China Mobile is selling 5G at a 30% discount to 4G – and that's just one of the reasons that 5G in China could expand far more quickly than in the US and elsewhere.

Mike Dano, Editorial Director, 5G & Mobile Strategies

October 31, 2019

3 Min Read
Chinese Operators Start Selling 5G at a Big Discount

China's three big operators said they will begin selling 5G services to customers starting tomorrow -- and it's priced to sell.

According to the Wall Street research analysts at New Street Research, China Mobile is offering 5G services at a 30% discount to 4G. "A 30GB 4G customer who migrated to 5G on the same plan would see their bill reduced from RMB 188 to RMB 128. Even a 12GB 4G customer migrating to the 30GB 5G plan would save money," the analysts wrote in a report to investors.

Figure 1: Source: New Street Research Source: New Street Research

In comparison, US operators are mostly offering 5G via their most expensive unlimited plans.

This kind of pricing could worry Chinese investors though, considering mobile services revenue among China's wireless network operators was down 3.9% year-on-year in the first three quarters of this year.

Nonetheless, Chinese providers are rushing headlong into 5G, considering 10 million people in China have already registered their intention to purchase 5G.

Indeed, Chinese operators are launching 5G across fully 80,000 macro base stations this week, a figure that will grow to 130,000 by the end of this year, according to Wall Street research firm Bernstein Research. In comparison, the firm expects South Korea to end the year in second place with 75,000 base stations, followed by the US with just 10,000.

This is why most analyst firms expect China to command the lion's share of 5G customers in the years to come.

Winning the race
This all may come as a concern -- though not necessarily a surprise -- to US executives and policymakers, who have framed the topic as a "race to 5G" between the US and China. A number of US officials have argued that startups and entrepreneurs who want to develop new 5G applications will do so in countries that build extensive 5G networks, and therefore the US could lose its technological edge to China if China "wins" the 5G race.

A big part of the "race to 5G" discussion centers on spectrum allocation. Operators in China and South Korea are mainly using midband spectrum like 3.5GHz for their 5G buildouts, while operators in the US are using bands ranging from 600MHz to 28GHz because there isn't much available midband spectrum for 5G in the US. This could change in the months to come as the FCC moves to release midband C-Band spectrum for 5G in the US. Midband spectrum is useful for 5G because it toes the line between providing high-speed connections and covering large geographic areas.

However, in recent months some US policymakers have been working to move the goalposts in the "race to 5G" a bit by pointing out that China's 5G buildout is mandated by the country's ruling party while 5G buildouts in the US and elsewhere are driven by the economics of competition and capitalism. As FCC Commissioner Brendan Carr explained earlier this month, that means 5G networks in the US will be more directly aligned with consumer demands than 5G networks in China.

Regardless, China's official 5G rollout is starting this week -- in a country with about four times more potential customers than the US -- and it's undoubtedly going to dwarf the 5G efforts in other countries in terms of most industry metrics.

Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano

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About the Author(s)

Mike Dano

Editorial Director, 5G & Mobile Strategies, Light Reading

Mike Dano is Light Reading's Editorial Director, 5G & Mobile Strategies. Mike can be reached at [email protected], @mikeddano or on LinkedIn.

Based in Denver, Mike has covered the wireless industry as a journalist for almost two decades, first at RCR Wireless News and then at FierceWireless and recalls once writing a story about the transition from black and white to color screens on cell phones.

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