China’s vast mobile market now led by 4G subscribers

Fast adoption of 4G two years since its launch on the mainland augurs well for swift transition to 5G, says Bernstein analyst

PUBLISHED : Tuesday, 21 February, 2017, 8:46pm
UPDATED : Wednesday, 22 February, 2017, 6:28am

Nearly 60 per cent of all mobile subscribers in mainland China are now on 4G networks, just two years after the high-speed wireless broadband service was launched in the country, which may indicate how fast the transition to 5G will happen there by the end of this decade.

Total 4G subscribers of China Mobile, China Telecom and China Unicom reached 789.5 million as of January 31, according to data from separate regulatory filings by the three Hong Kong-listed network operators.

That has put 59 per cent of the domestic market on 4G, Bernstein Research estimated.

“If measured since the launch of 4G services, China’s 4G adoption rate has been much faster than that of Japan and the United States, and a bit quicker than South Korea’s,” Bernstein senior analyst Chris Lane told the South China Morning Post on Tuesday.

China Mobile, the world’s biggest wireless network operator, had 552.2 million 4G subscribers at the end of January, which put it on pace to hit 753 million 4G users by the end of this year, Lane said.

The company was first to launch commercial 4G mobile service in the world’s second-largest economy in January 2014, with a network built on the mainland-developed 4G standard called time division long-term evolution.

“We expect China to launch 5G services in 2020, around the same time as commercial launches in Japan, Korea and the US,” Lane said “Early adoption among high-value users [on the mainland] is likely to be just as quick as we saw with 4G.”

More than bragging rights, the speed of a country’s adoption of 5G may determine how fast its industries and consumers can start benefiting from the advances the technology will deliver.

“The whole reason why 5G is a much more complicated technology than 3G and 4G is that it needs to deal with different user environments,” Jefferies equity analyst Edison Lee said in a recent report.

Those user environments include enhanced mobile broadband, which supports applications like augmented and virtual reality entertainment and distance education; machine-to-machine communication, for large-scale implementation of so-called Internet of Things devices; and ultra-reliable, low-latency communications for applications like tele-surgery and self-driving cars.

By 2021, 5G will account for 1.5 per cent of the world’s total mobile data traffic, according to a Cisco Systems report earlier this month.

The current timetable of the International Telecommunications Union, a United Nations agency responsible for drawing up a single global standard for 5G, expects an agreement on that standard to be reached by 2018 and trial networks to be deployed the same year.

“We assume 2G networks in China to be closed by 2020 and 3G likely before 2025,” said Lane, adding that 4G networks would remain operational for 15 more years.