China is one of the world’s most advanced countries in deploying 5G to support large-scale enterprise and industrial services. There are many case studies of innovative solutions, based on 5G Standalone, being applied to factories, property developments, venues, smart cities and many more. The government says there are more than 4,000 enterprise 5G projects in China, and the operators are even more bullish, saying they are supporting 8,000 between them.
However, by contrast with countries, such as Germany, that aim to accelerate the roll-out of 5G enterprise networks by allocating spectrum directly to industries, China’s ‘private networks’ have all been deployed by one of the three major MNOs, in MNO-owned spectrum.
This makes a recent announcement in the country interesting. State-owned aircraft manufacturer Comac has become the first Chinese company to be awarded spectrum directly, in order to deploy its own 5G private network. This has prompted speculation that operators may lose their monopoly on licensed spectrum and that the Chinese government may believe diversifying spectrum ownership could better support its two related 5G goals – to be the most advanced 5G country in the world in pursuit of industrial transformation, and a fully self-sufficient one in terms of technology and applications.
Comact has gained spectrum in the 6 GHz band and the 25 GHz band. The former has been partly opened up, in many parts of the world, for unlicensed or lightly licensed use, and the main technology to exploit this has been WiFi 6E. However China, along with many MNOs round the world, has argued that most of the 6 GHz band would be better reserved for expansion of licensed 5G. The Comac award may be an indicator that, while China may not open 6 GHz up for WiFi, it could extend it to a more diverse range of 5G deployers than just the MNOs.
The new allocation will also create tensions with the satellite sector in China, since much of the band has been in use for fixed satellite services.
A research note by local investment analysts Huachuang Securities said the move was of “great significance” for enterprise private networking and would likely “accelerate development of the industrial Internet industry chain and empower thousands of industries”.
This is likely to be overplaying the matter. China may well allocate precious spectrum only to a few critical services or infrastructure providers, that are state-controlled, rather than opening up a free-for-all for enterprises. And these new spectrum owners are still highly likely to turn to China Mobile, China Unicom or China Telecom to deploy and run their 5G networks, since they will lack such skills in their own right.
The other logical partners in this area would be the big cloud/integrator companies like Alibaba, and indeed, if the government allocated direct spectrum to these organizations, there could be a disruptive impact on the MNOs. Alibaba, and others such as Baidu, are interested and engaged in 5G, notably when they took stakes in Unicom, to rescue it during a financial crisis, but also to influence its 5G roll-out so they could harness that network for their own business purposes.
However, a new precedent has been set in the MNO-driven market, which reflects the increased urgency that geopolitics has brought to China’s plans to modernize its industries, and particularly to apply digital transformation to its manufacturing base and to key strategic products such as aircraft and telecoms equipment. Comac is currently engaged in a very high-profile project to develop China’s first homegrown passenger jet, which has a significant role in the national bid for self-sufficiency in all the enablers of modern life and competitiveness.
At a conference on enterprise 5G in China recently, Zhang Yunming, deputy minister at China’s MIIT, said the country had created a unique industrial 5G model led by the national government but with local government support (local government plays a highly significant role in funding ad supporting Chinese hi-tech), which was creating a framework to facilitate interworking between industry and operators.
He said this model was ready for large-scale deployment though certain key enablers were still in progress. In particular, he called for industries and public agencies to work together to devise 5G standards and frameworks that are optimized for each industrial sector.