Confused about 5G? It's time to dispel the fog

State-of-the-art 5G was hailed as the “next big thing” and a “game changer” for years. Now it’s going from buzz words to reality.

China recently officially revealed its 5G development timetable, signaling it will begin issuing “temporary” 5G licenses this year.

The coming generation of cellular mobile communications will bring high data rates, reduced latency, energy saving, cost reduction and high system capacity to consumers and network operators.

It’s expected to be 20 to 50 times faster compared than current 4G networks and faster than the fastest family broadband networks today.

The low latency, or time delay, of 5G will offer rapid response for artificial intelligence and other applications that include the Internet of Things, robots in manufacture plants, smart and self-driving vehicles, and professional game competitions in eSports battlefields.

No one can deny the huge potential of 5G, which is expected to change our daily lives, stimulate the economy and cause a surge in information use. It is expected to bring direct investment of more than 1.2 trillion yuan (US$176.4 billion) from Chinese communications carriers, help the sluggish smartphone market rebound and offer greater connection among devices.

“5G will be bigger than 3G and 4G,” said Cristiano Amon, president of Qualcomm, the world’s top mobile chip designer.

Timeline clarified

China will issue “temporary” 5G licenses this year, the industry regulator announced on January 12.

The 5G licenses will be issued to several cities, allowing consumers in those locations access to the first batch of 5G smartphones and tablet computers in the second half of 2019, said Miao Wei, the minister of the Ministry of Industry and Information Technology.

It’s the first time China’s top industry regulator has clarified the 5G industry timeline, especially the debut of 5G phones.

Overseas operators in South Korea, the United States and Europe kicked off commercial 5G services in December, and more are scheduled to debut in the first half of this year.

Between 2020 and 2025, 5G is forecast to create industry output of 3.3 trillion yuan, contribute 10.6 trillion yuan to the Chinese economy and create 3.1 million new jobs, according to the China Academy of Information and Communications Technology, a research institute under the ministry.

China Mobile, China Telecom and China Unicom, which offer services to 1.2 billion mobile users nationwide, have spent heavily to prepare for 5G.

Chinese mobile carriers are expected to invest 1.2 trillion yuan in 5G by 2025, 50 percent more than their total 4G investment. The three carriers are expected to build over 4.9 million 5G macro base stations by then, Nomura said.

The 5G generation will open up new business in smart manufacturing, super high definition video, eSports gaming and smart driving. The carriers won’t just be “dumb pipelines” for voice and data services, said Duan Bing, an analyst with Nomura’s China Telecom and Technology Research team.

The improved 5G network is expected to fuel demand for data usage. But for carriers, the return on investment may be years in coming because of debt incurred in long and costly development.

In November, China’s monthly mobile data usage reached 5.8 gigabytes, double the level of January 2018. Improved 5G is expected to challenge the carriers’ broadband business in the long term.

Though a detailed technology roadmap hasn’t been decided yet, most advanced 5G technology will offer download speeds of up to 20 gigabits per second, 10 to 20 times faster than current advanced broadband networks.

Despite the challenges, Chinese and global carriers have pinned their futures on 5G. The four largest US carriers — Verizon, AT&T, Sprint and T-Mobile — mentioned 5G an average of 28 times each in their most recent earnings calls with investors, according to media reports.

Chip and gear vendors 5G will start to be accessible this year, said Qualcomm. The US company released its latest mobile platform Snapdragon 855 with 5G features in December, even though most countries haven’t issued 5G licenses yet.

Last week, Huawei launched the world’s first 5G base station core chip called Tiangang. It’s the world’s first core chip specifically designed for 5G base stations, with a 2.5-fold increase in capacity over previous chips.

“We were the first to make breakthroughs in key technologies for large-scale 5G commercial use,” said Ryan Ding, Huawei’s executive board director.

Huawei also launched Ba Long 5000, calling it “the world’s most powerful 5G modem. It will showcase a foldable 5G smartphone and 5G eco-system products at an industry conference next month in Barcelona.

Shanghai-based Unisoc, which offers a mobile phone baseband chip, has also targeted 5G and the Internet of Things as key strategic growth points in coming years.

The new generation of communications will also affect equipment makers like Huawei, Ericsson, Nokia and ZTE.

To date, Huawei has won 30 commercial 5G contracts and sold over 25,000 5G base stations globally.

Swedish-based Ericsson has just completed a phase-three 5G trial test with Chinese partners, cementing its strong presence in the market.

In a previously published report, Ericsson said it expects 5G device sales will hit 1 billion by 2023, bringing huge opportunities and changes to “humans, society and business.”

Smartphone vendors will be happy to hear that forecast of 1 billion devices, which could herald a turnaround for their sluggish market.

In the third quarter of 2018, China’s smartphone sales fell 15.2 percent from a year earlier, according to Canalys, which called it “the worst quarter in recent years.”

It’s easy to understand why smartphone vendors are investing heavily in 5G.

Xiaomi, which had its initial public offering in Hong Kong last year, will invest 10 billion yuan in the next five years on an “all-in” strategy covering artificial intelligence, Internet of Things and 5G, according to Lei Jun, Xiaomi chairman and chief executive.

Oppo, the No.2 smartphone vendor in Chinese market, has said it will increase its annual research spending to 10 billion yuan in 2019 from 4 billion yuan last year, mainly covering 5G and AI.

Other vendors like Huawei, Vivo and Lenovo also announced plans on 5G testing and product debut. OnePlus, a Chinese smartphone startup, announced in December it will release 5G phones in the first half to overseas markets.

There will be about 30 5G models when China starts trial commercial use of 5G this year, China Mobile said recently in Guangzhou.

Patience, patience

Despite all the current hoopla, consumers in China will have to cool their heels before getting their hands on 5G services. In its initial stages, 5G use is expected to be targeted at businesses.

Only about 20 percent of connections will involve consumers, while 80 percent will involve connections among devices, said Miao.

The first batch of 5G services will be available to consumers in only about 10 cities. They may become more accessible to normal consumers later than expected. More work needs to be done to ensure the maturity of 5G, which won’t happen until 2020, UBS said recently.

With more than 1 billion mobile subscribers, Chinese carriers have to deal with legacy 4G assets, which have already cost them plenty.

“It’s not possible to have widescale adoption of 5G in a short period,” said Wei Leping, a senior official at the ministry. “It’s too much investment to each carrier,” Li Zhengmao, China Mobile vice president, has noted the challenges of 4G and 5G network convergence and issues of investment return.

The price of a 5G device will cost an average 8,000 yuan or more, four times the average price of smartphone now, China Mobile said recently.

And then, too, there are concerns about whether 5G will really become the “killer application” of its reputation.

Aside from its commercial applications like robotics and smart driving, its popularity among consumers is still uncertain. Services such as augmented reality, which would benefit greatly from 5G speeds, have not proven all that popular with the public.

Most analysts don’t expect Apple to launch a 5G version of the iPhone until 2020. “Facebook and email won’t be any different on 5G,” one analyst noted. “In China, neither will WeChat, Taobao and email.”