over the past years. After the leap from following to surpassing in the 4G era, China is expected to continue to lead the world and win the first chance in the 5G era.