China Mobile reveals 5G network expansion plans; China Telecom and China Unicom agreement on 5G network sharing
Lu Lu, a senior researcher at the China Mobile Research Institute, said in an industry speech last week that China’s largest wireless network operator expects its 5G network to reach 50 cities by the end of 2019 and 300 major cities by the end of 2020. Ms. Lu said that China Mobile aimed to reach commercial scale in 5G by June next year and that 5G private networking will be a major new enterprise network service. Edge computing, which was not used for 4G-LTE, was seen as essential for delivering customizable private networks, she said. The flexible architecture of the new 5G network was the critical factor, allowing for much more granular services and applications.
In addition, China Mobile is planning to offer network slicing services by the middle of next year when its standalone 5G network achieves commercial scale. That despite no standards for network slicing interoperability between different vendors.
“At present, China Mobile has reserved hundreds of nodes in edge computing rooms. Based on these nodes and 5G networks we will carry out trials of relevant edge computing services,” Lu said. China Mobile and its partners hoped to provide “full-stack edge-computing capabilities to industry customers,” she added.
The Chinese telco is building a “one-stop cloud-network convergence platform” that can provide customized service capabilities in both centralized data centers and data centers at the edge of cities around the country, Lu said. The operator has issued network slicing templates for six industry verticals — power grid, autonomous driving, gaming, entertainment, banking and medical. In partnership with Ericsson, China Mobile exhibited a network slicing-based autonomous vehicle application at MWC2019 in Barcelona earlier this year.
Earlier this year, Ms. Lu delivered a speech to introduce the achievements of the cooperation between China Mobile, Huawei, and Baidu, and elaborated on the concept of “5G network as a service”. She also invited partners to jointly build the 5G ecosystem and continuously promote the maturity of 5G technologies and industry development.
China Mobile Executive Vice-President Li Zhengmao has said he believes private networking and network slicing offered some of the best prospects among new 5G services.
“Operators can create a network-slicing-as-a-service business model, providing high-reliability, high-performance and easy deployment for the vertical industry through a centralized network slicing service platform,” he said in an interview with state news service Xinhua.
But he acknowledged that the lack of clear business models in industry partnerships was one of the biggest problems.
China Mobile has set up a 5G Joint Innovation Center to drive application development, with more than 500 industry partners and more than 400 vertical industry partners, Li said.
Separately, China Telecom and China Unicom, agreed to share the efforts to build and maintain 5G radio access networks across the country. The purpose is to accelerate deployment and slash associated infrastructure costs.
Each wireless carrier will be responsible for operating their own core networks, but will share spectrum resources and a single RAN network (which typically accounts for around 80 per cent of an operator’s capex). Under the agreement, the two companies will be individually responsible for construction and maintenance in specific regions.
In a statement China Telecom said: “The commencement of the co-build and co-share cooperation is beneficial to the efficient construction of [the] 5G network and will rapidly create 5G service capability to enhance network quality and business experience.”
It added the reduced costs would reinforce market competitiveness and achieve a win-win for both parties.
Both operators will continue to handle core networks and branding completely independently, with the collaboration only applying to the construction and ongoing maintenance of physical infrastructure assets. The network will use the companies’ combined spectrum.
In 2016, the operators collaborated on 4G network construction, a move which reportedly saved China Unicom millions in capex within the first year and helped the two better compete with the country’s largest operator, China Mobile.
2 thoughts on “China Mobile reveals 5G network expansion plans; China Telecom and China Unicom agreement on 5G network sharing”
China Unicom earnings report:
China Unicom has overcome flat revenue growth to post an 11.1% increase in net earnings for 2019. The state-owned telco slashed opex by 22% and marketing cost by 5% to record a 11.3 billion yuan ($1.6 billion) full-year profit, it revealed today.
But like rival China Mobile, the improved financial performance can’t hide its tepid top line growth. (See China Mobile reports 15.4M 5G customers.)
“In 2019, the domestic telecommunications industry development experienced a short-term pain with weak revenue growth and pressure on industry value,” Chairman and CEO Wang Xiaochu said.
Revenue of RMB290.5 billion ($41 billion) was off 0.1%, while service revenue increased just 0.3% to RMB264.4 billion ($37.3 billion).
Unicom’s core mobile services business declined 5%, despite an extra 3.4 million customers, while its broadband segment shrank 1.7%.
Over the last six years China Unicom’s gross revenue has increased just 2% as first its voice and now its data businesses felt the impact of increased competition and government-mandated price-cutting.
As signs of improvement, Unicom pointed to its 11% increase in earnings before interest, tax, depreciation and amortization (EBITDA) and the rise of 3.5 points in EBITDA as a percentage of service revenues.
It also stressed the gains in its emerging enterprise services.
The industrial Internet unit grew by 43% and now accounts for 12% of total services sales. IT services revenue reached RMB10 billion ($1.4 billion), up 78% year-on-year, while the IoT business grew 46%, to RMB3 billion ($420 million).
The cloud and big data segments, while still small, each more than doubled sales.
The company also said it is reaping the benefit of the network sharing partnership struck with China Telecom last September.
The two telcos had jointly saved RMB10 billion ($1.4 billion), Unicom said, enabling it to invest RMB29.7 billion ($4.2 billion) in its mobile networks – up 59% from the previous year – as it readied its 5G network ahead of national launch last November.
Actively executed new vision with remarkable achievement in the “co-build and co-share” of 5G network In September 2019, the Company entered into a cooperation agreement with China Telecom to jointly build one 5G access network across the country.
While significantly saving capital expenditure, the Company would enjoy the doubling of 5G network coverage, bandwidth, capacity and transmission speed, providing users with better experience. Currently, the two companies (China Unicom and China Telecom) shared 50,000 5G base stations and jointly saved investment costs of RMB10 billion.
In the future, the Company will leverage the advantages of “co-build and co-share” and invest steadily, precisely and dynamically on 5G network deployment, with due regard to the Page 4 of 5 technological progress, maturity of the value chain, as well as market and business demand, etc. While achieving material saving in capital expenditure and operating expenses, the Company would see its 5G network quality comparable with the leading operator. In addition, the Company will actively and comprehensively step up the “co-build and co-share” with China Telecom in areas such as 4G indoor distributed antenna systems, server rooms, optical fibre and pipelines to further enhance network advantages and corporate value.
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