Chinese telecoms get ready to ride the 5G wave

Chinese telecommunications companies are likely to shift from providing traditional communications services to businesses like data analytics and cloud services when 5G networks roll out commercially, amid a decline in legacy voice revenues, according to industry ­experts.

5G, a mobile network that is touted to be up to 100 times faster than the current 4G networks with a much lower latency rate, is expected to be commercially available by 2020.

Experts believe that the network, which will be able to handle both high and low capacity of data traffic on a widespread scale, will better facilitate the Internet of Things (IoT) and ‘smart city’ projects.

China’s three state-owned ­telecoms – China Mobile, China ­Unicom, and China Telecom – are investing heavily to develop 5G technology and infrastructure, amid the Chinese government’s Internet Plus initiative that calls for traditional industries to better integrate big data, mobile internet, cloud computing and IoT.

The move to develop 5G also comes as legacy voice revenues for Chinese telecoms continue to fall. In 2015, voice revenues slumped 15.4 per cent amid competition from apps like WeChat that provide phone calls and messaging over a data or wi-fi connection, according to a report on the mobile economy by mobile association GSMA.

“For state-owned Chinese telecom players, the challenge is that there is huge opportunity in 5G … 5G transforms everything, from smart devices, IoT and so on. But [telecoms] also need to transform, they cannot use a traditional mindset. They still have a lot to do, to innovate more and transform quickly enough,” said Gao ­Jianbin, Technology, Media and Telecommunications leader of PwC in China at the Mobile World Congress ­Shanghai.

Alasdair Grant, head of Asia for GSMA, said that the mobile operator industry has a strong opportunity to provide various cloud and data services in the growing IoT ecosystem in China thanks to data centres that operators already own. “When you have got the IoT, such as a sensor [transmitting information] to a database, operators need to provide that connectivity. But connectivity is a relatively small portion of their overall revenue,” said Grant.

“For the mobile operators, the strong opportunity is in the data centres that it has that help users connect to one another. With data centres, they can get into the cloud industry and be in the position to provide big data services,” he said.

Wilson Chow, Technology, Media and Telecommunications leader of PwC in China and Hong Kong, said that the telecommunications industry needs to transform their business model in order to stay competitive.

“Every industry today is being disrupted by changing technology and innovation, and telecoms cannot be an exception,” said Chow, pointing out that mobile operators could focus on providing business-to-business ­services.

“There is room for Chinese telecoms to facilitate and help companies digitalise their operations, be it account storage or big data analytics,” said Chow.

With the huge amount of data that will pass through the three telecoms’ networks, Chow also believes that they are well positioned to provide data analytics services to help companies in making better business decisions.

Chinese telecoms are already taking heed. Yang Jie, CEO of China Telecom, said on Wednesday at the Mobile World Congress Shanghai that the company plans to transform and upgrade itself via intelligent services in the next few years, by offering technology services such as cloud computing, data mining and data services to clients.