Major changes in the telecom landscape: 5G builds four licenses and two networks

On May 20, the parent company of China Mobile announced on the Hong Kong Stock Exchange that it would jointly invest in the construction of a 700MHz 5G wireless network with China Radio and Television Network Co., Ltd. Using 700MHz 5G wireless network assets, the cooperation period is from the date of entry into force of the 5G Cooperation Framework Agreement to December 31, 2031.

This is a new alliance formed by two other 5G players, China Mobile and China Radio and Television, following the announcement of cooperation between China Telecom and China Unicom in June 2019.

So far, the owners of four 5G licenses in China have completed the “two-two pairing”, and the 5G construction has formed a 2+2 pattern.

From the three major operators in the 4G era to the 2+2 in the 5G era, China Radio and Television, what does the arrival of this new entrant mean to the Chinese telecom industry?

700MHz frequency band sharing and co-construction

On June 6, 2019, China Radio and Television obtained the fourth 5G license issued by the Ministry of Industry and Information Technology in addition to China Mobile, China Unicom and China Telecom. In the spectrum allocation, 700Mhz was allocated to China Radio and Television.

The 700MHz frequency band was originally mostly used in radio and television services. On April 1 this year, the Ministry of Industry and Information Technology issued the “Notice on Adjusting the Frequency Use Plan of the 700MHz Band”, officially unbundling the 700MHz frequency band, and adjusting the frequency use plan of the 702-798MHz frequency band for mobile communication systems , and the 703-743/758-798MHz frequency band is planned for the mobile communication system with frequency division duplex (FDD) working mode.

The 700MHz frequency belongs to the golden frequency band in the communication business, and it belongs to the low frequency band in the frequency spectrum. In theory, the lower the frequency band, the smaller the loss, the wider the transmission range and the stronger the penetrating power. In the case of a certain coverage area, the less the number of base stations required, it is beneficial to save costs.

According to industry estimates, compared with the 2.6GHz system, the coverage area of ​​the 700MHz system is about 3 to 4 times that of the 700MHz system. Only 400,000 bases are needed to build a national 5G network using the 700MHz frequency band, while the three major operators need to build 6 million bases. macro base station.

This means that China Radio and Television can use the 700MHz frequency band to upgrade its 5G networking capabilities, and use the 700MHz low-frequency and large bandwidth capabilities to acquire customers in remote 5G areas.

Previously, China Radio and Television completed the laying of the 5G network of Leishenshan Hospital within 72 hours, and the frequency band used was the 700MHz frequency band.

At the opening ceremony of the World 5G Conference, Zhao Jingchun, chairman of China Radio and Television Network Co., Ltd., officially announced the China Radio and Television 5G timetable. It is planned to start the commercial use of radio and television 5G in 2020, and to carry out personal user business and vertical industry business.

Industry insiders analyzed that, compared with the internationally common 3.5GHz frequency band, 700MHz started late, and the industry chain is relatively immature. Before the official commercial use, it is still necessary to solve the integration of radio and television networks and the migration of terrestrial analog TV and terrestrial digital TV services in the 700MHz frequency band. And other issues.

The latest news released by China Radio and Television shows that its 5G construction has entered a full-scale development stage, and the communication equipment industry chain supporting medium and low frequency bands is becoming more and more mature, and 700Mhz network terminal equipment is also being developed at an accelerated rate.

The announcement shows that China Mobile and China Radio and Television agreed in the agreement that China Mobile will provide 700MHz frequency band 5G base stations to China Radio and Television’s transmission bearer network at the prefecture or provincial center docking point, and open and share the 2.6GHz frequency band 5G network for a fee.

At present, the 5G frequency licenses held by China Mobile include the 2.6GHz and 4.9GHz frequency bands.

5G industry observer Fu Liang analyzed that for China Mobile, 700MHz can be used to solve the coverage problem in edge areas, and paid use to expand the source of income.

As a new player, China Radio and Television also needs a partner to supplement commercial and network operation experience in this frequency band. Therefore, China Mobile can be regarded as the best partner of China Radio and Television.

The announcement also shows that China Mobile will undertake the operation and maintenance of the 700MHz wireless network, and China Radio and Television will pay China Mobile the cost of network operation and maintenance. Before the 5G network in the 700MHz band is ready for commercial use, China Radio and Television will share China Mobile’s 2G/4G/5G network for a fee to provide services to its customers. At the same time, China Mobile provides paid international business transfer services for China Radio and Television.

Fu Liang told Jiemian News reporter that compared with the three major operators of China Mobile, Telecom and China Unicom, China Radio and Television entered the 5G market later, and its accumulation in operation and maintenance, marketing, and package formulation is not as good as that of the other three operators. At the same time, China Radio and television itself lacks 2/3/4G networks and cannot quickly acquire users. The cooperation with China Mobile can help China Radio and Television to speed up the commercial process of 700MHz, reduce the pressure of operation and maintenance, and at the same time improve its own networking capabilities.

5G construction forms a “2+2” pattern

From the three operators to the “2+2”, 5G era, it is foreseeable that this will cause new shocks and impacts to the operators’ market structure.

In September 2019, the listed companies of China Telecom and China Unicom successively announced to the capital market that they signed the “5G Network Co-construction and Sharing Framework Cooperation Agreement” with each other, and will jointly build a 5G access network nationwide.

Fan Yunjun, deputy general manager of China Unicom, once said that as of April, a total of 100,000 5G base stations have been opened, 5G co-construction and sharing have been opened in 31 provinces across the country, and 5G has been officially commercialized in more than 50 cities. China Unicom and China Telecom will jointly build and share, and strive to complete the construction of 250,000 base stations nationwide by 2020.

The cooperation between China Mobile and China Radio and Television also represents that the four domestic 5G license holders have completed the “two-two pairing”, and the 5G construction has formed a 2+2 pattern. “The 5G network will be the de facto two networks, One for Mobile Radio and Television, and one for China Unicom,” said Chen Zhigang, a senior observer in the communications industry.

Compared with the cooperation between China Unicom and China Telecom, Chen Zhigang believes that the cooperation between China Mobile and Radio and Television is fundamentally different. He pointed out that in terms of openness, China Mobile’s 2G/3G/4G networks are all open to China Radio and Television, while China Unicom only cooperates with 5G, and the former is more open.

From the perspective of the form of cooperation, the cooperation period of mobile radio and television is ten years, and the degree of integration between the two parties is deeper, and the cooperation of mobile radio and television is market-oriented cooperation; the cooperation of China Unicom and telecommunications is planned economic cooperation.

From the perspective of complementary advantages, the 700M low frequency jointly built by the two parties is complementary to the 2.6GHz high frequency that China Mobile has also opened to radio and television and the 4.9GHz high frequency that both sides overlap. It has advantages in terms of network construction cost and network construction speed.

In addition, there are industry insiders who have analyzed that China Radio and Television is a standard setter in the 5G content ecology, with a general platform for integrated broadcast control platforms for OTT, mobile phone TV, and IPTV content, as well as a rich and high-quality audio and video content library. The cooperation announcement shows that the ecology created by the cooperation between China Mobile and China Radio and Television is a dual ecology of “content + network”.

Industry observer Fu Liang believes that if radio, television and China Mobile cooperate, the growth rate of new users can reach 10% in the second half of this year or the first half of tomorrow. For other operators, there is a risk that their shares will be divided up.