China’s Next Round of 5G Developments Highlights 5G-Advanced & 5G RedCap as the Powerhouses of Creation beyond Communications

China has been extending its global leadership of 5G deployments, with the latest reports of the total 5G subscriber base exceeding 1.3 billion as of 4Q 2023. 5G base stations also exceeded 3.2 million across the country and provide coverage for 100% of all prefecture-level cities and national-level cities. The number of 5G subscribers per Communications Service Provider (CSP) also continues to grow, with China Telecom and China Mobile welcoming 4.6 million and 3.6 million 5G subscribers, respectively, while China Unicom saw a 4.9 million increase in 5G package subscribers in September alone.

Considering consumer-centric developments, Chinese CSPs have capitalized on Enhanced Mobile Broadband (eMBB) monetization opportunities and new differentiated services that do not require network slicing and are based on the basic Quality of Service (QoS) network mechanisms. Enabled by 5G’s low latency capabilities, China Unicom offers personal broadcasting capabilities and gaming passes as part of their eMBB monetization strategies. China Unicom’s 5G Live Broadcast Package includes faster uplink and downlink rates than regular mobile plans and are well tailored for live video broadcasting on Chinese social media platforms such as Douyin, Kuaishou, and Bilibili. Established in 2021, 5G Live Broadcast Package has approximately 200,000 users today. Similarly, 3 Hong Kong also released its 5G LIVE Connect package, which allows for personal broadcasting, and a Gaming Pack that serves an add-on to mobile plans and has a rebate system for users to spend in respective online gaming stores.

Meanwhile, the three major Chinese CSPs experienced major spikes in 5G enterprise projects, jumping up from 491 to 18,000 between March 2022 and June 2023. China Mobile has the largest reported Data, Information, and Communications Technology (DICT) revenue, surpassing US$5.1 billion as of December 2022. On the manufacturing floor, CSPs in China have exemplified success with 5G-enabled factory and production lines to boost productivity and efficiency. At the COOEC Tianjin Intelligent Manufacturing Base, Artificial Intelligence (AI), welding robots, and Autonomous Guided Vehicles (AGVs) help boost production processes and implement intelligent warehouse management. The overall process pipeline improved by 22%, including a reduction in final assembly duration by 50%. Moreover, China’s first 5G Smart Chemical Park in Dongying Port in Shandong integrated Multi-Access Edge Computing (MEC), Internet of Things (IoT), and AI into its operations, powered by its own private 5G network. The facility maintains an emergency control center which enables predictive maintenance and environment management.

ABI Research anticipates that 5G-Advanced and 5G Reduced Capability (RedCap) will have a significant impact on 5G enterprise developments in China. With The 3rd Generation Partnership Project (3GPP) Release 18 set to elucidate the standards for 5G-Advanced in March 2024, the matured 5G ecosystem in China is arguably well positioned to embrace the new value creation wave. For instance, with an upgraded a 10 Gigabits per Second (Gbps) experience, in addition to better integration of sensing and communication to provide highly accurate positioning and localization, 5G-Advanced holds the potential to expand IoT deployment density from 10 billion to 100 billion units. Further, China’s IoT ecosystem has matured with 5G RedCap emerging as a very suitable solution for large-scale Industrial IoT (IIoT). Tapping into the low latency, high reliability at a low cost and low power consumption makes 5G RedCap an attractive one for enterprises. RedCap has been undergoing testing in China, with several trials ongoing (i.e., China Southern Power Grid’s trial to enable power distribution automation, distributed power control, and high-resolution video surveillance of up to 4K).

An exciting next-generation aspect of 5G is that CSPs will likely not have to heavily invest in equipment and relevant Capital Expenditure (CAPEX) to reap the benefits of 5G-Advanced. Equipment vendors such as Huawei, for example, announced at Mobile World Congress (MWC) Shanghai 2023 that the company has planned 5G-Advanced product launches in the pipeline for next year, which not only assures existing 5G investments by CSPs, but promises improved network performance. At the event, Huawei announced its Extremely Large Antenna Array (ELAA), AI-native technologies for 5G-Advanced core networks, Multi-Band Service Cell (MBSC), and Flexible Spectrum Access (FSA).

To prepare for the uptake of 5G-Advanced use cases and 5G RedCap, Chinese CSPs will likely continue to witness upticks in private cellular and network slicing-related 5G investments. According to ABI Research’s 5G Network Slicing and Cloud Packet Core report (MD-SLIC-103), 5G network slicing revenue in Asia-Pacific is expected to grow at a Compound Annual Growth Rate (CAGR) of 116% to reach US$10.1 billion by 2027, up from a projected US$0.4 billion in 2023. Meanwhile, ABI Research’s Private Cellular Network Forecasts report (MD-PCRN-22) anticipates that Asia-Pacific forecasts will reach US$7.52 billion by 2027, growing at a CAGR of 53% from US$1.37 billion in 2023. The industries that stand to benefit the most from these growth trends include manufacturing, logistics, and media & entertainment. As 5G approaches its 5-year mark in China, an indicator of the country’s success with 5G-Advanced and 5G RedCap will require a mindset shift toward welcoming a greater convergence of multiple emerging technologies. CSPs and enterprises will, therefore, have to implement a holistic and systematic framework to reap the full benefits of the next generation of 5G.