The partnership strategy of China Broadcasting Network (CBN, China’s new entrant and the fourth mobile operator), as well as the distribution of 700MHz spectrum, was finally settled in May. Omdia expects that the new partnership between China Mobile and CBN will drive the development of 5G in China and create good opportunities for vendors. However, despite the optimism about China’s 5G development, Omdia also notes some uncertainties.
China has four mobile operators in the 5G era but, in terms of 5G networks, two alliances have finally emerged in the race – “China Mobile + CBN” vs “China Telecom + China Unicom.”
In September 2019, China Unicom and China Telecom took the lead by forming a 5G network “co-build co-share” framework alliance. Compared with the big three operators in China, CBN is weak in terms of telecoms infrastructure, hence its network strategy has been the subject of intense interest in the industry.
CBN’s network strategy and its plans for its assets, notably its 700MHz spectrum, have now finally been revealed. On May 20, 2020, China Mobile and CBN announced a collaborative agreement in relation to 5G co-construction and sharing. The two parties shall jointly invest in the construction of the 700MHz 5G wireless network at a ratio of 1:1, and jointly own and have the right to use the 700MHz 5G wireless network assets. According to the agreement, China Mobile will open up and share its 5G network in the 2.6GHz frequency band on a paid basis. Before the 5G network in the 700MHz frequency band becomes commercially available, CBN may share China Mobile’s 2G/4G/5G networks on a paid basis to provide services to its customers.
Omdia expects there to be good opportunities for both China Mobile and CBN as a result of this collaboration.
For CBN, access to China Mobile’s 2G/4G/5G networks will solve the difficulties of lacking the legacy telecoms infrastructure and empower CBN with almost immediate network capability. Moreover, with China Mobile – the largest service provider in terms of mobile subscriptions – joining the 700MHz camp, the maturity of the 700MHz 5G industry is likely to accelerate.
For China Mobile, the right to use the 700MHz band will be a great complement to China Mobile’s 5G spectrum, contributing to a spectrum portfolio of 700MHz, 2.6GHz, and 4.9GHz bands. Specifically, Omdia expects the valuable 700MHz spectrum to help China Mobile to expand 5G coverage much more quickly, making it easier to achieve national coverage.
Under the agreement, the two parties’ cooperation has a duration of around 10 years. In the long term, Omdia believes this new partnership will drive more profound impacts on China’s 5G market, integrating two ecosystems, telecoms and content, and leveraging both parties’ traditional strengths. According to the agreement, China Mobile and CBN will jointly explore innovations in areas such as products and operations, carry out in-depth collaboration in areas such as content and platforms, and pursue collaborative operations in areas such as channels and customer services.
The Omdia report, COVID-19 in China: Opportunities Exist Amid the Challenges, expects 5G deployment to accelerate in the post-COVID-19 era. The research shows that the big three service providers – China Mobile, China Telecom, and China Unicom – have planned significant 5G investments for 2020, over four times the number of 5G investments in 2019. Now, with CBN’s plan set, Omdia expects there to be even more opportunities for vendors.
However, uncertainty remains due to the US government’s recent move to restrict Huawei’s access to US chip technology, announced on May 15. At its annual Global Analyst Summit (HAS2020), held in Shenzhen, China, in May, Huawei said that its supply chain is more open than ever but the impact of the US government’s sanctions still needs to be evaluated.
As Huawei is currently the largest 5G equipment vendor in China, the tech giant has a significant role to play in China’s 5G development.
COVID-19 in China: Opportunities Exist Amid the Challenges, GLB007-000373 (April 2020)
Trends to Watch: China, GLB007-000323 (November 2019)
Ramona Zhao, Research Manager, Asia-Pacific Service Provider Markets
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