All the answers you want about 5G base stations are here! | 2020 China 5G Base Station Construction Report

Author | Liu Lin

2020 is a critical year for 5G construction. The three major operators plan to build 550,000 5G base stations by the end of the year, of which China Mobile plans to build 300,000, and China Unicom and China Telecom plan to jointly build 250,000 5G base stations. The Ministry of Industry and Information Technology expects that the number of 5G base stations nationwide will exceed 600,000 by the end of this year, achieving continuous outdoor coverage in prefecture-level cities, focused coverage in county towns and townships, and indoor coverage in key scenarios.

With the policy dividends, how will my country's 5G base station industry develop in 2020?

Recently, the Forward-looking Industry Research Institute released the "2020 China 5G Base Station Construction Industry Research Report" (hereinafter referred to as the "Report"). The "Report" analyzes my country's 5G base station market from three dimensions: 5G base station construction environment, construction status, and development prospects forecast.

The report predicts that during the period 2021-2023, the three major operators will build approximately 800,000, 1.1 million, and 850,000 micro-base stations annually, and predicts that the number of micro-base stations will reach tens of millions.

In addition, the report also mentioned that the largest capital expenditure for 5G network equipment is base stations . According to data, the price of 5G macro base stations is 250,000 yuan per unit in the initial stage of investment. As the industrial chain gradually matures, the price will gradually decrease in the later stage. It is estimated that the average unit price of 5G macro base stations will be 140,000 yuan per unit.

If calculated at this price, it is estimated that the total market space for 5G base stations in China will exceed 770 billion yuan from 2020 to 2025.

If you want to obtain the full text pdf of this report, please reply to the keyword "703 report" in the Leiphone.com WeChat public account (leiphone-sz) to extract it.

1. 5G concept

5G, the fifth generation mobile networks, is the latest generation of cellular mobile communications technology and an extension of 4G (LTE-A, WiMax), 3G (UMTS, LTE) and 2G (GSM) systems.

• Application Scenario

ITU-R (International Telecommunication Union Radiocommunication Bureau) defines three major application scenarios for 5G:

The first is enhanced mobile broadband , whose peak rate will be more than 10 times that of 4G networks;

The second is big connectivity (massive machine-type communications) , which will achieve full coverage of all links from consumption to production, from people to things, that is, "Internet of Everything";

The third is high-reliability and low-latency communication , and the communication response speed will be reduced to millisecond level.

• Network structure
  

The mobile communication network consists of wireless access network, transmission network and core network.

The wireless access network, namely the base station, connects the user terminal to the mobile network through wireless connection; the transmission network is used to connect the core network and the wireless access network, and is the network responsible for carrying data transmission; the core network is the hub of the mobile communication network, responsible for the management and control of the entire mobile communication network.

Compared with 4G networks, 5G networks will reshape network element functions, interconnection interfaces and networking structures in terms of wireless access networks; in terms of core networks, they will tend to adopt a cloud-based distributed deployment architecture. Core network signaling network elements will be mainly deployed in provincial trunk and regional center computer rooms, and data plane network elements will adopt a layered deployment solution based on the performance differences of different services. With the development of vertical industries such as the Internet of Things (IOT), the 5G control plane will also show a trend of regional deployment.

• Spectrum
  

The term "spectrum" refers to the range of radio frequencies in which specific types of wireless communications occur. Different wireless technologies use different spectrums so they don't interfere with each other. Because the spectrum for a technology is limited, there is a lot of competition in the spectrum space, and new and efficient ways to use the spectrum are constantly being developed and enhanced.

5G spectrum is currently divided into two frequency bands: sub-7GHz (FR1) and millimeter wave (FR2). In the sub-7GHz FR1 band, 100MHz bandwidth can be achieved; for the FR2 band millimeter wave, 400MHz bandwidth can be achieved. If individual mobile network operators have enough spectrum licenses, 5G can aggregate up to 800MHz bandwidth in the FR2 band.

The more bandwidth a frequency band has, the more data can be received and the faster it can be received. The more bandwidth a frequency band has, the less time it takes to download large files. Therefore, mobile network operators and regulators are doing everything possible to restructure, acquire or share spectrum resources.

• The significance of 5G construction

5G will drive rapid and sustained growth in the upstream and downstream of the industrial chain and drive the transformation of my country's real economy.

