Why is 5G considered the first of the new infrastructure?

The wind of new infrastructure suddenly blew up, rippling the whole pond of spring water. Overnight, everyone became familiar with the new infrastructure.

On March 4, at a meeting of the Standing Committee of the Political Bureau of the CPC Central Committee, decision-makers emphasized the need to accelerate the construction of major projects and infrastructure that have been clearly defined in the national plan, including speeding up the construction of new infrastructure such as 5G networks and data centers.

After the 5G trial in 2017, the 5G pilot in 2018, and the pre-commercial use in the first half of 2019, on June 6, 2019, the Ministry of Industry and Information Technology officially issued 5G commercial licenses to China Telecom, China Mobile, China Unicom, and China Broadcasting Corporation. Then on October 31 of the same year, at the 2019 China International Information and Communication Exhibition, the Ministry of Industry and Information Technology and the three major operators held a 5G commercial launch ceremony, and 5G packages were launched, marking that China has officially entered the 5G commercial era.

5G is a feast of carnival, but after a short boom, the 5G industry has also exposed some problems and challenges that need to be solved:

Technology: R16 was frozen in March 2020, and indicators such as latency need to be continuously improved; the domestic industry chain (high-end chip design and manufacturing, etc.) still has gaps in integrity and competitiveness;

Network: The frequency band is high, coverage is difficult, it is difficult to obtain basic supporting facilities, and the network construction cost increases; the power consumption is high, and the network operation and maintenance cost increases; the edge computing with low latency is still in the verification stage, and a complete and open industrial ecosystem needs to be formed;

Terminals: The complexity and cost of multi-network imaging mobile terminals will affect the development of large-scale users; the coexistence of multiple network standards and switching between networks will affect the 5G user experience;

Application: Vertical industry users agree that there is a cycle, and cross-industry development and integration solutions need to be customized;

5G is named as the new infrastructure. What is new about the new infrastructure and what kind of industry opportunities does it hide? 5G has been hot throughout 2019. What changes will the new infrastructure bring to the 5G industry? There are many questions, and they are all unanswered questions.

015G lays the foundation for the digital economy

5G is the first of the new infrastructure. The introduction of the concept of 5G new infrastructure shows that we should look at 5G from another perspective, although this has already happened in the eyes of practitioners.

Sun Songlin, a professor at Beijing University of Posts and Telecommunications, told Leifeng.com that the reason why new infrastructure is called "new" is that compared with the traditional "railway, highway and basic infrastructure", it has added information and communication infrastructure construction. Its novelty is more reflected in its supporting role for the digital economy.

"5G is the most fundamental communication infrastructure in the new infrastructure. It can not only provide important network support for other infrastructure such as big data centers, artificial intelligence and industrial Internet, but also quickly empower digital technologies such as big data and cloud computing to all walks of life. It is an important carrier of the digital economy." said Professor Sun Songlin.

Different from "railway, highway and basic infrastructure", the term "new infrastructure" originated from the change in the economic situation. The "White Paper on the Development and Employment of China's Digital Economy (2019)" released by the China Academy of Information and Communications Technology shows that in 2018, the scale of my country's digital economy reached 31.3 trillion yuan, accounting for 34.8% of GDP, and its contribution to GDP growth exceeded two-thirds.

2016—2018年，数字经济连续3年维持20%以上的名义增速，高于同期GDP名义增速十余个百分点；2018年我国数字经济领域就业岗位为1.91亿个，占当年总就业人数的24.6%，同比增长11.5%，显著高于同期全国总就业规模增速。

The comprehensive development trend of my country's digital economy has become an established fact, and the digital economy requires new digital infrastructure. New infrastructure is a top-down promotion initiative at the national level, and 5G is the infrastructure of the digital economy era.

Why can’t 4G and earlier communication technologies be considered new infrastructure?

Wu Geng, Intel Fellow and Chief Expert of Wireless Technology and Standards, once said that 5G is the starting point but not the end point, and it is the integration of communication and computing. "Now, we have begun to use computing to solve communication problems; in the future, the industry will usher in a transformation to use communication technology to solve computing problems."

5G network speed is 10 to 100 times faster than 4G, but this is only the most basic capability of 5G. Ultra-low latency, multi-heterogeneity (integration of 2.5G, 3G, 4G, LTE, WiFi, millimeter wave and other wireless technologies), 5G is the first network in history designed not only for connecting people, which means a comprehensive transformation of the network to have a virtual core network, cloud-based architecture and advanced data analysis capabilities. 

