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Will 5G be the final boost for CHINA’s take-off? / The 20s Report #2


5G. Who hasn’t heard about the technology of
the future which will soon change our lives once for all? Fully autonomous transportation, remote surgery,
holographic phone calls. And that’s just a tiny bit of all the solutions
which 5G may result in. But these are just slogans which we hear across
the media all the time. For a better understanding of this technology
we have to take a deeper look at 5G foundation to realize how it will affect global struggle
for hegemony as well as our daily lives. and why China is leading that race? Firstly – 5G is the fifth generation of wireless network technology. Much of the attention goes to vastly improved
data speeds, with 100 times faster data streaming or downloading performance up to 3 gigabytes
per second. Yet the real revelation here is that it will
enable high-capacity and ultra-low latency data communications. But what does it mean? 2G, 3G and 4G network generations were built
as voice centric networks. Unlike them, 5G is from the foundation
designed to handle a huge number of devices, high-data rates and software that require
reliable, ultra fast communication with minimal latency and no lags. This all is needed to fully take advantage
of the opportunities 5G offers. To further investigate the topic we need to
make a distinction between network types via which 5G will be distributed to people. The infrastructure path to make 5G happen
is based on two stages. The first one is non-standalone 5G infrastructure,
which basically is enhanced 4G LTE mobile network, where mobile operators mostly take
make use of the existing pieces of mobile infrastructure. As on of December 2019, you may have heard
that in some countries non-standalone 5G is already rolled out, as thousands of speed
test videos spread across YouTube. But this phase is more evolutionary, than
revolutionary, although some companies may call it alike. Frankly speaking, that’s a minor
change. The second one is set to bring the innovation
of tomorrow and it’s called, as you may expect – standalone 5G. Fully standalone 5G, as the name suggests,
is separate of from the existing 4G network and will require massive infrastructure investments
to be built. However it is necessity necessary to fully
utilize the technology itself. Now when we have the infrastructure sorted
out, let’s have a look on at the functionality side of 5G, as it is divided into 3 essential
sectors : Let’s start with Enhanced mobile broadband
(eMBB) which is related to non-standalone phase and mostly accounts for faster data
communication and will result with in downloading the movie in 6 seconds, instead of 30 minutes. It may sound as just a convenience issue,
but some estimates say that consumers may save up to a day of loading time per month,
while browsing social media, gaming, streaming and uploading. And as you know – time is money. The
second one is Ultra-reliable low-latency communications (uRLLC) – it’s required for applications
including smart cities or autonomous vehicles with road obstacle sensing, where there is
no space for any lag in communication. Here new infrastructure, antenna designs or
smaller equipment expenditures are a must, as communication capacity needs to be nearer
closer to roads and building. The last one is Massive machine-to-machine
communications (mMTC), which is aimed to maintain device communication among themselves communication
between devices, which is also described as the Internet of Things (IoT). It basically means that mMTC is designed to
handle the data transfer between billions of sensors which appliances consist of. I’m sorry for this long introduction, but
I think it is really important to get the notion of the technology which will surround
us in the near future. Ok, now – what is the situation now and what
can we expect in the near future? As I’ve mentioned, many countries carry
on out some tests in certain cities with non-standalone 5G mostly, but there is one who which seems to be a little bit ahead of the rest of the world. And there will be no surprise when I say it is China. Assuming that it is the beginning of this channel and for those who have been hibernated
for the last 40 years I’ll point out that China is the new superpower openly challenging
the US hegemony status over the world with economy 54 times larger that it was when you
started your 40 year long nap. It’s nominal GDP is second only to that
of the USA, but measured with purchasing power parity it is already the biggest in the world. Welcome to 2020 🙂
Ok, now we are truly back to the 5G topic. China is the first country to fully accelerate
the 5G technology. It is expected that the Chinese will open
130 000 initial 5G base stations covering main cities such as Beijing, Shanghai and
Shenzhen by the end of 2019 with a cost of $43 billion. 126 000 stations have been confirmed opened by 23rd of December 2019. It’s still a drop in the ocean as the
fully operational 5G system in China will require 5.5million base stations (which by
the way is nearly 2million more than the existing 4G network), but still it’s miles ahead
than in any other place in the world. Yet we are still talking about this non-standalone/enhanced
mobile broadband phase. Commercial non-standalone 5G will be also
available in certain cities of the US, UE, South Korea or Australia, so why all the fuss? The scale is important here – the Chinese, having a larger infrastructure base, are able to collect more data and learn technology on a regular basis, which is kind of a puzzle for everyone. Another key element here is that China wants to launch the first deployment of commercial 5G standalone network with full functionality in 2020, which is again ahead of the competition. Ernst&Young forecasts that there will be 576mln
5G users in China by 2025, while CCS Insight predicts 1bln users worldwide by 2023 with
half of them being Chinese. But how did it happen? Well it’s good ol’ Chinese planning and…money
of course. Back in 2013 Beijing’s mayor, national institutions
such as Ministry of Industry and Information Technology, the National Development and Reform
Commission and the Ministry of Science and Technology established the IMT-2020 5G promotion
group (IMT stands for international mobile communications), which its main goal being
to push all-government / all-industry alliance on 5G. With the Communist Party of China’s blessing
we could suddenly see all of the key parties involved in the project like, namely major
research institutes (Beijing University of Posts and Telecommunications), Chinese operators
( China Mobile, China Telecom, and China Unicom); infrastructure equipment makers (Huawei and