According to data released by the China Academy of Information and Communications Technology, 5G is expected to drive direct output of approximately RMB 484 billion in 2020, and will grow to RMB 3.3 trillion and RMB 6.3 trillion in 2025 and 2030, respectively, with an average annual compound growth rate of 29%;

In terms of indirect output, 5G will drive indirect economic output of 1.2 trillion, 6.3 trillion and 10.6 trillion in 2020, 2025 and 2030 respectively, with an average annual compound growth rate of 24%.

In terms of boosting employment, it will directly create about 540,000 jobs for the society in 2020, mainly from jobs created by 5G-related equipment manufacturing; in 2025, 5G will provide about 3.5 million jobs, mainly from jobs created by 5G-related equipment manufacturing and telecommunications operations; in 2030, 5G will drive the employment of more than 8 million people, mainly from jobs created by telecommunications operations and Internet service companies.

2. 5G base station concept

• Traditional base station
  

Communication base stations are the core equipment of mobile communication networks and the core link in providing wireless coverage and signal reception and transmission. They can realize wireless signal transmission between wired communication networks and wireless terminals.

In the 4G communication era, base stations are usually composed of baseband processing units, radio frequency units, and antenna feed units. The baseband processing unit includes a main control board and a baseband board. The main control board is responsible for processing core network and user signaling data, and the baseband board is responsible for data coding and modulation; the radio frequency unit is mainly responsible for the generation and extraction of radio frequency signals. In order to reduce transmission loss, the radio frequency unit and the antenna are deployed together, which is called a remote radio unit (RRU). One baseband processing unit can manage multiple remote radio frequency units; the antenna feed unit is responsible for sending and receiving signals, and includes an antenna and a feeder. The antenna is mainly responsible for sending or receiving electromagnetic waves in a specific direction, and the feeder is responsible for connecting the radio frequency unit and the antenna.

• 5G Base Station

In order to meet the key performance requirements of high power, high frequency band and high speed of 5G networks, 5G base stations and access networks have undergone major changes compared to 4G: the use of massive MIMO technology, combined with beamforming, can greatly improve network capacity and user experience by sending and receiving data simultaneously through a large number of array antennas.

The use of active antenna units (AAUs) integrates the antenna and radio frequency unit of traditional base stations into AAUs, which can simplify site deployment, reduce feeder complexity, reduce transmission losses, and improve overall network performance.

The wireless access network adopts the CU/DU architecture, which splits the traditional base station BBU into CU (Centralized Unit) and DU (Distributed Unit). CU is used to centrally process non-real-time data, and DU is responsible for distributed processing of real-time data. Each CU can manage multiple DUs. Different networking solutions can be used between CU and DU to adapt to different base station access scenarios.

• Deployment density

2G, 3G, and 4G all use low-frequency signal transmission, and macro base stations can handle almost all signal coverage. However, since 5G operates in medium and high frequency bands, the signal range that macro base stations can cover is very limited. Therefore, in order to ensure the coverage of the signal, the deployment density of 5G base stations will be increased compared to 4G base stations.

• 5G Base Station Classification

5G base stations are mainly divided into macro base stations and small base stations. Macro base stations are usually erected on iron towers. They are large in size, carry a large number of users, and cover a wide area. However, due to the high frequency band of 5G, the signal range that macro base stations can cover is limited, and a large number of small base stations are required to cooperate with macro base stations for continuous coverage and shallow indoor coverage. Small base stations are divided into micro base stations, pico base stations, and femto base stations according to the size of their coverage.

• Upstream supply chain situation

The upstream supply chain of 5G base stations mainly includes macro base stations, small base stations and supporting facilities. In macro base stations, the most important components are optical modules, radio frequency modules and base station antennas; supporting facilities mainly include power equipment, optical fibers, computer rooms, etc.

1. Policy environment

The 5G standard is developed by 3GPP. 3GPP (Third Generation Partnership Project) is a standardization organization established in December 1998. Its current members include: the Alliance for Telecommunications Industry Solutions (ATIS), the European Telecommunications Standards Institute (ETSI), the Association of Radio Industries and Trade (ARIB), the Telecommunications Technology Committee (TTC), the China Communications Standards Association (CCSA), the Korea Telecommunications Technology Association (TTA), and the Telecommunications Standards Development Institute of India (TSDSI).

The 5G standard is constantly evolving, mainly covering R15, R16, and R17. R15 is mainly for eMBB scenarios, R16 standards further meet uRLLC and mMTC scenarios, and R17 will be for a wider range of industry applications. Affected by the new coronavirus pneumonia epidemic, 3GPP postponed the release of 5G protocol R16 and R17 versions by 3 months. According to the latest schedule, the third phase of Release 16 specifications will be completed in June 2020, and R17 is expected to be postponed to December 2021.