Therefore, 5G is not an iteration of mobile communication technology, but an important turning point in the next round of technological revolution.

"In fact, it requires innovation in the architecture, form and design of the network, mobile platform and terminals. This is what makes 5G different from other generations of technology. In addition to the communication function, what is more important is that it integrates computing and storage. Therefore, the future information network will be a network that integrates network communication, computing and storage." Wu Geng said.

5G network side takes the lead

With the advent of new infrastructure, the entire industry is affected.

Operators are at the core of the current 5G industry development. Without the network, everything is empty talk. The operator side directly reflects the progress of the industry. Leifeng.com (official account: Leifeng.com) learned that operators are accelerating the centralized procurement of 5G network equipment. First, the original network construction plan was postponed due to the epidemic. As the epidemic improves, operators need to catch up with the progress; second, the direct promotion brought by the new infrastructure has greatly advanced the schedule of the entire industry.

Coincidentally, on the second day after the new infrastructure was announced, China Mobile launched the 2020 5G SA core network new equipment procurement, involving the construction of new 5G SA core network network elements and NFV virtualization platform equipment in 8 major regions/31 provincial companies across the country; the 2020 5G Phase II wireless network main equipment procurement involved a total of 232,143 5G base stations in 28 provinces (cities, autonomous regions).

China Mobile said it will strive to reach 300,000 5G base stations by the end of 2020, ensure that 5G commercial services will be provided in all cities at the prefecture level and above in the country within 2020, accelerate the evolution of the target network from NSA to SA, and strive to achieve SA commercialization in the fourth quarter.

As of the end of February, China Mobile has built and opened more than 80,000 5G base stations, including 286 5G base stations in key epidemic prevention and control areas. As of the end of January 2020, the number of 5G package customers reached 6.736 million.

On March 10, China Telecom and China Unicom jointly launched the joint procurement of wireless main equipment for the 2020 5G SA new construction project, with an estimated scale of 250,000 stations. China Telecom said that it would recover the construction progress affected by the epidemic in the first half of the year, and would complete the construction of 250,000 5G base stations with China Unicom by the end of September, and strive to complete the goal of building 300,000 5G base stations by the end of the year. At present, China Telecom has opened a total of 74,000 5G base stations.

China Unicom also said that it and China Telecom will strive to complete the construction of 100,000 base stations in 47 cities in the first half of the year, and strive to complete the construction of 250,000 base stations nationwide in the third quarter, completing the annual construction target one quarter ahead of schedule. China Unicom has opened about 66,000 stations in total, and China Telecom and China Unicom have opened a total of 50,000 co-built and shared base stations, basically completing the first phase of the grid connection target. As of now, it is preliminarily estimated that both parties have saved about 10 billion yuan in investment costs.

"In 5G construction, we should share instead of build new ones if possible, strictly control the proportion of new sites, and reduce construction costs." Tong Jilu, chairman of China Tower, stated that this is also the principle of controlling costs and accelerating the construction of 5G networks.

Liu Qicheng, editor-in-chief of Communication World All Media, believes that the arguments of all parties to accelerate 5G construction are the result of each party taking what it needs, and there is no problem from a general standpoint. However, in the case of hype, 5G construction should not be reduced to a "one-man show" of operators in the context of "new infrastructure". The development of 5G requires the cooperation of many parties, and the most critical issue is the policy orientation. 5G leads the "new infrastructure", and the policy environment is the key. At present, the central government has issued major policies on the development of 5G, but when it comes to specific local governments, it is really hard work to truly implement them.

"At present, governments at all levels across the country have issued a series of 5G development policies. Faced with the current new situation and task requirements, governments at all levels should fully implement relevant policies, form a policy toolbox, support various types of 5G companies to make full use of the policy environment, and ensure the construction and application of 5G networks. Experts unanimously believe that 5G development requires long-term strategic deployment and comprehensive policy tool support. Whoever has the correct strategic thinking and uses policy tools well will be able to seize the initiative in the new round of Internet revolution. Faced with the new situation and new tasks under the influence of the epidemic, governments at all levels can only quickly transform the development of 5G into a key driving force to support high-quality economic development by formulating policies based on local conditions, fully releasing policy dividends, and forming a 5G policy toolbox." Liu Qicheng concluded.

