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China's 5G question: Why are so few using it?

China's 5G numbers might be the envy of the world but one expert is asking questions about the payoff.

China's 5G sector reports 250,000 basestations, 90 million users and 77 million handsets shipped.

Yet one analyst, Wang Changyou, asks why in light of these numbers are there so few signs of people actually using 5G?

One obvious reason is user numbers are overstated. The subscriber totals are around a third above the number of handsets shipped because, in a land-grab for customers, operators are including 4G subscribers using "5G packages" in their 5G totals.

But a bigger problem is that there still isn't a reason to upgrade to 5G, other than price. The three operators have all slashed basic tariffs to below 100 yuan (US$14.28).

KT CEO Hyeon-Mo Ku made this point at a recent online event. With the benefit of 15 months' 5G experience, he reminded the industry that the opportunity lies in the enterprise, not the consumer market.

He said consumer 5G offers little differentiation over LTE and urged operators to focus their energies on B2B, which has vastly greater scope for differentiation and profitability.

"Above all, B2B customers will have a willingness to pay, as they can see the benefit for their business," he said. "They see telecommunications services as an input, not as final product."

This is a long way from the China Inc. strategy of rapidly rolling out 5G and offering discounts to get consumers on board.

The China approach is also a contrast to previous mobile generations, when operators were content to pace themselves in order to iron out bugs and to expand coverage to meet demand.

In reality, China's 5G rollout, for all its vastness, is stretched too thin. A quarter of a million basestations sounds huge, but across 300 cities that's just 833 locations each.

As Wang says, China's current 5G scale "is far from meeting the goal of achieving continuous coverage."

Even the abundant 5G handsets offer little advantage, Wang says.

"Compared with 4G mobile phones of the same price, the performance indicators of 5G mobile phones still have a lot of room for improvement ... the best 5G mobile phone is only equivalent to 4G+."

Likewise, he said the 5G applications developed for individual users "have not been eye-catching."

— Robert Clark, contributing editor, special to Light Reading

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