Are China’s huge 5G numbers to be believed?


Disclosure: 

Many experts believe you can not trust any economic numbers reported by China’s government. China has a long history of opaqueness when it comes to reporting economic statistics. Here’s a reference: https://www.heritage.org/international-economies/commentary/the-problem-false-chinese-economic-data

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Summary:

Xie Cun, Director of China’s Information and Communication Development Department of the Ministry of Industry and Information Technology (MIIT), stated last week that China has built more than 1.15 million 5G base stations, accounting for more than 70% of the world.

Prefectural-level cities, more than 97% of counties and 40% of towns and towns have achieved 5G network coverage.  China’s network operators report they have a total of 450 million 5G terminal users, accounting for 27% of all mobile subscribers in China and more than 80% of the world.

210 million 5G smartphones have been sold in China so far this year, up 69% over 2020 and representing nearly three-quarters of all handsets sold in China.

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Analysis:

The overarching  factor in China’s spectacular 5G statistics is the role of the national government.  In addition to its direct control of the three state owned network operators [1.], the CCP has ensured – through its high-profile national plans, the supportive Chinese media, and the now-ubiquitous enterprise party committees – that the entire industry is in sync with its prolific 5G ambitions.

Note 1. China Mobile, China Telecom and China Unicom are together allocating 185 billion yuan ($29 billion) for 5G capex this year alone.  5G plans are available at ultra-low prices, with China Mobile’s entry-level package around $12 a month.

According to the China telecom operators’ numbers, the total number of ‘5G package’ subscribers is 667 million – more than 50% higher than the number of actual 5G users. That’s because there are a tremendous number of 4G subscribers buying the bigger 5G packages.

Light Reading’s Robert Clark wrote:

The operators and the MIIT do not disclose the kind of meaningful network rollout data used by operators in the rest of the world, like percentage of population covered.

So we know nothing about the actual reach of China’s giant 5G project. Most likely, the two giant networks – China Mobile’s and the shared China Telecom-China Unicom network – each covers exactly the same population.

Which leads to the second problem – the distortions of a top-down plan driven by bureaucratic dynamics rather than market needs.

Major cities have rushed to offer rent and tax rebates to speed up rollouts and, of course, to catch the eye of their Beijing bosses.

According to Light Reading’s count, a year ago the wealthy cities of Shanghai, Beijing and Shenzhen accounted for nearly a third of the total 5G rollout.

That is why the MIIT’s new five-year plan makes a point of demanding that 5G be extended to 80% of all rural administrative villages by 2025. Currently, 5G is available in exactly 0% of them.

The other problem in this approach is the built-in irrational exuberance. Since launching 5G, the telcos have worked tirelessly to build out a portfolio of enterprise use cases, as anticipated by the national 5G plans. China Mobile, for one, has developed 470 enterprise apps and nine industry platforms.

But the operators are now tapping out, acknowledging the futility of developing thousands of customized applications, most of which they now admit are “showroom-only.” That’s without getting into the complexities of telco generalists trying to sell into highly specialized segments.

At first look, the scale of China’s government mandated 5G project seems quite impressive.  However,  in reality it’s a story of fake numbers, rapid rollouts and low subscriber prices.

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References:

https://www.finet.hk/newscenter/news_content/61944e4dbde0b33639732370

https://www.lightreading.com/asia/behind-chinas-huge-5g-numbers-fast-rollout-and-low-prices/d/d-id/773735?

https://spectrum.ieee.org/how-america-can-prepare-to-live-in-chinas-5g-world

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