After the 5G standard is formulated by 3GPP and then approved and promulgated by the International Telecommunication Union (ITU), all manufacturers in the global communications industry chain must produce equipment, build networks, and access terminals in accordance with this standard. Therefore, all members hope to obtain as many core patents as possible in the 5G standard, which means more voice and benefits in the future. The formulation of 5G standards is both a collaboration of the global communications industry and a game between manufacturers in various countries.

According to the latest 5G industry patent report released by IPLytics, an internationally renowned patent data company, as of January 1, 2020, Huawei ranked first with 3,147 patents out of a total of 21,571 5G standard patent declarations worldwide, surpassing the second-place Samsung (2,795) by 352 patents.

In terms of policy, from the first mention of "5G" in the Government Work Report in 2017, to the transition of 5G applications from mobile Internet to industrial Internet in 2019 and the first year of commercial use, the national policy has continuously increased its attention to 5G.

2. Economic environment

5G is not simply 4G+1G. 5G will become the main artery of social information flow, an accelerator for industrial transformation and upgrading, and a new cornerstone for building a digital society.

5G will further break through the time and space limitations of the connection between people, people and things, and things and things, and realize the centralized convergence of people, things, capital, and information, and efficient collaboration, and constantly create new forms and models with intelligence as the core. The deep integration of new information technology represented by 5G and the real economy will comprehensively accelerate the networking, intelligent, and digital transformation of thousands of industries, and will also effectively improve the total factor productivity.

According to data released by the China Academy of Information and Communications Technology, my country's digital economy reached 31.3 trillion yuan in 2018, accounting for more than one-third of GDP, reaching 34.8%; it is estimated that the overall scale of my country's digital economy in 2019 may be close to 36 trillion yuan.

3. Social environment

• Mobile Internet traffic continues to explode at a high speed

Theoretically, the download speed of 4G is 100M/bps, while that of 5G can reach 1G/bps. In other words, it only takes a few seconds to download a high-definition movie with a size of G. 4G has already helped devices to connect to the Internet, and 5G's high speed, low latency, large access, and wide coverage will continue the strengths of 4G on a larger basis and bring more advantages.

According to statistics from the China Internet Network Information Center (CNNIC), mobile Internet access traffic reached 122.0 billion GB in 2019, a year-on-year increase of 71.57% over 2018. Mobile Internet traffic is growing rapidly, and the expansion of new applications requires 5G support.

• 5G mobile phone shipments

According to statistics from the China Academy of Information and Communications Technology, 5G mobile phone shipments have continued to grow since August 2019, except for February 2020, which was affected by the epidemic. In April 2020, 16.382 million 5G mobile phones were shipped in the domestic market, accounting for 39.3% of mobile phone shipments in the same period; from January to April 2020, the cumulative shipments of 5G mobile phones in the domestic market were 30.441 million, accounting for 33.6%.

• 4G users begin to accelerate their upgrade to 5G

According to data from the Ministry of Industry and Information Technology, as of April 2020, the total number of mobile phone users of the three major operators reached 1.59 billion, basically the same as the same period in 2019. Among them, 4G users accounted for 80%, a decrease of 0.2% from March 2020, and 4G users began to accelerate their upgrade to 5G.

• Engineer Bonus

According to statistics from the Ministry of Education, the number of general undergraduate graduates nationwide increased year by year from 2006 to 2019, reaching 3.9472 million in 2019.

On March 4, 2020, the China Association for Science and Technology, the Chinese Academy of Engineering, and the China National Commission for UNESCO jointly published an article stating that China currently has more than 1.4 million ordinary undergraduate graduates in engineering each year. The engineer dividend has replaced the demographic dividend and has become an important force in promoting the high-quality development of China's economy.

1. Overall situation of 5G base station construction in China

• 5G Development History

Compared with the past 1G blank, 2G follow-up, 3G breakthrough and 4G synchronization, China is in a leading position in the 5G era. As early as 2012, China began 5G research. In 2013, China's Ministry of Industry and Information Technology, the National Development and Reform Commission and others jointly established the IMT-2020 (5G) Promotion Group to coordinate and promote 5G-related work; in 2016, the Ministry of Industry and Information Technology officially launched 5G technology research and development trials; on June 6, 2019, the Ministry of Industry and Information Technology issued 5G commercial licenses to China Mobile, China Unicom, China Telecom and China Broadcasting Corporation, marking that my country has become one of the first countries in the world to build 5G networks.

