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Infinite Possibilities
China ushers in a new chapter of communication as 5G licenses for commercial use are granted
By Zhang Shasha  ·  2019-06-14  ·   Source: NO.25 JUNE 20, 2019
A researcher works in a microwave darkroom at Purple Mountain Laboratories, a major technological innovation platform on 5G chip research and development, in Nanjing, east China's Jiangsu Province, on June 6 (XINHUA)

Despite a great deal of information, people still find it hard to imagine how 5G will benefit their lives or the world at large. Some clues can be traced back to 2012, before the commercialization of 4G.

Based on reports at the time, people knew 4G would provide smoother videos on smartphones, but they couldn't possibly predict the boom of the short video industry. They realized that 4G would make mobile payments easier, but the ideal method at the time was through credit cards, and no one knew a Quick Response code would soon replace cash payment, revolutionizing the field. Other unpredicted results included the emergence of mobile e-commerce, food delivery services and ride-hailing platforms. People's predictions couldn't jump out of the box of the existing technologies and logics.

Within just a few years, 4G and its spawned services have made a profound impact on people's lives, with the benefits including more than just speed. Similarly, speed may be the least significant change of the new 5G network, although it is nearly 10 times faster than 4G. At present, we know that 5G will empower virtual reality, augmented reality, automatic driving and the Internet of Things, but what we cannot imagine is the transformation and upgrading it will bring to industries and its potential for innovation.

On June 6, the Ministry of Industry and Information Technology (MIIT) granted the first 5G licenses for commercial use to China Telecom, China Mobile, China Unicom and China Broadcasting Network, initiating the new 5G commercialization era and opening the door to infinite possibilities. The move is ahead of schedule as it was originally projected to be launched in 2020.

A lucrative chain

The speed up of 5G is generally a boon for the industrial chain, which consists of a string of stakeholders, such as operators, equipment manufacturers, smartphone manufacturers and others.

A report by Pacific Securities, a Chinese investment bank and brokerage firm, said that in the preliminary stage of 5G commercialization, the beneficiaries are mainly equipment manufacturers and their upstream suppliers. By 2020, Chinese domestic telecom operators are expected to have invested 220 billion yuan ($31.8 billion) on 5G network equipment, according to the China Academy of Information and Communications Technology (CAICT), and the global market will be even bigger. The construction of 5G is bringing a number of deals to equipment manufacturers like Huawei and ZTE, making them the biggest players at this stage.

During the middle-term stage, a trend of mobile terminal replacement is expected, with new products already available. Thus, consumer spending on terminals and telecom services will see rapid growth, which will make terminal equipment manufacturers, operators and related industrial chains the main beneficiaries. In 2018, there was a downward trend of smartphone sales, partly attributable to a lack of innovation; thus 5G will be a catalyst for a new round of consumption.

As 5G terminals and networks become more popular in the final stage, 5G-related information services are poised to embrace a burst of growth.

"The commercialization of 5G will lead the new generation of information technology to penetrate all walks of life and drive the growth of new products, services and business models," Jiang Jiang, a researcher with the Institute of Industrial and Technological Economics at the Chinese Academy of Macroeconomic Research, told Beijing Review. For example, in combination with telemedicine, precision medicine could break through bottlenecks and make it possible to acquire more clinical data and advance applications for new technologies, she said, adding that the same is true for other industries.

"5G can propel the transformation and upgrading of the real economy and boost industrial development while seizing new opportunities in the digital economy," said Wang Zhiqin, CAICT deputy head.

In addition, the participation of China Broadcasting Network will be noteworthy since it is a big variable in the industry. In recent years, with the impact of the Internet, users of big screens have turned their heads toward small screens. How to regain their attention in the future is an important challenge.

"There are broad prospects for China's 5G development," Chen Baoming, a researcher with the Chinese Academy of Science and Technology for Development, said. "The release of the consumption potential and the development and application of technology and products should be a mutually reinforcing process. Meanwhile, the application of 5G will effectively promote economic development."

