5G-Advanced: underpinning a monetisation imperative

5G take-up continues to grow. Adoption has now reached around 20% globally but is considerably higher in most of the vanguard countries. China (with 45% adoption), South Korea (49%) and the US (57%) are among the most populous countries in this group. The pace of 5G adoption since launch has been the fastest of any mobile technology generation. 4G took twice as long to reach this level, while 3G was around 2.5× slower. The reasons are well established and include wide handset availability with declining price points, expanded network coverage, faster speeds, high levels of competition among operators on airtime prices, and relief from Covid-era macro pressures. 

China is home to a fast developing 5G story and has a growing gravitational pull, given its impact on strategic industries and the content ecosystem in the consumer domain. Translating its 5G adoption rate into absolute connections numbers – 810 million – underscores its sheer size. By 2030, China’s 5G connections base will exceed 1.6 billion, accounting for around a third of the global total despite being home to less than 20% of the global population. 

The imperative for operators is to monetise this connections growth beyond the marginal levels reported to date. Most of the revenue uplift attributable to 5G on the consumer side has so far come from price premiums in return for higher speeds and data allowances. This is fine and justified but ultimately not sustainable, because the price premiums will eventually be competed away. The enterprise segment has more incremental revenue upside but this has not yet materialised beyond marginal levels.

China offers a useful case study. The imminent arrival of 5G-Advanced networks with 3GPP Release 18 (the next phase of 5G) provides an upgrade that increases the ability to monetise several enterprise and consumer applications more than has been possible to date. This includes low-power IoT with RedCap, FWA broadband, and a range of higher bandwidth streaming and entertainment categories that could draw on extended reality (XR). 

How much more do 5G customers lean towards entertainment categories?

Percentage of contract customers who have added, or are interested in adding, a given entertainment subscription to their tariff

Source: GSMA Intelligence

Beijing trial: leading the way

I had the opportunity to speak at Huawei’s 5G Evolution Summit at MWC Barcelona 2024. The discussion focused on monetisation strategies that can form the basis of network transformation upgrades.

An important question for 5G-Advanced is how to balance the goals of high network performance and cost effectiveness. Huawei and China Unicom have undertaken a trial in Beijing to this effect. The trial brings together an approach to balance low and high frequency band spectrum such that coverage and capacity layers are both delivered. To date, China Unicom’s 5G network in Beijing has become robust. However, the fast rising traffic profile and concentration in dense, urban areas mean further upgrades and rearchitecting are necessary to ensure performance. The following network KPIs for China Unicom in Beijing underscore this: 

• approximately 4,000 sites support 200 MHz spectrum 
• 5G coverage is at parity with 4G 
• utilisation can reach over 90% in the busy hour.

The trial set up a network to integrate high-band spectrum with mid-band holdings (3.4–3.6 GHz, 4.8–5.0 GHz). Drive tests of the network indicate peak download rates of 10 Gbps with a continuous (i.e. sustained and uninterrupted) rate of 5 Gbps. The network strategy uses a handover algorithm rather than carrier aggregation to link the spectrum holdings, preserving capacity only when it is needed in real time (such as at a sporting event). This means high-bandwidth use cases (e.g. VR gaming at an e-sports venue, or glasses-free 3D) can be serviced while maintaining coverage across the network and indoors, given that lower band propagates better through walls. Higher uplink speeds were also achieved, which helps with high-definition video streaming and other bandwidth-intensive applications such as VR. 

Outlook

The partnership and trial are a good indication of how 5G-Advanced networks can be set up to balance performance and coverage. This also plays to the demand requirements for 5G networks in serving lower latency use cases: wide area coverage, adaptable for AI, and deterministic. The situation in China is in some ways more pressing than other countries on account of the rapid take-up of 5G in numbers and usage. Data usage per 5G customer will rise from 13 to 54 GB per month by 2030 (or 23% per year), faster than subscriber growth of 11%, implying a higher usage intensity as people use more bandwidth-heavy apps.

China is likely to license millimeter wave spectrum at some point in 2024, though the allocation amounts – which will have an impact on capacity – are not yet known. If the allocation does go ahead, China would be the most prominent country on the 2024 calendar for a millimeter wave release, joining the 50 countries that have already done so. It would also provide regulatory certainty to chipset makers and device OEMs to incorporate high-frequency spectrum in their portfolios, in turn driving scale economies to help reduce handset and other CPE costs. These are all positives to go alongside the product monetisation of operators using this type of 5G network. We would expect to see other operators consider this deployment model for 5G-Advanced where spectrum holdings permit, even if that is at the local or regional level rather than on a national scale.