The development of 700 MHz 5G base stations will drive 5G investment in China in the second half of 2021.
Chinese telecom operators are progressing rapidly with the construction of 700 MHz 5G networks. 400,000 700 MHz 5G base stations are currently planned for deployment during the second half of 2021, making this the key driver of 5G investment in China.
700 MHz networks offer mobile operators an attractive combination of wide coverage combined with low propagation loss, which is ideal for 5G. The vast majority of the network infrastructure equipment is likely to be sourced from Chinese vendors, of which Huawei is the key contributor.
China is already among the world leaders for the speed at which it has rolled out its domestic 5G networks. According to China’s Ministry of Industry and Information Technology (MIIT), 847,000 5G base stations have been deployed in China, as of June 30, 2021. During the recent MWC 2021, Bi Qi, chief expert of China Telecom, announced that the total number of 5G base stations in China is expected to reach 1.7 million by the end of 2021, meaning Chinese operators will double the number of 5G base stations deployments over the next 6 months.
Commenting on China Telecom’s announcement, an MIIT spokesperson remarked “...this sounds a quite aggressive number”. However, several recent developments in China, notably the partnership between China Mobile and China Broadcasting Networks, announced in January 2021, indicate that the target is realistic.
China’s New Mobile Operator Builds Nationwide 700 MHz 5G Network
In June 2019, the Chinese Government granted a 5G license for the 700 MHz frequency to China Broadcasting Network (CBN). Launched in October 2020, the company is China’s newest mobile operator and the only network authorised to operate nationwide, providing cable TV, mobile, fixed broadband and satellite communication services.
In January 2021, CBN and China Mobile announced a strategic cooperation agreement to jointly develop a 700 MHz 5G mobile network and at a China Mobile press conference in March, it was announced that the partners plan to complete the construction of 400,000 700 MHz 5G base stations by the end of 2021.
The two carriers agreed to share the investment costs for network construction, expansion, and renovation equally. In addition, China Mobile is providing access to its existing 2.6 GHz 5G network to CBN in return for access fees.
Work is progressing rapidly and the two companies will in total purchase more than 480,000 700 MHz 5G base stations this year. According to the bidding result just announced on July 18, Huawei has won around 60% share of the total and this procurement of low frequency 5G base stations will bring major benefits to Huawei.
CBN and China Mobile also jointly released the device requirements for 700 MHz 5G in March 2021. All 5G smartphone models launched after October 1, 2021, should support the 700 MHz band and voice over NR. CBN stated that 400,000 5G base stations will be deployed in 2021 and nationwide coverage will be achieved in two years.
According to the recent study “China’s 5G Base Stations to Double in 6 Months?” by Strategy Analytics, “So far, most 5G base stations in China are deployed in the 2.6 GHz or 3.5 GHz band. The 480,000 base stations in 700 MHz will be a significant boost to the 5G infrastructure market and will also be a catalyst for the 5G development in China.“
The award of CBN’s 5G license has led to increasing interest in the 700 MHz frequency from China’s other three telecom carriers, China Mobile, China Unicom and China Telecom, each of which holds 5G licenses for 2.6 GHz and 4.9 GHz. Areas where 700 MHz offers significant advantages include rural and remote coverage, and industrial IoT.
Rural and Remote Area Coverage
The 700 MHz band has the dual advantages of a wide coverage coupled with low propagation loss, making it ideal for the provision of universal coverage in rural and remote areas.
The number of base stations required for 700 MHz is far fewer than with other frequencies, reducing network CAPEX and OPEX. 700 MHz 5G networks only require 20% of the base stations need for a 2.6 GHz network, 16% of the number required for a 3.5 GHz network, and only 11% of the base stations needed for a 4.9 GHz 5G network.
“700 MHz could be used to build a nationwide low-frequency 5G shared access network for rural areas and could be shared by the four telecoms firms to avoid duplication of construction”, according to Zhang Yunyong, General Manager of China Unicom's product centre and a member of the National Committee of the Chinese People's Political Consultative Conference. Guang Yang from Strategy Analytics believes that 700 MHz 5G will enable 5G network extensions to reach broader areas more cost-effectively.
Industrial IoT and B2B Applications
In addition, the good radio penetration of 700 MHz band can effectively enhance 5G indoor coverage. Both these characteristics help operators improve user experience and grow their customer base.
This means that 700 MHz 5G networks have a big potential to stimulate the development of 5G B2B and industrial IoT applications. CBN has a strategic investment from a subsidiary of the State Grid Corporation of China (State Grid), one of the pioneers of 5G industrial applications in China.
State Grid has already deployed some large scale 5G smart power grid applications. According to Guang Yang “In the future, CBN could leverage the partnership with the State Grid to explore 5G industrial business opportunities based on the superior propagation characteristics of the 700 MHz band”.
Chinese 5G Network Growth Mainly Benefits Chinese Vendors
Despite the geopolitically motivated setbacks Chinese vendors have experienced recently in North America and elsewhere, the investment in 5G networks and base stations by Chinese operators in 2020 has continued to increase demand for 5G network infrastructure. In the end this is mainly beneficial to Huawei and other Chinese vendors.
Moreover, the level of 5G related CAPEX now planned by China Unicom, China Telecom and China Mobile for 2021 is even higher than their spending in 2020, as 700 MHz networks are developed further. Current Chinese operator 5G network deployments are focused almost exclusively on tier 3 or above cities. As consumers and businesses come to see the advantages and opportunities offered by 5G, there is little doubt this trend will continue.