A boon for China's economy, 5G also brings good news for the global economy. By 2035, 5G will enable $12.3 trillion of global economic output, which is nearly equivalent to the U.S. consumer spending total in 2016, according to a report by IHS Markit, a London-based global information provider. In addition, the global 5G value chain will generate $3.5 trillion in output and create 22 million jobs by 2035 while the total contribution of 5G to the real global GDP will be equal to an economy the size of India, the seventh largest in the world.

A boy observes a 5G base station chipset developed by Huawei Technologies at the China International Big Data Industry Expo in Guiyang, southwest China's Guizhou Province, on May 26 (XINHUA)
5G acceleration

This year, the world has stepped up efforts to accelerate 5G development. To date, the Republic of Korea, the United States, Switzerland and the UK have opened 5G services, according to GSMA Greater China, which is part of Groupe Speciale Mobile Association (GSMA) representing the interests of global mobile network operators. GSMA also estimated that by the end of the year, there will be 29 cities around the world open for 5G services with 10 million connections made.

Against this backdrop, China aims to seize the momentum and take the initiative in accommodating the world situation.

Chen Baoming told Beijing Review that the issuance of 5G licenses at this time is a result of the joint effect of supply and demand. He said the combination of increasingly mature technologies and products along with growing social demand triggered the issuance.

"China has adhered to innovation and opening up and has established competitive advantages in 5G technology and standards," Gong Daning, a senior engineer with the CAICT Policy and Economics Research Institute, said.

In terms of technological standards, the 5G concept, scenarios and technical indicators initiated by China have been included in the 5G definition of the International Telecommunication Union, he said. In addition, some key technologies proposed by Chinese enterprises such as Polar Code, Massive MIMO and a new type of network architecture have become highlights of international standards.

According to a report released in April by IPlytics, an authorized patent data company, Chinese enterprises accounted for 36 percent of 5G standard essential patents (SEPs) among more than 20 global enterprises, ranking first in the world. SEPs refer to patents that use specific technology required to meet a technology standard.

From the perspective of industrial capacity, China took the lead in 5G technology research and development. China Mobile carried out tests in five Chinese cities, which will each have more than 100 5G base stations. The company will also open 5G services and demonstrate 5G applications in 12 cities across the country. China Securities, a Chinese investment bank and brokerage firm, estimated that the number of China's 5G base stations will be the most in the world by the end of the year.

Chen Zhaoxiong, Vice Minister of Industry and Information Technology, said that China's 5G technologies and products are becoming increasingly mature. The main links in the industrial chain such as the system, chips and terminals have basically reached the commercial level, with conditions ready for commercial deployment. At present, China's medium-frequency 5G equipment, terminal chips and smartphones are among the first tier in the global industry, Gong added.

Along with the foundation of technological and industrial advantages, Chen Baoming said he regards China's acceleration of 5G construction as a response to international competition. "Given the external pressure facing some Chinese hi-tech enterprises, it is a critical measure to promote the development of the domestic market and offer opportunities for their development," he said.


Joining hands

The MIIT emphasized that the 5G standard is an international standard jointly formulated by global players. It said foreign enterprises such as Nokia, Ericsson, Qualcomm and Intel have been deeply involved in the technical testing phase, which contributed to laying a solid foundation for the commercialization of 5G in China.

Meanwhile, Chinese enterprises are participating in global 5G construction. As of June 6, Huawei had acquired 46 5G commercial contracts in 30 countries around the world. ZTE has also promoted 5G cooperation with more than 40 global operators.

Jiang emphasized that 5G as a new technology should have no country restrictions since it will provide benefit to all global consumers with cheaper and more convenient and efficient products and services.

"China speeding up the construction of its 5G network will have a demonstrative effect on the world and trigger a worldwide momentum of 5G development," said Xiang Ligang, a renowned observer of China's communications industry.

MIIT stressed that China welcomes enterprises at home and abroad to actively participate in the building, application and promotion of its 5G network and share the sector's development dividends.

"The huge Chinese domestic market will play a crucial role in promoting global 5G development since China provides global players with access to fair competition and is willing to share the fruits of its 5G growth," Chen Baoming said.

Copyedited by Rebeca Toledo 

Comments to zhangshsh@bjreview.com 

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