Behind China’s huge 5G numbers: Fast rollout and low prices

China Mobile and Huawei win 5G Core Leadership Award at the 5G World Summit

China’s 5G rollout continues to grow on a wonderful scale.

According to official statistics released last week, operators now report 450 million users, accounting for 27% of all subs, and 1.15 million 5G base stations, reportedly more than 70% of the global total.

The handset industry has shipped 210 million 5G phones so far this year, an increase of 69% over 2020 and represents almost three quarters of all handsets sold in China.

The most important underlying factor in China’s spectacular attack on 5G is without a doubt the role of the national government.

In addition to its direct control over the operators, Beijing has provided ?? through its high-profile national plans, the supporting media and the now ubiquitous corporate party committees ?? that the entire industry is part of its 5G ambitions.

The leaders of the three telecommunications companies are all senior party nominees who do not need to be asked twice. They are being evaluated on their 5G progress, so it’s no surprise that they spend a lot, between them allocating 185 billion yuan ($ 29 billion) to 5G capex this year alone.

They have also made 5G available at ultra-low prices, with China Mobile’s entry-level package around $ 12 a month.

The rapid proliferation of 5G is a result of these low prices, but with the unexpected impact of too large a number of 4G subscribers buying the larger 5G packages. According to the operators’ figures, the total number of ‘5G package’ subscribers is 667 million ?? more than 50% higher than the number of actual 5G users.

These statistics are all celebrated in China as a sign of its 5G leadership. But while they are impressive, they are not terribly revealing.

The raw base station number, for one. The operators and MIIT do not disclose the kind of meaningful network rollout data used by operators in the rest of the world that the percentage of the population covered.

So we know nothing about the actual reach of China’s gigantic 5G project. Most likely, the two giant networks ?? China Mobiles and the shared China Telecom-China Unicom network ?? each covers exactly the same population.

Which leads to the second problem ?? the distortions of a top-down plan driven by bureaucratic dynamics rather than market needs.

Larger cities have been quick to offer rents and tax rebates to speed up the rollout and, of course, to catch the eyes of their Beijing bosses.

According to Light Reading’s count, the wealthy cities of Shanghai, Beijing and Shenzhen accounted for almost a third of the total 5G rollout a year ago.

Therefore, MIIT’s new five-year plan makes a point of requiring 5G to be expanded to 80% of all rural administrative villages by 2025. Currently, 5G is available in exactly 0% of them.

Want to know more about 5G? Check out our dedicated 5G content channel here at Light Reading.

The second problem in this approach is the inherent irrational abundance. Since the launch of 5G, telecommunications companies have worked tirelessly to build a portfolio of enterprise use cases, as envisaged by national 5G plans. China Mobile has first developed 470 enterprise apps and nine industry platforms.

But operators are now pushing ahead and acknowledging the futility of developing thousands of bespoke applications, most of which now admit “showroom only”. It is without getting into the complexity of telco generalists trying to sell to highly specialized segments.

The scale of China’s supply side 5G project is eye-opening, but in reality it’s a story of rapid rollout and low consumer prices.

?? Robert Clark, co-editor, special to Light Reading


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