Slam dunk for ZTE? Chinese telecoms firm vows to bring ‘pre-5G’ service to over 10 countries this year

Tech firm plans to conduct full 5G network trials nationwide in early 2018 and commercialise the service soon after

PUBLISHED : Thursday, 18 February, 2016, 2:25pm
UPDATED : Thursday, 18 February, 2016, 3:06pm

ZTE Corp will commercialise its “pre-5G” technology in at least a dozen countries and territories this year including the Chinese mainland and other parts of Asia and Europe, it said this week.

To this end, field trials will be run in every Chinese province by midsummer, according to ZTE spokesman David Dai.

In doing this, the world’s third-largest telecommunications equipment manufacturer is rising to the challenge set by the Chinese government, which has urged local technology enterprises to launch 5G networks before any of their rivals.

Expectations are high this goal will be reached by 2020 - but whether a Chinese company will get there first remains to be seen.

Beijing certainly hopes so. As China continues to mature from a manufacturing-and-export-based economy to one more focussed on domestic consumption and innovation, the government wants China to play a leading role in next-generation information systems as its industries upgrade.

Shenzhen-based ZTE, founded as Zhongxing Semiconductor three decades ago, has a role to play in this and seems to be making steady progress.

But while an overhaul of network infrastructure may be a few years off, the company claims its pre-5G service can deliver significantly faster speeds on pre-existing 4G networks.

“After upgrading ... internet and mobile phone users will be able to enjoy speeds between four and five times faster than 4G,” said Zhang Jianguo, ZTE’s senior vice president for wireless business.

“We expect to run 5G field trials in 2017 or 2018 with speeds several hundred times faster than 4G. About 2,000 engineers are dedicated to this task.”

If all goes well, the company will commercialise its 5G service shortly afterwards, said Dai.

READ MORE: China’s Huawei and ZTE up their game at CES 2016 to rid image as budget smartphone vendors, bid for global domination

ZTE did not name the countries it is targeting this year, but announced that it would be ramping up spending on 5G.

Instead of investing US$220 million from 2015 to 2018, as it predicted last year, Zhang said that figure would probably be doubled.

“5G will be the most important division for ZTE,” said Dai. “It will start to contribute to our revenue soon.”

He said ZTE spends over 10 billion yuan (US$1.54 billion) a year on research and development, with up to 40 per cent of this dedicated to its 4G and 5G programmes.

Its 5G research projects relate to such areas as network design, multiple-antenna technology, high-frequency communications, and Internet of Things architecture.

ZTE is also working on an unmanned driving project, Dai added.

With 5G tipped to be a dominant force over the next decade, network operators could be raking in service revenue of US$65 billion from this globally by 2025, up from US$100 million in 2020, according to forecasts from Juniper Research.

READ MORE: China’s ZTE to partner with SoftBank to bring ‘pre-5G’ technology to Japan

Boosted by strong demand from China and elsewhere, ZTE’s wireless business posted sales growth of 30 per cent last year. ZTE also owned nearly a third of the global market for 4G products in terms of shipments.

It has targeted annual revenue of 200 billion yuan by 2020, double what analysts expect to see from its 2015 numbers. The company believes 2015 was a record year, financially.

The number of mobile users in China surpassed 1.3 billion at the end of last December. Of these, 29.6 per cent use 4G services and networks, according to data from the Ministry of Industry and Information Technology. China has an official population of 1.4 million.

Last year was a coming of age for 4G in China with hordes of people flocking to sign up for it. Newly subscribed users jumped 289 million, nearly tripling the rate of growth seen in 2014. This brought the total to 386 million, data shows.