The opportunities of Chinese 5G densification must be grasped, despite trade wars

By Caroline Gabriel, Rethink Technology Research Ltd

The current wave of 4G densification is being led by major roll-outs in north America. But when it comes to 5G, China will lead the way in deployments. The scale of that market could be a strong lever to propel the 5G small cell sector to critical mass, as well as opening opportunities for small cell and semiconductor vendors.

Yet the current chilly state of trade relations with the west presents the risk that China will adopt a homegrown strategy, and other vendors and operators will lose influence over how 5G small cell platforms evolve.

According to a report published in August by Deloitte, China already has 350,000 cell sites equipped to support 5G equipment, compared to 30,000 in the USA, and while the USA currently averages 4.7 5G-ready cell sites per 10,000 people, China has 14.1 (despite a larger population). One reason for the high Chinese numbers is the greater emphasis on small cells in the near term 5G roll-out plan.

It is important for the small cell industry that China’s rapid densification is an opportunity for the whole ecosystem, not something that exists in a vacuum because of political differences. There have always been trade tensions between China and the USA, in particular, but despite that, there have been significant collaboration and cross-fertilization in the development of new technologies.

This has been particularly true at silicon level. In small cell system-on-chip (SoC) products, early innovators like Picochip and Percello came from Europe or Israel, but had extensive development activities in China. Large silicon providers like Qualcomm and Intel have invested heavily in joint ventures and design capability in the world’s largest mobile market.

Conversely, Chinese companies have contributed heavily to 3GPP mobile standards and to open source efforts (for example, China Mobile, along with AT&T, donated some of the code that underpins the Open Network Automation Protocol, which will be an important enabler of automated dense networks).

It is important that this spirit of cooperation remains, regardless of commercial tensions, especially when it comes to setting standards and establishing development priorities. Conditions for 5G in China will, of course, be somewhat specific – spectrum band-plans will vary from those elsewhere; there will be a heavier focus on coexistence with 4G TDD (unpaired spectrum) technologies; there is likely to be greater reliance on small cells and ‘mini-macro’ sites (like ZTE’s Magic Pole) in the first phase of roll-out.

But that does not mean that Chinese developments are not helpful to the rest of the world. Localized requirements will apply in all markets. The key to a harmonized global platform for small cells – one capable of driving significant scale – is to support those local needs within a unified framework, which needs to be agreed between as many players as possible. History gives us examples of early, large markets taking a unilateral approach, and delaying the creation of a truly global base. For instance, the split between the global, but Europe-centric, GSM, and north America’s adoption of CDMA, created fragmentation in the mobile industry for a generation. By contrast, when stakeholders from competing nations nevertheless work together, common frameworks emerge more quickly and enable rapid adoption.

China has sometimes adopted an isolationist stance. An example is TDD spectrum. In 3G and early 4G, the mobile industry remained focused on paired spectrum, with the major exception of China. In 3G, China lost out from its go-it-alone strategy, developing the unloved TD-SCDMA.

But in 4G, Chinese firms set all the priorities for TD-LTE, and as operators elsewhere started to see the advantage of adopting unpaired airwaves to boost data capacity – especially in small cell-focused higher bands – they were left with an ecosystem that had been driven almost entirely by Chinese priorities for spectrum, performance and so on.

In other words, where one country is ahead of the others, but is also motivated to act alone, everyone loses out. The standalone mentality will be encouraged by the current stand-offs with the USA, since China will want to develop core technologies, especially chips, which are immune from sanctions and tariffs. It has set aside billions of dollars to drive self-sufficiency in semiconductors.

If it has to create its 5G and small cell platforms all on its own, it will be capable of doing that, but that is unlikely to be its preference. Chinese operators want to tap into innovation and competition from round the world, just as all MNOs want to have access to Chinese developments.

Industry alliances like Small Cell Forum will have an important role to play in ensuring that communication continues, regardless of political and macro-economic trends. And developers of 5G chips and technologies worldwide must continue to participate, even if their home markets will move more slowly towards 5G hyperdensity than China, so that they do not abdicate the evolution of next generation frameworks and baselines to others.

Standards and platforms which are formed with input from all regions, creating a synthesis of different requirements, will always be the most valuable to a global industry. China will certainly drive early 5G small cell deployments, but it will benefit from access to ideas and products from elsewhere, and that will enable it to kickstart a globally applicable, not a locally defined, platform.

Small Cell Forum will play a valuable role in promoting exchange of ideas and requirements between China and other markets. This summer, it held a successful workshop in Beijing, which helped to understand local requirements for small cell expansion, and to feed these back into the international mix. Such activities will help to neutralize the potential damage that government stand-offs can do to hopes of a global, mass-scale and innovative platform for 5G densification.

SCF is conducting a range of activities looking at how best to commercialise 5G rollout. We are considering the initial use cases for early monetisation which will fund later phases of service rollout, once coverage and devices are in place. If your organisation is driving commercial adoption of 5G small cells, then get involved in the programme which includes: Survey of MNO Monetisation plans for 5G, Technical feature and performance definitions of 5G small cells, Real world 5G capacities for cell planning and backhauling, IIOT performance requirements that justify 5G over 4G

The SCF China workshop 2018 report can be accessed here

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