Huawei to cheer as China overtakes US in 5G spending

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China has outspent the US by $24 billion in 5G infrastructure since 2015, according to a new study by Deloitte.
5G forecast by GSMA
Earlier, GSMA said there will be 1.2 billion 5G connections in the world by 2025. The 5G subscription base will represent 14 percent of connections at that time.

China 5G

# China has 10x more sites for 5G than US
China added more sites in 3 months of 2017 than US had done in 3 years
China outspent US by $24 billion since 2015
China built 350,000 new cell phone tower sites
US built less than 30,000 cell sites
35% cheaper to install 5G equipment in China compared to US
# US underspent China in wireless infrastructure by $8-$10 bn per year since 2015
# China’s 5-year investment plan projects $400 billion in 5G
# US need to spend 2.67 times the amount that China spends to generate an equivalent amount of wireless network capacity
# China has 1.9 million sites, 10 times more than US
# China site yields 40 times the tower density per square mile

China has built 350,000 new cell sites, while the US has built fewer than 30,000 in the same time-frame. But the Deloitte report did not reveal the specific investment by China and US operators in 5G networks ahead of their launches.

Leading telecom operators in China are China Mobile, China Telecom and China Unicom.

Deloitte’s report noted that China plans hundreds of billions of dollars in 5G-related spend.

US may find challenges to match China on investment, the report said.

Recently, FCC announced new rules for selling 5G spectrum in the US. Top wireless service providers in the US include AT&T, Verizon, T-Mobile US and Sprint, among others.

5G is expected to enable $12.3 trillion of global economic output in 2035, IHS Markit estimated in a recent report.

Deloitte estimated that the equipment necessary to add a carrier in China cost about 35 percent less than the US, suggesting that Washington would need to spend 2.67 times the amount that China does to generate an equivalent amount of wireless network capacity.

“China and other countries may be creating a 5G tsunami, making it near impossible to catch up,” Deloitte said in its report.

Deloitte in its telecom research report recommended that the US should deliver lighter-touch policy frameworks to reduce deployment times of equipment required for 5G. It recommended the creation of a national communications infrastructure database in order to help share data between various parties.

Huawei to cheer

This is seen as a big boost for China-based Huawei and ZTE. The Shenzen based Huawei is the leader in the China telecom equipment market. Telecom network makers such as Nokia, Ericsson and Samsung are also looking for 5G equipment deals in China.

Since Huawei is facing crisis in some of the telecom equipment markets such as US and Australia, the main beneficiary of the latest development will be Huawei. Ericsson recently said it is looking for 5G equipment deals in China.

5G in Asia

In June 2018 a GSMA report said that Asia Pacific will become the world’s largest 5G region by 2025. Australia, China, Japan and South Korea are making investments in 5G networks. The report did not talk about India which is home for BSNL, Bharti Airtel, Vodafone Idea and Reliance Jio.

Asia region will have 675 million 5G connections by 2025, more than half of the global 5G total expected by that point.

“Mobile operators in Asia will invest almost $200 billion over the next few years in upgrading and expanding their 4G networks and launching new 5G networks in order to accelerate the growth of Asia’s digital economies and societies,” Mats Granryd, GSMA Director General, said.

5G, which is up to 10 times faster than 4G, will be an important platform for technologies such as self-driving vehicles.

The number of 5G users in China will reach 576 million by 2025, or more than 40 percent of the global total, according to an industry report by EY.

The high cost of 5G base stations, roughly 150 to 200 percent that of 4G base stations, will be putting pressure on telecom carriers, according to the China Academy of Information and Communications Technology.

Baburajan K

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