• Number of 5G base stations built

According to statistics from the Ministry of Industry and Information Technology, as of the end of 2019, my country had built more than 130,000 5G base stations; as of the end of February 2020, the number of 5G base stations built and put into operation nationwide reached 164,000.

At the "First Anniversary of 5G Licensing" online summit held by the News and Publicity Center of the Ministry of Industry and Information Technology on June 6, 2020, Lu Chuncong, deputy director of the Information and Communications Administration of the Ministry of Industry and Information Technology, stated that in terms of network construction, basic telecommunications companies have built more than 250,000 5G base stations; Wu Hequan, an academician of the Chinese Academy of Engineering, predicted that by the end of 2020, the number of 5G base stations in my country may reach 650,000, and the number of 5G package users may reach 200 million, achieving continuous outdoor 5G coverage in all prefecture-level cities across the country, key coverage in county towns and townships, and indoor coverage in key scenarios.

2. 5G base station construction status in various provinces and cities in China

From a regional perspective, the vast majority of provinces and cities have announced their 5G base station construction plans for 2020.

3. 5G capital expenditure of China's three major operators

• China Mobile

According to China Mobile data, China Mobile's capital expenditures showed cyclical changes from 2008 to 2019, which is inseparable from the iteration of mobile communication technology. Currently entering the 5G cycle, China Mobile's capital expenditures in 2019 were 165.9 billion yuan, of which 24 billion yuan was 5G-related investment; China Mobile's capital expenditure budget for 2020 is 179.8 billion yuan, of which 100 billion yuan is 5G-related investment, accounting for more than 55% of total expenditures, with an increase of 7-15% on the equipment side and a decrease of 19% on civil engineering and others, demonstrating the strength and determination to increase investment in 5G.

• China Unicom

According to China Unicom data, China Unicom's capital expenditure in 2019 was 56.42 billion yuan, of which 7.9 billion yuan was 5G-related investment; China Unicom's capital expenditure budget for 2020 is about 70 billion yuan, of which 5G-related investment is about 35 billion yuan. It plans to jointly build more than 250,000 5G base stations with China Telecom and further improve the network deployment of LTE900. In 2020, China Unicom will fully focus its network construction on 5G, which is in line with the country's requirements to accelerate the construction of 5G networks.

• China Telecom

According to China Telecom data, China Telecom's capital expenditure in 2019 was 77.56 billion yuan, of which 9.23 billion yuan was 5G-related investment; China Telecom's capital expenditure budget for 2020 is about 85 billion yuan, of which 45.31 billion yuan is 5G-related investment. China Telecom will continue to promote the maturity of the SA industry in 2020, and plans to complete the core network pilot of four provincial companies in the second quarter, and strive to complete the construction of commercial networks with SA capabilities across the country in the third quarter.

• Frequency band spectrum resource allocation

my country has completed the allocation of spectrum resources in the Sub-6GHz band. On December 6, 2018, the Ministry of Industry and Information Technology allocated spectrum resources in the 5G standard Sub-6GHZ band to the three major operators.

Among them, China Mobile obtained 160MHz in the 2515MHz-2675MHz band, with the frequency band number n41, and 100MHz in the 4800MHz-4900MHz band, with the frequency band number n79.

China Unicom obtained 100MHz of 3500MHz-3600MHz, with the frequency band number n78;

China Telecom obtained a total of 100MHz in the 3400MHz-3500MHz band, with the frequency band number n78.

• 5G base station construction status

China Mobile:

According to China Mobile's 2019 annual report, China Mobile built and opened more than 50,000 5G base stations in 2019, providing 5G commercial services in 50 cities; guided manufacturers to launch 32 5G terminals, and promoted the maturity of the 2.6GHz industry chain to be basically the same as that of the 3.5GHz industry chain.

On June 6, 2020, at the "First Anniversary of 5G Licensing" online summit held by the News and Publicity Center of the Ministry of Industry and Information Technology, China Mobile stated that it has currently opened nearly 140,000 5G base stations and will accelerate network construction to ensure that a total of 300,000 5G base stations will be built within the year, and 5G commercial services will be provided in all cities at the prefecture level and above across the country, laying a solid network foundation for the digital transformation of the economy and society.