5G investment is the ballast stone of economic growth

Recently, the National Development and Reform Commission and the Ministry of Industry and Information Technology issued a notice on the organization and implementation of the 2020 new infrastructure construction project (broadband network and 5G field), which further highlights the role of new infrastructure in promoting 5G. The "Notice" issued a notice on the application of seven 5G innovation and application promotion projects, and the document clearly stated:

The total investment of a single project shall not be less than 100 million yuan. According to the Interim Management Measures for Central Budget Investment (Subsidy) in High-tech Industrial Development Projects, the central budget subsidy funds are arranged in accordance with the principle of grading. The project is allocated subsidy funds in three tiers of 150 million yuan, 100 million yuan, and 50 million yuan. In principle, the proportion of subsidy funds to the total investment of the approved project shall not exceed 50%.

The seven 5G innovative application promotion projects are:

Construction of 5G smart medical systems for major public health emergencies;

Construction of 5G virtual enterprise private network for Internet + collaborative manufacturing;

Large-scale application of new 5G technologies for smart grids;

Large-scale verification and application of 5G-based vehicle-road cooperative vehicle network;

5G+ smart education application demonstration;

Construction of 5G smart port application system;

5G+4K/8K ultra-high-definition production and broadcasting system infrastructure construction;

It is not difficult to see from the above notice that the National Development and Reform Commission and the Ministry of Industry and Information Technology, on behalf of the country, directly use investment to speed up the 5G industry, and take the lead in establishing a number of demonstration cases in industries that are related to social livelihood and have good transformation conditions, thereby enhancing confidence in the 5G industry.

However, the 5G industry does not rely solely on investment. Professor Sun Songlin said, "The funding issue for 5G construction has received national project investment and policy support, but there is still a big gap. In the long run, in terms of operation and maintenance, if there is no good business model, the funding gap will become more and more serious. The 5G industry needs 3-5 years of construction and operation and maintenance before it can gradually mature. It also needs to find application breakthroughs after many attempts in various industries. The accelerating effect of funds is limited."

According to the forecast of China Academy of Information and Communications Technology, the cumulative investment in 5G network construction in my country is expected to reach 1.2 trillion yuan by 2025, which will drive the investment in upstream and downstream of the industrial chain and various industries to exceed 3.5 trillion yuan. The "5G Industry Economic Contribution" released by China Academy of Information and Communications Technology believes that from 2020 to 2025, the total economic output indirectly driven by the commercial use of 5G in my country is expected to be about 24.8 trillion yuan.

"First, the investment brought by 5G construction itself will become the ballast of economic growth, taking into account both the supply side and the demand side; secondly, 5G construction will further improve the industrial chain and related industries, and will have a significant driving effect on the digital economy; finally, the jobs created by 5G will also contribute to boosting the economy." Professor Sun Songlin said this when talking about how 5G drives economic growth.

5G commercialization awaits closure

Only when the 5G business closed loop is solved can the 5G industry truly usher in spring.

Regarding how to better accelerate the development of 5G at this stage and in the future, China Unicom Chairman Wang Xiaochu put forward pertinent suggestions, one of which is to "further explore 5G business models and reduce operating risks brought about by huge investments."

“5G投资和运营成本均显著高于4G。由于目前设备成熟度还不高，规模部署后未来还需承担大量设备优化、替换成本；另一方面，5G盈利模式尚不清晰，2C侧目前还没有出现过硬的“杀手级”应用，2B侧尽管一些解决方案已经落地，但规模推广与商业模式还不清晰。”

Wu Hequan, an academician of the Chinese Academy of Engineering, pointed out that the rich applications of 5G during the epidemic are just the beginning. 4K/8K ultra-high-definition video, VR/AR, smart connected cars, smart Internet of Things and industrial Internet will be a bigger stage. Unlike telecommunications connections for people, various digital applications for industries will become mainstream in the 5G era. At present, AT&T's non-telecom business revenue in the United States has reached 40%, and Korea Telecom and Japan's SoftBank's non-telecom revenue has also exceeded 30%.

"At present, 5G has not really entered a stage different from consumer Internet applications, and we don't know enough about it. From historical experience, when 3G was born, people did not foresee the emergence of smartphones, mobile e-commerce and social applications; in the 4G era, the popularity of the sharing economy, QR code payment and short videos was also unexpected. New forms of mobile communications are born after the network and users reach a certain scale. Therefore, in the 5G era, new applications that we cannot imagine now will definitely appear, and their greater value needs to be innovatively developed."

