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5G in China: Outlook and Regional Comparisons

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5G in China: Outlook and Regional Comparisons GSMA Intelligence 5G in China: Outlook and regional comparisons © 2017 CAICT caict.ac.cn • [email protected] • CAICT@WeChat © 2017 GSM Association gsmaintelligence.com • [email protected] • @GSMAi The GSMA represents the interests of mobile China Academy of Information and operators worldwide, uniting nearly 800 operators Communications Technology (CAICT) is a with more than 300 companies in the broader scientific research institute directly under the mobile ecosystem, including handset and device Ministry of Industry and Information Technology. makers, software companies, equipment providers and internet companies, as well as organisations CAICT is a specialised think-tank for the in adjacent industry sectors. The GSMA also government and an innovation and development produces industry-leading events such as Mobile platform for the industry. Its service portfolio World Congress, Mobile World Congress Shanghai, covers telecommunications, the Internet, Mobile World Congress Americas and the Mobile informatisation and the integration of 360 Series of conferences. industrialisation and informatisation. It contributes to the development and innovation of the country For more information, please visit the GSMA and the ICT industry by providing support and corporate website at www.gsma.com services in terms of strategies, plans, policies, regulations, technologies, standards, testing and Follow the GSMA on Twitter: @GSMA certification. www.caict.ac.cn GSMA Intelligence CAICT YU Xiaohui, Chief Engineer GSMA Intelligence is the definitive source of global WANG Zhiqin, Vice President mobile operator data, analysis and forecasts, and publisher of authoritative industry reports and Industry and Planning Research Institute: research. YANG Zizhen, Deputy Director PAN Feng, Vice Chief Engineer Our data covers every operator group, network LI Shan, Senior Engineer and MVNO in every country worldwide – from CAO Lei, Senior Engineer Afghanistan to Zimbabwe. It is the most accurate SHI Lifeng, Senior Engineer and complete set of industry metrics available, ZHANG Chunming, Senior Engineer comprising tens of millions of individual data LUO Zhendong, Senior Engineer points, updated daily. GSMA Intelligence is relied WANG Qiushi, Senior Engineer on by leading operators, vendors, regulators, HE Yang, Senior Engineer financial institutions and third-party industry players, to support strategic decision-making and long-term investment planning. The data is used as an industry reference point and is frequently cited by the media and by the industry itself. Our team of analysts and experts produce regular thought-leading research reports across a range of industry topics. www.gsmaintelligence.com [email protected] GSMA Intelligence Calum Dewar, Director of Forecasting David George, Research Director Mark Giles, Lead Analyst Tim Hatt, Research Director Contents Executive summary 2 1 Use cases 6 Consumer market opportunity 7 Enterprise market opportunity 9 2 Deployment 12 Merits of standalone vs non-standalone deployment scenarios 13 Enterprise – IoT, edge and slicing 16 Capex implications 16 3 Forecasts 18 4 5G: regional comparisons 20 5 The outlook and key challenges 26 5G IN CHINA Executive summary This report focuses on the outlook for 5G in China, as well as making comparisons with the outlook in other leading markets in the region, including Japan and South Korea. It explores the near-term outlook for testing and commercial launches, and potential use cases in the consumer and enterprise segments, as well as presenting forecasts for the number of 5G connections and the key future challenges. The report follows earlier analysis published by the GSMA (The 5G Era: Age of boundless connectivity and intelligent automation), which set out the five high-level goals for the 5G era, based on feedback from an extensive survey of 750 operator CEOs and other industry stakeholders. This report has been produced through collaboration between GSMA Intelligence and the China Academy of Information and Communications Technology (CAICT). It combines market research and survey feedback from a number of operators and other ecosystem players in China, South Korea and Japan. 