The Race for 5G: China Is Winning
The Race for 5G: China Is Winning
Many countries have been in a race to be the first to commercially release 5G, the 5th generation of mobile internet. China is the one leading the charge of the race for 5G with a network being released in late 2019 in some major cities. The rest of the country should follow early 2020. The new generation of mobile internet is said to be extremely fast and a very tough competitor to Wi-Fi.
Why China wants to win the race for 5G
The USA was the first country to release 4G which led to a major economic boost. Since China is expected to release 5G first, a similar economic development is predicted. However this boost will most likely be much bigger than the one for 4G. The total amount of revenue generated by 5G at the end of 2020 is forecast to be somewhere around $672 billion. Moreover in 2025 the total amount of connections from the 5G network will be about 1.2 billion, which amounts to 14% of all connections worldwide. Of these 1.2 billion connections China will have around 575 million connections. Therefore, the Chinese population will account for about 40% of the global 5G connections.
Chinese mobile companies are state owned, which is a reason for the quick development of 5G by China. The Chinese mobile companies and government are eager to win the race for 5G to have access to the IP-rights. Currently, Chinese companies have to pay several European and American companies. Thus, Chinese companies are extra motivated to obtain as many intellectual property rights as they can get on 5G. This would allow Chinese companies to earn royalties from foreign companies and to have the possibility to cross license with foreign firms, decreasing the amount of royalties paid by Chinese firms.
Huawei leading the race for 5G
China has the world’s largest smartphone market. The leading technology developer Huawei, which is one of the first companies to have developed a 5G network announced that the network could support a 100 billion devices. It claims to have the most advanced 5G technology and are 18 months ahead of any of the other companies and countries who are in the race for 5G.
China mobile is one of the front runners and is the biggest mobile network provider in the world, with a staggering amount of 1 billion subscribers. Which in turn means that there is no doubt that they will also release their 5G network. They are currently also testing in a few cities, several of which are: Hangzhou, Shanghai, Guangzhou and Suzhou. Furthermore, they are planning to build around 10.000 thousand 5G base stations in 2020. It is expected that China mobile will have and expenditure of about $2.46 billion at the end of 2019, while smaller players like China Unicom will have an expenditure of $1-1.3 billion.
China Unicom is the fourth biggest mobile internet provider in the world and owned by the Chinese government, which is why they are one of the front runners when it comes to the release of 5G. There have been several cities throughout China where the 5G network has been tested. Some of these pilot cities are Beijing, Shenzhen, Tianjin, Qingdao, Hangzhou and Nanjing. In total the 5G network has been tested in 16 cities. These cities all have 100 base stations that will be built for the sole purpose of testing this 5G network. Furthermore in addition to the 16 cities that the 5G network will be tested in there will be 12 cities in which the 5G network service will be demonstrated with local networks.
As stated before 5G is likely to have a massive economic impact, this means that every sector will be influenced in some ways. Some industries are impacted more than others. For example, 5G enables real-time guidance and even collaboration during the surgeries in the medical industry because of the fast connection
The amount of economic output China is projected to receive by 2030 will amount to somewhere around $945 Billion, this amount just goes to show how big the economic impact will likely be. Since this is an enormous amount of money the biggest network providers are projected to spend a combined $420 billion on 5G between 2020 and 2030, this in order to extend the 5G network even further.
The change from the 4G network to the 5G network is not expected to cause a huge change in the price of the mobile subscription. However, it is expected to be a slow process due to the sheer number of mobile phones used in China, which is more than 1 billion. Furthermore, you will need a special 5G phone in order to be able to access the network. This means that the 4G and the 5G network will co-exist in the future as it will take some time before consumers switch phones.
Made in China 2025
The impact of 5G is so big that there are even plans in which the network will play a crucial role. A Plan like this is the 10-year plan ‘Made in China 2025’, released in 2015. This plan was unveiled with the idea to make China an even bigger player in the manufacturing market. Another goal of the plan is to make China more independent from other countries.
5G will be one of the corner stones in making this plan work. A big part of this plan is about automating factories and using the Internet of Things(IoT). The IoT in essence means that any device could be linked to the internet and communicate with one another. This could lead to automating whole factories, cities or houses. The 5G network is very important for the IoT, so that automated devices can connect with each other without any interference. On some level the IoT already exists in China, however not on the scale that is desired by the Chinese government. The IoT is an ambitious project, and the 5G network will be an incredibility helpful tool to enable the usage of IoT on a much larger scale.
In general, 5G is a very exciting prospect for the future and will enhance many plans, economies and industries, with the tremendous speed it is supposed to be on. Think about automation, watching 4K videos or a smart house. And as with every new generation of this network, it will probably revolutionize the world.
This article was written by Koen Bolland, who contributed as an intern at our Beijing office.