ZTE) and mobile device makers (Oppo, Vivo, Huawei, ZTE). This even goes beyond entities directly involved
in 5G – for example there was a fear that smaller Chinese mobile operators such as China
Unicom won’t have enough financial capacity to handle 5G implementation, when Chinese
online platforms such as: Baidu, Alibaba, Tencent and JD came and said there is nothing
to worry about and acquired stakes in China Unicom that amount to nearly $12 billion. What’s more, all of China’s major technology
plans and strategies, including Made in China 2025, prioritize development of 5G technologies
and related sectors such as IoT, big data, AI, semiconductors and advanced manufacturing. And that’s not all, because it is patents
that looks seem to be sealing China’s 5G leadership. You see we are on the verge of establishing
international standards that 5G will be governed by. This process included granting patents, which
will give their owners both protection from possible lawsuits and obviously profits from
licensing to other users. This process is overseen by the 3rd Generation
Partnership Project (3GPP) and International Telecommunications Union (ITU). Patents in the Telecom Industry are called
Standard Essential Patents (SEP). Since the process isn’t transparent we don’t
know how many SEP each company has, but estimates say that Chinese firms had 0% in 2G technology,
which was dominated by Qualcomm, Nortel, Ericsson and Nokia. In 3G, 3 Chinese companies – ZTE, Huawei and
Datang, had a share of 10% (it was still dominated by previously mentioned American and European
giants). The 4G has already brought a big shift. Still Qualcomm took the biggest share, as
it was mainly their invention, but Chinese companies’ share in aggregate accounted
for 22% of 4G SEP, which nationwise gave them the leading position. And now comes 5G. According to CSLA, Huawei alone claimed 35% of
the Standard Essential Patents, followed by LG, Samsung and ZTE. Overall, China claims more than a half of 5G patents, with South Korean entities coming second with 35%. But claiming isn’t owning. The problem with Chinese patents is that big part of them have not yet been fully granted and final outcome might be less impressive than Communist Party expects But nonetheless there is no doubt license payments will now mostly fly from the USA and Europe to China and South Korea. That seemed unrealistic just a couple of years
back. And this may explain some of the panic 5G
causes mostly in the US. But hey some of you would say now that I’m
missing security threats that USA puts so much emphasis on. Excluding Huawei is an example of this attitude. And you would be right – every company, which
competes in 5G technology has the potential of going beyond the standards, which could
include hardware software implants or malicious software. An exponential expansion of the volume of
data flying around will make it more difficult to detect malicious traffic. The huge growth in the number of connected
devices and large bandwidths means that the potential for unsecure or compromised devices
to be used for malicious activity such as botnet-driven denial of service attacks goes
way up, as does their size and severity. That is what concerns the US national security
community and leads to legislative and executive measures that would block Chinese firms from
building 5G core infrastructure in the USA. The same uncertainty about Chinese intentions is experienced by European countries which are in the middle of the US-China struggle
for hegemony. 5G decisions in Germany, the UK, France, Italy in the upcoming months may leverage the final outcome of this battle. The last key element to 5G is the spectrum. You see 5G has much broader and complex spectrum
allocation than 4G. 5G is set to use frequency up to 95Ghz. This is also the point where all the health
issues arise, but I have to leave it to others. Anyway, such a complex spectrum leaves a lot
of space, which exact spectrum to choose, as it has to be defined the same for each
place in the world to work on each mobile device. Well – at least this is my expectation as
a travelling consumer, but it doesn’t necessarily has have to go that way. You see this is the next 5G battlefield, as
China opts to use lower frequencies, while the USA wants to operate in the higher spectrum,
mostly because low frequency bands are allocated for the military use in the USA. What’s unfortunate for the US government
– American giants such as: Apple, Microsoft, Facebook and Google also look favourably at
lower frequencies. Here we come back to the China’s first-mover
advantage. As Beijing started heavily with the implementation
of 5G with the spectrum of its choice, which is maybe kind of a gamble as it’s
not agreed on yet. But on the other hand, it is another milestone
strengthening China’s fundamental position in the 5G field, possibly convincing countries,
which have not proclaimed their position on the matter. As we are heading towards the end of this
material, let’s think of the possible outcome. Certainly having an upper hand in commercial
5G network will give China leverage to innovate and manufacture 5G related technologies, which will help Beijing fulfilling its plan of transforming Chinese economy from
that the one which makes products by using other companies’ patents to the one developing
fully owned, Chinese technology. China is on its way to take the advantage
of 5G via creating such products and technological environments to maximize productivity. China Academy of Information and Communications
Technology estimates the 5G market could account for $156 billion or 3.2% of mainland China’s
economic growth in 2025. On the other hand, while boosting it’s own
5G development China may struggle to convince other Western governments to fully open it’s
their markets for 5G technology, not only because of the pressure coming from the USA. At the same time, developing countries that
are more sensitive to cost will find Chinese technology and related enticements—for example,
infrastructure and project financing available through the Belt and Road Initiative—hard
to pass up, particularly if China gains an edge in the related technology applications. Certainly we will monitor the situation of 5G development across the world and update this material with another 5G video in the future. If you would like to know more about Nord Stream 2 case, I invite you to witnessing watch the first episode, which you can find on Good Times Bad Times channel. For now, a big help would be subscribing to our channel and pressing thumbs up button, which you can find below. Thank you very much for your attention and have a good day!

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