As an equipment manufacturer, Huawei certainly hopes that operators will deploy 5G networks as soon as possible. Huawei's view is more radical. Yang Tao, vice president of Huawei's China Operator Business Department, believes that 5G has entered a positive business cycle and the business "flywheel" is turning faster and faster. Compared with the previous generation of technology, 5G will bring us changes in experience, technology and social management.

But he also said that To C is the foundation of 5G development, while To B is the future of 5G development. Yang Tao predicted that the number of global 5G commercial networks will increase from 60 in 2019 to 170 this year, and the number of base stations will increase from 500,000 in 2019 to 1.5 million. By the end of this year, the number of global 5G users is expected to increase from more than 10 million to 250 million.

"The biggest opportunity for 5G is in its application in the To B industry, which has a domestic market space of 10.6 trillion yuan," data provided by Huawei shows.

Whether from the perspective of operators or equipment manufacturers, it is not difficult to find that finding a 5G business model is the biggest pain point of the 5G industry. The potential of the To C market has been exhausted, and the exploration of the To B market is the top priority now and in the future. In the midst of industry competition and cooperation, 5G business cannot be said to have found a mature model, but is looking forward while building and searching.

The Internet of Vehicles is one of the more mature scenarios in the 5G vertical industry. Data shows that by 2020, the global C-V2X (cellular-based Internet of Vehicles) market size will exceed 614 billion yuan, and the Chinese market will reach 200 billion yuan. Liao Leiming, general manager of Datang Mobile's strategic marketing department, revealed that Datang Mobile has jointly carried out intelligent network applications in many places across the country. In the national-level intelligent networked car demonstration areas and V2X test demonstration areas in Xiamen, Hangzhou and Chongqing, Datang Mobile's C-V2X series of commercial products, including roadside units (RSUs) and on-board units (OBUs), have been widely deployed. They have been tested to be stable and reliable. At present, Datang Mobile has a complete Internet of Vehicles industry chain, especially in vehicle-mounted V2X terminals, safe/efficient traffic management, intelligent vehicle perception, and application of big data.

5G+AIoT is another recognized potential scenario. In the 5G era, the amount of data has exploded, and the pressure on cloud computing has increased dramatically. There is an urgent need for computing power to be transferred to the edge. Enterprise customers need smart terminals that can flexibly adapt to various scenarios. Liwei Zhilian cooperates with operators to launch the Oasis series of smart hardware and "AIoT+industry" solutions for 5G. The products use AI to define scenarios, edge computing, and multi-dimensional perception fusion to achieve digitalization, networking, and intelligence of infrastructure equipment in industries such as telecommunications, government, electricity, and industry.

It is often said in the industry that 4G changes life and 5G changes society. In fact, 5G has already taken effect in subtle places. In the community + AIoT + 5G scenario, Liwei Zhilian and Shenzhen Telecom jointly created the Shenzhen Smart Community pilot project, using 5G, big data, artificial intelligence and other technologies to conduct intelligent discovery, wide-narrow linkage, and closed-loop management of various events such as illegal parking and manhole cover changes in community management, so as to achieve refined and intelligent improvement of community management. In the new retail + AIoT + 5G scenario, Liwei Zhilian and Zhejiang Mobile jointly created a province-wide smart business hall project, conducting a full-scale analysis of people, goods, and venues, using AIoT to create a store brain, and achieve consumer insight recognition and precise service.

It’s better to think on the bright side. The more challenging 5G is now, the more revolutionary it will be in the future.

The butterfly effect of 5G new infrastructure

The value of the network V = K × N2 (K is the value coefficient, N is the number of users)

The value of a network is equal to the square of the number of nodes within the network, and the value of the network is proportional to the square of the number of connected users. This is Metcalfe's Law, which symbolizes the development of network value and technology.

The above formula is named after Robert Metcalfe, a computer network pioneer and founder of 3Com. It was proposed in 1993. Since the 1990s, the Internet has shown an exponential growth trend, penetrating and expanding widely into all areas of the economy and society. The more network connections there are, the greater its impact on the economy and society.

5G is the first of the new infrastructure and a technological singularity of the butterfly effect. Its greatest value lies in its deep integration with digital technologies such as cloud computing, artificial intelligence, big data, and blockchain. The mutual complementation of these technologies will fill the blind spots of commercial applications. This integration itself and its combination with the industry will inevitably be a slow and long process.

As the function of the Internet connecting people becomes marginalized and 5G arrives to connect everything, a new cycle has begun.