Total spending on 5G infrastructure by mainland China’s three telecommunications network operators is forecast to reach up to US$180 billion over a seven-year period, dwarfing their estimated US$117 billion investment in 4G from 2013 to 2020. This is according to the SCMP.
That would represent about a 48 per cent increase in total capital expenditure by China Mobile, China Unicom and China Telecom from their combined outlay on 4G, said Jefferies equity analyst Edison Lee.
It would also surpass spending in Japan, where the total 5G outlay was forecast to hit US$46 billion over the same seven-year mobile technology cycle.
“The impact of 5G on innovative consumer and business services on the mainland will be significant, as all three telecommunications network operators will likely build out aggressively from 2019,” Lee said.
As the latest advance in mobile communications, 5G denotes a new era in which networks will adapt to applications, and performance will be tailored precisely to the needs of the user, according he GSM Association, a trade body.
The International Telecommunications Union, the UN agency overseeing development of the IMT 2020 standard for 5G technologies, has said the upcoming universal specification will support a million connected devices per square kilometre; 1 millisecond latency, or the amount of time a packet of data takes to get from one point to another; higher energy and spectral efficiency; and a peak data download rate of up to 20 gigabits per second.
China Mobile, the world’s largest mobile network operator, announced plans in March to start building trial 5G networks in major mainland cities from next year and launch full commercial services in 2020.
Lee said the predicted higher capital spending by the mainland network operators on 5G will be driven by a number of factors. Domestic 5G networks will initially be on the 3-gigahertz to 5GHz spectrum bands, which will require more base stations to provide the same coverage as 4G at present, he said.
In addition, all three mainland network operators are expected to swiftly push for nationwide coverage, with China Mobile likely to achieve that goal by 2021.
Jefferies predicts that the mainland will have 588.3 million 5G subscribers by 2022, about 39.9 per cent of total mobile users nationwide in that year.
“The major Chinese internet companies, Baidu, Alibaba Group and Tencent Holdings, will lead the way in introducing advanced consumer services based on 4K and 8K video, as well as augmented and virtual reality technologies, on the new 5G networks,” Lee said. New York-listed e-commerce giant Alibaba owns the South China Morning Post.
“Smart city initiatives will take advantage of the 5G networks to make use of artificial intelligence for public security, traffic management and disaster management,” Lee said.