5G is on the way

Now we are at the dawn of the 5G era, you often hear people ask, "How far away are we from 5G?" According to "The Mobile Economy China 2021" issued by the Global System for Mobile Communications Association (GSMA), as of January 2021, a total of 144 5G commercial networks have been established in 57 countries around the world, and the number of 5G connections has reached around 235 million.

In China, the world’s leading nation in the construction and deployment of 5G networks, the number of 5G connections has exceeded 200 million, accounting for 87% of the total number of 5G connections globally. An even more telling sign is that China's 4G penetration rate declined for the first time in 2020, indicating that an increasing number of consumers are interested in switching to 5G services.

The good news about 5G

Today's 5G is like a train, moving swiftly and surely forward along a well-laid track.

In 2020, China added approximately 580,000 5G base stations, built 330,000 shared 5G base stations, and established to date a total of 718,000 5G base stations. According to the timetable given by the Ministry of Industry and Information Technology, 2020 to 2024 will be the period of 5G network scale construction; 2025 to 2028 will be the period of improvement; and 6G will be introduced around 2029. Hence the next 7 to 8 years will be the golden years of 5G.

In terms of 5G terminals, the penetration rate of 5G mobile phones is also rising at an extremely fast rate. The "China Mobile Phone Market Report, March. 2021" released by the China Academy of Information and Communications Technology shows that in March this year, 5G mobile phone shipments reached 27.498 million units in the domestic market, already accounting for 76.2% of all mobile phone shipments during the same period. Furthermore, from January to March, the cumulative shipment volume of 5G mobile phones in the domestic market was 69.846 million units and 64 new models were launched, with 5G mobile phones accounting for 71.3% and 52.5% respectively. Moreover, 5G mobile phones priced below CN¥1,000 have hit the market, further driving sales and expanding market share.

Figure 1: A recently released 5G smartphone priced at only CN¥999 (Image source: Realme)

Conventional mobile communications with mobile phones as the carrier are only one of the many application scenarios that involve the use of 5G. In other words, the value of 5G can only be truly revealed when 5G fully penetrates all aspects of life and the Internet of Everything becomes a reality. Analysts’ forecasts are optimistic. For instance, Acumen Research and Consulting’s latest report entitled "5G Services Market--Global Industry Analysis, Market Size, Opportunities and Forecast, 2020-2027" predicts that from 2020 to 2027, the global 5G service market is expected to grow at a CAGR of approximately 29.7%, and market size will exceed US$250.3 billion by 2027. The China Academy of Information and Communications Technology also predicted the direct contribution of 5G to China's social development in the " White Paper on China's 5G Development and Its Economic and Social Impacts," stating that by 2030 5G will drive a total output of CN¥6.3 trillion, spur economic added value of CN¥2.9 trillion, and provide 8 million employment opportunities with indirect contributions bringing even greater benefits.

What are some of the applications in the 5G era?

Before we get overly excited by these ambitious visions of a 5G future, we should bear in mind that there is still a long way to go before they are realized. Clearly, 5G is obviously a "technology-driven" market. In such markets, technology is often the first step towards building infrastructure, while the growth of real demand lags far behind. Only when we ascertain which applications truly belong to the 5G era and are applicable to everyday life will we be able to determine whether all that 5G "big talk" is fantasy or reality.

It should be noted that 3G and 4G network bandwidth and capabilities have been rapidly exhausted due to the rise of the Mobile Internet. So what exactly are the killer applications in the 5G era? While there is no clear answer to this question yet, speculation has begun.

For example, since the second half of last year, operators have been raving about "5G messaging," This is an information service system based on the GSMA RCS UP standard that enables multimedia, lightweight, and interactive messaging by introducing MaaP technology. In other words, using the native SMS portal and the high bandwidth of 5G, richer multimedia content including text, pictures, audio and video, geographic location, mini programs, service interaction, and consumer transactions can be sent through 5G messaging. For businesses, 5G messaging clearly offers a more direct, more eye-catching and more controllable commercial promotion channel with immense room for creativity. From the user's point of view, it is far more convenient to scroll short videos in SMS or enjoy access to more multimedia information experiences without opening a specific app. It’s not surprising that some people have already begun calling for “moving Douyin to SMS” and the commercialization of 5G messaging.

Figure 2: 5G messaging is becoming a new application hotspot (Image source: https://www.huanqiu.com/)

In the Mobile Internet era, social media apps such as WeChat “moved the cheese” of mobile operators' text messaging. In the 5G era, whether operators can make a comeback with "5G messaging" remains to be seen. Regardless of whether 5G messaging eventually takes off, its emergence is significant. The question is whether we have a sufficient grasp of the technical architecture of 5G to reshape business logics and business models and fully embrace the 5G era. Only those who think fast and act quickly will be able to secure a place in the 5G value chain.

5G power consumption: growing pains

As 5G network deployment continues to expand, the trending topic of 2020 continues – namely 5G’s power consumption. Some industry seers believe that this will be a stumbling block for the future commercial use of 5G.

Compared with 4G technology, 5G will indeed consume more power. Consider the following:

• From the perspective of the radio frequency system, the 4G base station uses an 8-antenna RRU antenna matrix to achieve 2D MIMO, while the 5G base station uses a 64-antenna AAU antenna matrix to achieve 3D MIMO. After comprehensive evaluation, under the same efficiency, the power consumption of the 5G radio frequency system is twice that of 4G.
• From the perspective of base station deployment, as 5G uses a higher frequency band to meet the requirements of high bandwidth and Massive MIMO, the coverage area of a single base station will be smaller than that of 4G, which means that to cover the same range, theoretically the number of 5G base stations required is 1.2 to 1.4 times that of 4G.

According to estimates that take into account the above two factors, the energy consumption of a 5G network will be 2.4 to 2.8 times that of a 4G network. Converted into electricity bills paid for by China's three major operators for example, total annual electricity costs will rise from CN¥50.5 billion to CN¥120 - 140 billion after 5G networks are adopted. This expenditure is a "sweet burden" that operators must bear before 5G can be commercialized on a large scale, as well as a factor that makes it necessary for players in the 5G ecology to accelerate the pace of optimizing energy conservation, emission reduction and large-scale commercial use.

That said, these are “growing pains” that will ultimately disappear over time.

Development decision: 4G or 5G?

Apart from operators, other users have also encountered pain points on the road to 5G. Firstly, they must decide whether to switch from 4G to 5G, and when to make the switch. For the average end consumer user, this is just a change in the number on the bill. For a commercial user who is developing a cellular connection application, it is a weighty decision that will impact the entire product life cycle.

The good news is that in the upgrade from 4G LTE to 5G, standard makers and technology developers have already considered this issue. By adopting dynamic spectrum sharing (DSS) technology, operators can use the same spectrum for 4G LTE and 5G without dividing the spectrum, and can allocate spectrum resources flexibly according to usage. This flexibility also means that 4G LTE and 5G will be able to coexist harmoniously for a long period of time in the future, sparing developers unnecessary anxiety during this important phase of technological transitioning. In other words, those who are willing to try new things and are able to pay a high premium can use 5G connections, while applications that are more sensitive to cost and technical robustness can continue using 4G LTE.

As you can see, various approaches are eliminating all kinds of obstacles on the road to 5G. This is paving the way for the most important technological transition in the history of wireless communication, allowing more industry players to stake a claim in this emerging technology. Almost imperceptibly, we are already travelling on the road to 5G.