Workers setting up a 5G base station at the border near the Hong Kong-Zhuhai-Macau Bridge. Photo: China Mobile

With more than 700,000 5G base stations in operation nationwide, China is the clear frontrunner in the emerging new ultra-fast wireless communications era. But while China’s 5G build-out has been speedy, the question arising as the stations come on line is will they be cost-efficient?

The Ministry of Industry and Information Technology (MIIT) said last week that as of October China’s total 5G cell sites and land stations accounted for more than twice the rest of the world combined.

The United States had about 46,000 5G-ready cell sites at the end of 2019, though each site normally hosted more than one base station, according to the Federal Communications Commission. The MIIT added, however, that China was also far ahead in terms of 5G availability and adoption rates.

China’s “big three” state-owned carriers – China Mobile, China Telecom and China Unicom – now boast a combined 180 million 5G users, though it has not defined all of them as 5G subscribers since many mobile phone users have not yet upgraded their 4G handsets for 5G ready ones after switching to a 5G package. 

Since 2015, China had outspent the US by approximately US$24 billion in wireless infrastructure, according to a Deloitte report examining worldwide telecoms expenditure. That gap will widen as Beijing puts renewed priority on the build-out in the wake of the pandemic.

China Tower, a state-owned telecoms infrastructure contractor established in 2015 to take over base station and equipment investment business from the “big three” carriers, said in November that it had installed 380,000 5G base stations in the first 10 months of 2020 to expand coverage in the country’s densely populated eastern and central regions. 

Last month, Jiangsu’s provincial government announced a seamless roll-out of 5G service covering the whole 107,200 square kilometer eastern province, with signal overlaps and ample capacity redundancy in major cities and along key economic corridors.

The 5G base stations are now fitted a few hundred meters apart along the 300-kilometer expressway and high-speed railway between Shanghai and the province’s capital of Nanjing. Moreover, lamp posts in key urban centers such as Nanjing, Suzhou and Wuxi are being retrofitted into 5G hotspots.  

However, key stakeholders are faltering somewhat to keep pace with Beijing’s breakneck 5G investment and expansion drive to connect even far-flung villages and other less economically vibrant areas.

Visitors experience products exhibited at the 2020 World Internet Conference and the Light of the Internet Expo in Jiaxing city in eastern China. Photo: AFP

China Tower’s Jiangsu subsidiary reportedly complained to the provincial government when it drafted its own policies to accelerate 5G deployment into suburban and rural areas, where the hefty capital outlays required to meet the targets will less clearly generate the returns needed to recoup the investments. 

Those returns will also reportedly be eroded by higher power costs. China Tower’s President Tong Jilu told reporters on the sidelines of a parliamentary session that his company may have to pay 100 billion yuan ($15.3 billion) per year just for electricity as 5G stations that use domestic equipment from Huawei and other local suppliers have become power guzzlers due to recently imposed US restrictions on their chip supplies.

Instead, the 5G stations are using less efficient homemade chips that are adding substantially to their power usage. 

Tong explained that the average power consumption of one 5G station was 3.8 kilowatt per hour, or three times more than used by current 4G stations outfitted with more efficient chips.

He said the company’s aggregate annual power cost may hit 100 billion yuan once 5G deployment matched the size of existing 4G networks.

Ding Yun, Huawei’s telecoms business arm director, was quoted in local reports as saying that because of the US chip ban, Huawei is mulling sharing some of the additional electricity costs that telecom carriers rack up after switching to less efficient homemade chips in 5G base station systems. China Tower is one of Huawei’s pillar corporate clients. 

Under Beijing’s 5G imperative, outlined in the recently promulgated Five-Year Plan, China Tower and its partner carriers are now paying huge sums to roll out more coverage. 

A ZTE Axon 10 Pro 5G smartphone, which is the first 5G phone to hit the market in China, for sale at a store in Beijing. China now has 180 million 5G users according to its telecoms authority. Photo: Handout

Wang Wang, an ICT analyst with China Tower’s Shanghai branch, told Asia Times that while 5G’s high-frequency bandwidth meant higher transmission speeds than 4G, a 5G station can only beam signals to a much smaller area, typically within 500 meters.

To guarantee steady coverage and stable download speeds of up to 10 gigabits per second, China Tower would have to build considerably more 5G stations than it did for 4G, he said. 

“It’s like building countless WiFi hotspots to cover the entire Shanghai, so the cost of 5G coverage, maintenance and power consumption can be prohibitive,” said the technician, who added that in Shanghai the cost of building a 5G base station was at least 300,000 yuan ($46,000). 

China Tower is now trialing a pilot scheme in Shanghai and Jiangsu to lease individual towers to all “big three” carriers to cut costs and reduce the number that needs to be erected. 

The Xinhua Daily, Jiangsu’s provincial mouthpiece news outlet, reported that under the leasing model China Tower built just 99 5G stations and indoor points throughout the sprawling new campus of the Jiangsu University of Science and Technology in the city of Suzhou that covers almost 2 square kilometers. The paper also noted that the operator of the state grid had also agreed to lease its towers and substations in downtown areas to be adapted as 5G hotspots.

At the same time, Beijing is heaping praise and sweeteners on China Tower for laying the groundwork to cement the nation’s first-mover advantage in the 5G era. The State Council has mandated discounts in grid tariffs for China Tower, significantly after it hinted at ditching Huawei for Ericsson’s more power-efficient base station equipment. 

China Tower and state carriers still have their profitability work cut out for them since individual 5G networks or hotspots do not guarantee superior network performance until sufficient economies of scale are realized.

The nation still needs to build more than twice as many 5G stations than presently installed within the next five years to hit the two million mark which is Beijing’s target in its Five-Year plan.

China will need roughly more than four times as many cell sites and stations as the US for the near-instantaneous communication to support its substantially larger population.