While operators in Europe and India complain about high spectrum costs, those in China and Japan receive 5G spectrum on a beauty contest basis. They are allocated their licences for free, in return for producing strong roadmaps to deploy new networks quickly and in a way that will support national broadband objectives.
The three Chinese MNOs have now received their first 5G licences, but they have their own challenges too. The government has awarded a fourth licence, introducing a new entrant, the cable TV provider China Broadcasting Network, to the market.
The decision to increase competition, and to award the licences earlier than expected, is seen as part of the escalating trade war with the USA, which is heavily focused on 5G leadership. China is no doubt hoping to accelerate the progress of its roll-outs, to support the pressurized Huawei and to score bragging rights against its US rival.
This will create issues for China Mobile, China Unicom and China Telecom though. They may be state-owned but they are commercial operators with the same challenges of stagnating ARPU and huge upgrade costs as their counterparts in free market economies.
China Broadcasting Network was created by the country’s National Radio and Television Administration (NRTA) in 2016 and awarded a basic telecoms licence, but no mobile rights at that time. Now it will be able to offer quad play bundles as well as delivering video over 5G as well as cable. From the NRTA’s perspective, that will strengthen it against over-the-top video services while also increasing competition in the mobile space and encouraging new 5G services.
China Mobile may be the most vulnerable – it has 60% market share and 932m customers, but has lost some ground to its smaller rivals in the 4G era, and its dominance is weighted towards the lower end consumer base while Telecom has been more successful in the enterprise, and Unicom – which was performing poorly a couple of years ago – has been bailed out by an interesting consortium of web and industrial investors, all interested in supporting a 5G roll-out that meets their needs.
The three telcos have conducted extensive 5G trials this year, using midband spectrum allocated for testing purposes in late 2018. China Mobile had installed around 540,000 4G base stations in 2018, taking its total across the country to 2.4m, and it is estimated that it could build up to 50,000 5G base stations this year, with China Unicom and China Telecom rolling out around 20,000 each. Their costs and speed should be helped by their giant shared infrastructure venture, China Towers, though it is unclear whether the new entrant will have any access to that.