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27 October 2020

Now there are four, as China Broadcasting becomes commercial MNO

China Broadcasting Network (CBN) has become the country’s fourth commercial MNO, just over a year after the company started trials of its 5G infrastructure. It is an offshoot of the state TV provider of the same name, which owns  51% of the shares.

Other investors are State Grid Information & Telecommunication Group, Alibaba Venture Capital Management, Guangdong Radio Television Network and Beijing All Media and Culture Group.

The stage was set in June 2019 when the country’s Ministry of Industry and Information Technology (MIIT) doled out commercial 5G licences to the three major telcos, China Mobile, China Telecom and China Unicom, as well as CBN. The regulator wanted to have four nominally competing operators, even if the overall 5G roll-out can be regarded more as a state-run exercise.

CBN is a hybrid between an MNO and MVNO, since it is sharing infrastructure with market leader China Mobile. Like other new entrants such as Japan’s Rakuten Mobile, it will rely more heavily on its MVNO deal at first, and then morph towards being a full MNO. Even then, it will rely on an extensive network sharing agreement with China Mobile, which gives the newcomer access to Mobile’s 2.6 GHz network, as well as receiving expertise, guidance and investment.

Going forward, the companies have confirmed they will jointly fund and deploy a network in the 700 MHz frequency, with CBN contributing from its registered capital of RMB101.2bn ($15.2bn).

Over time, CBN plans to spend more than that, having set a target of $36bn for total investment in 5G infrastructure. CBN’s entry will though have an immediate impact by helping the MIIT meet its ambitious 5G targets, firstly to cover all of China’s prefectures by the end of 2020. There are 293 such prefectures or administrative cities in China. This will enable China Mobile to extend its rural coverage using fewer base stations than with its 2.6 GHz network, along the same lines as AT&T in the USA. We are likely to see more such collaborations among operators over infrastructure developments around the world.

Overall 5G deployment has been preceding at a frenetic pace in China, outstripping the rest of the world put together and there are no signs of this slowing, with the government thinktank, China Academy of Information and Communications Technology (CAICT), forecasting the country will have spent RMB1.2 trillion ($180bn) on 5G network construction by 2025, pulling along over RMB3.5 trillion ($524bn ) upstream and downstream investment in its wake.

So far, about 160m users have signed up for 5G plans in China, according to data from the operators themselves, although this does not quite tally with CAICT figures. This is still only 10% of the total 1.6bn mobile subscriptions, which reflects some people having more than one, but is rising fast. Already some earlier forecasts indicating that 30% of Chinese mobile subscriptions would be 5G by 2025 look wildly short of the mark even though they would be optimistic in many markets. It now looks like it will be more like 700m 5G subs by 2025, or approaching 50%, perhaps even more.

We can see this from levels of investment and activity. As we have noted, China’s 5G project is a collaborative effort spearheaded by government while involving operators, equipment makers, device makers and software developers. Roll-out of 5G base stations has been aggressive at a rate of 15,000 a week, and now exceeds 500,000 in total and on course for 600,000 by the year end. This has helped compensate Huawei for its recent miseries on the global stage, given it is the dominant manufacturer of both infrastructure and handsets in the country. Over 93m 5G mobile phones had been sold in the first eight months of 2020, again according to CAICT, with 60% of these being 5G-capable.

China Mobile is the leading operator although slightly less so over 5G so far, having reported that it had reached 98.2m ‘5G package customers’ in August, up 13.1m from July. By contrast China Telecom had amassed 57.1m subs by then, 8m up on the month.

China Unicom, the smallest of the three operators before CBN’s entry, has declined to disclose its 5G subscriber totals until its network is more mature, but we can assume at this stage it is a small number.

There is certainly a mismatch between the two leading operators’ aggregate claim of 150m 5G subs and the 94m 5G handsets shipped by the end of August. So if those numbers are all accurate, over 50m are paying for 5G plans but unable to enjoy the benefits.