Why China is in a hurry to issue 5G licenses

June 04, 2019 14:16
China will soon issue commercial 5G licenses, allowing the nation's telcos to speed up launch of the next-generation mobile networks. Photo: Bloomberg

Confronting a trade and tech war, Beijing is keen to prove a point to Washington, as well as the rest of the world, that it has the strength and capability to stand on its own and ride out the challenges. 

As authorities seek to showcase homegrown technologies and deliver a message that nothing can deter China from pursuing its development objectives, 5G appears to have become a handy tool. 

Evidence of this comes from acceleration in the plans for launch of commercial 5G mobile networks in the country. 

On Monday, state media reported that the government will soon issue 5G licenses for commercial operations, allowing the nation's big three telecom operators to speed up rollout of next-generation mobile networks.

The Ministry of Industry and Information Technology (MIIT) will issue commercial 5G licenses “in the near future”, Xinhua news agency said.

Though the report didn't provide a specific timeframe, there is speculation in the market that the licenses could be granted as soon as this month.

At the end of last year, authorities granted licenses to the three state-owned carriers -- China Mobile, China Telecom and China Unicom -- to conduct trials for 5G deployment.

Now, approvals are expected soon for full commercial deployment of the new high-speed networks.

Speeding up the launch will help Beijing achieve many objectives.

For one, it will demonstrate China's technological might, sending a powerful message to the Trump administration that its efforts to rein in a competitor through economic warfare won't succeed.

Also, 5G commercial licenses will prompt Chinese telcos to step up their investments, which will come as big help to embattled Chinese telecom equipment giant Huawei.

Huawei has seen its overseas business take a big knock due to US sanctions, so it could do with additional support from the domestic market.

Beijing has criticized the US for banning Huawei from doing business with US firms as well as foreign entities that use American technologies and components.

China Telecom has partnered with China Telecom for 5G network deployment, while other operators are using other suppliers.

Foreign entities such as Nokia and Ericsson and chipmakers Qualcomm and Intel had been involved in technical trials in China earlier. Beijing aims to show to the US government that it can still win the support of some big overseas firms.

Pushing 5G deployment is important for China as the nation needs to demonstrate its strength and ability, and tell the world that it will not give up on its plans despite the US trade and tech war. 

It is now clear that Beijing is on track to launch 5G commercial service within this year, making China one of the first countries in the world to offer the latest mobile technology to the mass market. The US, Korea and Switzerland launched 5G early this year.

Globally, 5G is in a critical period of commercial deployment. Despite efforts by Washington to keep China's tech development in check, the world's second-largest economy has seen its 5G industry establish a competitive advantage.

The 5G standard is a unified international standard jointly developed by the global industry. More than 30 percent of the 5G patents are from China, Chinese state media have noted.

With the joint efforts of local and foreign parties, China's 5G has reached the stage for commercial rollout. As Beijing issues licenses for 5G services, it will provide a huge market for both domestic and foreign enterprises to actively participate in network construction and application development.

The decision to bring earlier the launch of 5G commercial service can be seen as political move in the face of the US ban on Huawei. 

While Huawei has been blocked from participating in a number of foreign 5G network projects, it is still playing a major role as a key network equipment supplier to Chinese telcos.

When China Mobile held a bidding round for base stations in January, Huawei took half. Faster network deployment means Huawei can generate income quickly and cope better with foreign setbacks.

China Mobile, China Telecom and China Unicom have announced around US$4.5 billion in combined 5G-related investments for 2019. Once they get commercial service licenses, the telecom carriers will step up their spending significantly.

According to some experts, the three operators could build more than 100,000 base stations across China this year to provide 5G network coverage. That will be good news for Huawei as well as for some foreign equipment suppliers.

Once the networks get going, Beijing will have an opportunity to have the last laugh, at least in one aspect, in relation to the US trade war.

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EJ Insight writer