China ‘to invest $2.5bn this year’ on 5G in 40 cities

17 June 2019 | Alan Burkitt-Gray

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The three Chinese network operators will have 5G coverage in at least 40 cities this year, with investment reaching $2.53 billion, according to a government agency.

Investment will peak at the equivalent of $33 billion a year by 2024, says CCID Consulting, part of the Ministry of Industry and Information Technology (MIIT), in a white paper on the development potential of 5G.

But the investment in 5G will boost China’s economic output by 10.6 trillion renminbi, equivalent to $1.53 trillion, says the report.

CCID Consulting believes that the penetration rate of 5G mobile phones will reach 2% in 2020, 30% in 2022, and 75% in 2024, with total 5G mobile phone ownership due to exceed 1 billion in 2024.

MIIT has issued 5G commercial licenses to the three major operators – China Mobile, China Telecom and China Union – as well as to China Radio and Television.

The government wants to focus on 18 pilot cities with its 5G investment. Most of these are in China’s highly populated eastern districts, including Beijing, Tianjin, Hebei, Shandong, Shanghai (pictured), Jiangsu, Zhejiang, Fujian and Guangdong. Lanzhou, in Gansu province in the north-west, is the only city outside the heavily-populated areas of the country.

Shen Guansheng, deputy general manager of the CCID Consulting, told First Financial News that the three major operators will deliver 5G networks in at least 40 cities this year. An evaluation show that the top five cities for investment will be Beijing, Shenzhen, Shanghai, Guangzhou and Chengdu, said Shen.

The operators selected Shanghai last year to become the first of the 5G pilot cities. Huawei, ZTE and Nokia’s local operation – part Chinese-owned – Nokia Bell are all focusing on 5G technology research and development in Shanghai.

Shanghai is in the Yangtze River Delta, which now has its own 5G Innovation and Development Alliance. He Renlong, chief planner of the east China branch of China Information and Communication Research Institute, told reporters that the Yangtze River Delta has a high degree of enthusiasm for innovation in 5G applications. However, industry customers have insufficient understanding of 5G technology, said He.