2 Executive summary 5G IN CHINA Consumer use cases: early deployments target an enhanced mobile broadband experience Enhanced mobile broadband (eMBB) will be the core sub-6 GHz – and possibly mmWave – frequencies, as consumer provision for early 5G networks, and the well as, potentially, a 4K (or 8K) screen. We expect headline 5G services at launch are likely to be based prices to fall with large-scale adoption, as with earlier around 4K/8K Ultra-HD video and augmented reality technology generations. (AR) and virtual reality (VR) applications. China is likely to be a key market for VR, as many businesses Given that early 5G deployments will be mainly have been early adopters, giving consumers direct aimed at upgrading capacity for high-speed MBB, we experience of the technology. However, a lack of expect the majority of operators to initially market consumer content and device availability could 5G to consumers by emphasising its improved speed limit the adoption of VR services. As such, the compared to 4G, which should allow some scope for core application of 5G in its early phase will be to ARPU uplift through larger data bundles. There may be supplement the capacity of 4G networks as cellular scope for operators to price 5G at a premium to users data traffic continues to rise. of applications such as VR gaming and immersive entertainment services, who could conceivably be Although some services will require devices with offered a guaranteed quality of service (QoS) level for new form factors, we expect the smartphone to be an additional fee. Outside of this, it is difficult to see the principal 5G device at the launch of 5G networks. other opportunities for generating increased return on The first 5G smartphones are likely to be priced at investment (RoI) from 5G in the consumer segment at a premium to 4G models, as they will require an present. enhanced chipset and RF module supporting multiple Enterprise use cases: the largest incremental opportunity While operators will continue to explore opportunities 5G will deliver a number of enhanced capabilities over in the consumer space with the advent of 5G, and and above 4G, including increased data rates, reduced compete strongly to retain existing customers, it is latency and enhanced reliability, which operators can the enterprise segment that presents the largest attune to enterprise needs. Over time, as operators roll incremental revenue opportunity. Chinese, Korean and out 5G networks more widely, and as they implement Japanese operators are broadly aligned on the key virtualised core networks, edge computing and new verticals in which 5G can deliver value. These include back-office IT orchestration systems, we will begin to automotive and wider transport, logistics, energy/ see them offer differentiated networks as a service to utilities monitoring, security, finance, healthcare, enterprises, based on the concept of network slices. industrial and agriculture. They are collaborating with Such a step would be a departure from the traditional the broader mobile ecosystem and vertical industry enterprise connectivity business model. The positive is players to develop new services and business models that, in theory, better network quality offered through that will utilise 5G networks. slicing provides pricing leverage. On the other hand, the burden of maintaining a guaranteed QoS means operators will require rigorous monitoring software and redundancy measures to mitigate the risk of penalties if SLAs are not met. Executive summary 3 5G IN CHINA Deployment approaches: merits of standalone vs non-standalone There are two broad deployment scenarios for 4G, NB-IoT and a range of unlicensed cellular 5G networks: standalone and non-standalone. options, such as Sigfox and LoRa. The parts of Standalone would be a new-build network, IoT that fall within the exclusive purview of 5G are including new base stations, backhaul links those that are either much larger in scale or that and core network. A non-standalone network are mission-critical and therefore demand low would piggy-back on existing infrastructure, latency. In China, we expect the former to include supplemented by targeted small cell deployment logistics tracking, energy and grid management. in areas of high density. This is unlikely to be a Mission-critical applications could include one-size-fits-all story, with different approaches connectivity for robotics in industrial settings adopted by different operators at different points and traffic management in cities. This is as much in the 5G rollout timeline, reflecting the trade-offs about the broader ‘softwarisation’ of network associated with either option. architecture and the pushing out of computing power to the edge through the cloud (i.e. building Standalone offers larger scale economies and more data centres), as it is the new 5G standard. high performance as well as less complexity from legacy LTE integration, but it is more expensive On capex, indications from the Chinese mobile in the early commercial stage. By contrast non- operators are that 5G investment will follow a more standalone offers a quicker route to market, but its gradual path and over a longer timeframe than 4G, suitability is arguably greater for hyper-localised roughly seven years, from 2018 to 2025. Japanese deployments than national rollouts,
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