China gears up for 5G launch

January 22, 2019 12:52
Huawei said it has so far signed more than 30 commercial contracts for 5G network deployment and shipped 25,000 5G base stations. Photo: Reuters

China is frenziedly preparing for the rollout of fifth-generation mobile technology even as several western nations appear to be ganging up on Huawei Technologies to exclude the Chinese telecommunications equipment giant from their own 5G plans over national security concerns.

Last week, China made the first voice call on a 5G network, demonstrating the nation’s determined efforts to launch the new technology.

In a field trial in Shenzhen, China Unicom (00762.HK, 600050.CN) and ZTE Corp. (00763.HK) made a call using the latter's 5G prototype smartphone.

The test, conducted in Shenzhen, covered a range of planned 5G services, including WeChat group voice call, online video and web browsing. 

Shenzhen, which is one of the cities where China Unicom plans to pilot its 5G service, is currently verifying the 5G equipment's networking capabilities, special services, roaming and interconnection, as well as existing services, thereby laying a foundation for the construction of the 5G network. 

The test covers ZTE's 5G end-to-end solution, including radio access network, core network, transport network and intelligent devices.

ZTE, a smaller player than Huawei in the mobile equipment market, had been banned by the US government from dealing with US suppliers after it was caught doing business with Iran in violation of sanctions against the Persian Gulf nation.

Still, the company is working hard to step up its business operations, especially in 5G networks. Its smartphone brand Nubia is reportedly planning to launch its 5G handset in the first half of this year.

While ZTE is playing catch-up in the home market for 5G, Huawei is doubling efforts to sell its 5G technology amid western fears that it would be used by Beijing for espionage or hacking activities.

Huawei founder Ren Zhengfei said last week that the company has so far signed more than 30 commercial contracts for 5G network deployment and shipped 25,000 5G base stations.

Given its strength in 5G research and development – it currently holds 2,570 5G patents – Huawei does not seem to worry much about the western world's boycott.

“As long as we develop very compelling products, there will be customers who will buy them,” Ren was quoted as saying.

China's three state-owned mobile operators, including China Mobile (00941.HK) and China Telecom (00728.HK), will soon start the commercial trials of their respective 5G networks in key cities, after which the Chinese government will issue them licenses to provide the service.

But while China may be one of the first nations to launch 5G service commercially, the real impact will depend much on the number of handsets that will be sold in the market.

While some Chinese experts believe that Huawei could be the first Chinese smartphone maker to launch a 5G device, Xiaomi is likely to be first to unveil a 5G smartphone as it plans to do so at the Mobile World Congress in Barcelona next month.

Market observers said the device would be a 5G version of its Mi Mix 3 with 5G signal chip and the latest Qualcomm 855 mobile platform.

Supply chain sources said the 5G smartphone would cost about 500 yuan (US$73.5) more than the current 4G handset due to the more expensive 5G-related components.

So given that the average price of a Chinese smartphone is around 2,500 yuan, the 5G handset could be around 3,000 yuan at its launch.

That's quite competitive, considering that some foreign brands price their 4G smartphones at 4,000 yuan or above. That should help Chinese companies to more easily penetrate the market.

Industry players hope that the commercial launch of 5G service will help stimulate China's sluggish economy. The government itself expects 5G development to create 3.1 million jobs. China hopes to create 3.3 trillion yuan of economic value and overall output of 10.6 trillion yuan from the introduction of 5G technology. 

In fact, 5G, artificial intelligence, industrial internet and Internet of Things are the government's core investment priorities for this year, according to the National Development and Reform Commission, which sets the country's economic policies.

China is certainly eager to tap the opportunities presented by 5G technology to boost economic growth.

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EJ Insight writer