Shiv Putcha, Principal Analyst at emerging tech specialists Mandala Insights, shares impressions from MWC Shanghai on the momentum of 5G in the Chinese market, and concludes that the hype is real.

In a previous post about the flagship MWC event in Barcelona, I had opined that it was impossible to leave Barcelona without having “5G etched, scratched or even burned into your brain.” Well, it was more of the same in Shanghai, with the added boost of the world’s largest telecom market having announced new 5G license awards barely three weeks prior to MWCS19. Indeed, on June 6th, China awarded 5G licenses to three incumbents – China Mobile, China Unicom, China Telecom – and one surprise package, which was China Broadcast Networks.

While the timing of the announcement may have come as a surprise to many China watchers, it was clearly not a surprise for the prospective 5G operators, who went all out to showcase 5G in their respective booths, replete with demos, use cases and battalions of attendants at every station. During keynote speeches at MWCS19, China’s communications service provider (CSP) community made announcements underscoring the size of 5G launches in China as well as ambitious plans to scale these networks.

China Mobile’s CEO announced plans to launch commercial 5G in 50 cities by the end of 2019. China Telecom announced that it had already started building a hybrid standalone/non-standalone (SA/NSA) network in 40 cities across the country. These announcements will boost the groundswell behind 5G in 2019, as the number of “Year 0” launches accelerate at a much faster pace than 4G, with China accounting for more than fifty percent of global sites for 5G.

China’s 5G networks will have one fundamental difference to the rest of the world. We expect that these networks will cater heavily to industrial use cases. In a country that is effectively the factory of the world, the number of use cases and the efficiencies that can be driven across industrial segments will be a huge boost to productivity and China’s economy.

Primarily, we expect the primary 3GPP roadmap option chosen to be a combination of option 3x NSA and option 2 SA in order to cover the majority of scenarios. Moreover, China’s 5G networks will have one fundamental difference to the rest of the world. We expect that these networks will cater heavily to industrial use cases. In a country that is effectively the factory of the world, the number of use cases and the efficiencies that can be driven across industrial segments will be a huge boost to productivity and China’s economy.

5G Momentum Is Real, Despite Vendor One-Upmanship

Not that it hasn’t happened before, but the week at MWCS19 was full of claims and counter claims from the major network equipment providers (NEPs) like Nokia, Ericsson and Huawei. While Huawei claimed the outright lead in 5G with over “50 commercial deals and over 150,000 base stations shipped”,

Nokia pointed to its 43 commercial deals with many of them “public” of which more than half are non-RAN deals, highlighting their end to end portfolio! Ericsson, for its part, encouraged analysts not to focus on top line numbers but instead the depth of engagement with its customers as a much more worthy metric of success. If I had polled Samsung as well, I would have likely got similar claims of 5G success and market leadership. It’s easy to be dismissive of all the constant one-upmanship on display from the vendor community but lost in the noise of these claims is the fact that 5G really does have momentum and the numbers of operators across the world who have accelerated their deployment timelines is real and significant. In Korea and China respectively, amongst the earliest Asian markets to deploy and announce 5G respectively, all the major NEPs have won market share, to varying degrees. While Huawei can claim to have the early lead, Ericsson has managed to retain its tier 1 customer base and Nokia is able to leverage its end to end portfolio to pick up 5G “wins” across different network domains.

China’s New Digital Economy Will Be A Major Driver For 5G

MWCS19 was awash with demos of industrial and vertical use cases but the larger takeaway from this event was China’s new focus on the “digital economy”. This is another way of saying that the “enterprise” segment, whether for private industry or Governmental applications, will be the dominant driver of demand for 5G connectivity. Many of these “private networks” will be run as a managed service by mobile operators, thereby opening up new revenue streams. Many others will be run by the enterprise “privately”, fully onprem with local edge compute and management.

The incredible scale offered by China’s industrial and government sector has already manifested in a massive installed base of IOT devices that underpin smart cities, smart lighting, parking and a range of use cases based on NB-IOT technology. China Mobile’s CEO made pointed remarks about China becoming a $2 trillion plus (150 trillion RMB) “digital economy” by 2035, with over 50% of the economy being attributable to digital. For this to be achieved, China’s installed base of IOT devices, already vast, will need to grow exponentially and will require reliable connectivity. Much of the hard work to enable this has already been done by Chinese SPs, with the market boasting over 5 million macro “cells”, far larger than its nearest comparable telecom market.

Densifying the networks will add millions more sites to the current inventory, all of which will need new optical “fronthaul” and backhaul networks that will need to be managed through digital technologies like SDN, and AI/ML.

Shiv Putcha

Founder & Principal Analyst, Mandala Insights
  

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