According to data released by China Mobile, the number of domestic 5G package users has grown rapidly since 2020. By the end of May 2020, China Mobile had developed more than 55 million 5G package users, and the user development speed exceeded expectations.

China Unicom and China Telecom jointly build and share 5G networks:

In September 2019, China Unicom announced that Unicom Operation Company will cooperate with China Telecom to build a 5G access network nationwide. The 5G network co-construction and sharing adopts the access network sharing method, with the core network built separately and 5G frequency resources shared. Under the sharing of both parties, the usable frequency band will be expanded from 100MHz to 200MHz, effectively expanding the spectrum bandwidth and improving spectrum efficiency.

According to China Unicom’s announcement, the two parties will demarcate areas and carry out construction in sections, with each party being responsible for 5G network construction-related work within the designated areas.

According to China Unicom's annual report, China Unicom and China Telecom have opened 50,000 shared 5G base stations by the end of 2019. According to the joint construction plan of China Unicom and China Telecom, the two parties strive to complete the construction of 100,000 base stations in 47 cities in the first half of 2020, and strive to complete the construction of 250,000 base stations nationwide in the third quarter of 2020.

As of February 20, 2020, China Unicom and China Telecom have opened a total of 64,000 5G base stations, and the network covers all municipalities, major provincial capitals, and key cities in the Beijing-Tianjin-Hebei, Yangtze River Delta, and Greater Bay Area regions.

As of April 2020, a total of 100,000 5G base stations have been put into operation, 5G co-construction and sharing have been launched in 31 provinces across the country, and 5G has been officially commercialized in more than 50 cities. It is expected that by the end of the third quarter, more than 300,000 5G base stations will be put into operation, covering all urban areas, some county towns and developed towns across the country.

In terms of the number of 5G users, in January 2020, China Telecom stated at the 2020 Terminal Ecosystem Cooperation Promotion Conference that its 5G users had exceeded 8 million; according to an announcement released by China Telecom, from February to April 2020, the number of China Telecom's 5G users continued to grow. As of April 2020, the total number of China Telecom's 5G users reached 21.7 million.

• 5G base station collection situation

China Mobile:

On March 31, 2020, China Mobile's second phase of 37.1 billion yuan and 232,143 5G base stations were completed, with Huawei taking the largest share, followed by ZTE. According to C114 statistics, Huawei won 132,787 base stations with a bid amount of 21.411 billion yuan; ZTE won 66,653 base stations with a bid amount of 10.731 billion yuan.

China Unicom and China Telecom:

In April 2020, China Telecom and China Unicom announced the winning bidders for the joint centralized procurement of wireless main equipment for 5G SA new construction projects in 2020. The bidding results showed that there were four winning bidders, namely Huawei, ZTE, Ericsson and Datang Mobile, among which Huawei and ZTE accounted for the largest proportion.

1. Forecast of the number of 5G base station construction in China

5G licenses were issued in June 2019. 2020-2023 will be the main investment period for 5G networks. Taking into account the 5G spectrum and corresponding coverage enhancement solutions, it is estimated that the number of domestic 5G macro base stations in the next ten years will be about 1-1.2 times that of 4G base stations, totaling about 5-6 million. Based on the scale of 4G network construction, it is estimated that from 2021 to 2023, the three major operators will build approximately 800,000, 1.1 million, and 850,000 base stations annually.

In terms of micro stations, the construction of macro station sites is difficult and the market is relatively saturated. At the same time, 5G has a higher frequency and theoretically has more coverage gaps. Therefore, macro base stations cannot fully meet the needs of eMBB scenarios. A large number of micro stations are needed to fill in blind spots in local hotspots and high-capacity areas. According to CITIC Securities' forecast, the number of micro stations may reach tens of millions.

2. China’s 5G base station market space forecast

The largest capital expenditure for 5G network equipment is base stations. The main reason for the increase in 5G network capital expenditure compared to 4G is that the number of deployed base stations is larger and the initial base station cost is higher. 5G base stations have significantly more antenna channels than 4G base stations, resulting in a higher price for a single 5G base station. According to data from the China Merchants Bank Research Institute, the price of a 5G macro base station is 250,000 yuan per unit in the initial stage of investment. As the industrial chain gradually matures, the price will gradually decrease in the later stage. It is estimated that the average unit price of a 5G macro base station is 140,000 yuan per unit.

Calculated at this price, it is estimated that the total market space for 5G base stations in China will exceed 770 billion yuan from 2020 to 2025.