It's official! China starts 5G commercial use

China on Thursday officially started commercial use of 5G technology, with telecom operators rolling out 5G service packages.

Chen Zhaoxiong, vice minister of the Ministry of Industry and Information Technology (MIIT) made the announcement at the PT Expo China 2019, adding there will be 130,000 5G base stations around the country by the end of this year.

With this move, China's big three telecom operators, China Mobile, China Unicom and China Telecom, can finanly offer 5G services to ordinally customers.

The price for 5G services are higher compared with 4G packages, with the entry level by all the three operators set at 129 yuan.

This is also the first time telecom operators in China chose to price the service packages by internet speed rather than data allowance.

For instance, China Unicom prices the data plan which allows peak speed of 500Mbps at 199 yuan. For those who want to enjoy peak speed of 1Gbps, they have to pay at least 299 yuan.

The formal launch of 5G commercial use marks the latest move China has taken in utilizing the new technology.

As cnTechPost reported previously, the MIIT in June issued 5G licenses to the three telecom operators, which all rolled out pilot programs for users to try out the service.

It proved that user participation was rising fast.

As of October 9, China Mobile saw 5.922 million users register for its 5G package. The number for smaller players China Telecom and China Unicom were 2.078 million and 2.003 million respectively, bringing the total to 10 million.

All three carriers have offered incentives to encourage consumers to sign up for 5G services early. China Mobile has offered a 30 per cent discount to users who have been in its network for more than five years, and a 20 per cent discount to those in its network for less than that period.

Even if the 5G opportunity takes more time to play out, Barron's believe there is still a powerful near-term investment opportunity for the technology: Chinese infrastructure.

In a story published on October 4, Barron's argue that 5G may come together slowly in the US market, but China is serious about winning the race.

Behind this conclusion, Multiple Wall Street analysts are getting more optimistic about China's 5G buildout.

For instance, Rosenblatt Securities notes that local governments in China are providing subsidies to “speed up 5G network deployments.” As a result, Rosenblatt says, more than 300 cities in China will have 5G networks by the end of next year.

Even Rod Hall, the Goldman Sachs 5G skeptic, expects 120 million 5G smartphones to ship next year, largely because of China's aggressive buildout.

In a report this past week, Piper Jaffray analyst Harsh Kumar cited a Chinese think tank that sees China-based companies spending $411 billion on 5G networks from 2020 to 2030.

Of the 600,000 5G base stations expected to be rolled out worldwide next year, Kumar says half will be deployed in China: “We expect 2020 global [5G] deployments to largely be driven by the Chinese market.”