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5G Business Value Puzzle: MWC 2023 Unveils Definitive Answers to the World

On November 25, 1915, Einstein left an incredibly concise equation on the blackboard of the Prussian Academy of Sciences, linking two seemingly unrelated elements: the tensor and energy of space-time.

Later generations summarized the true meaning of this general relativity field equation: "spacetime tells how objects move, and objects tell spacetime how to move; matter tells spacetime how to curve.)”。 The two complement each other and are seamlessly integrated.

For a long time, the network upgrade and commercial return of 5G have not been clearly linked. When the construction of 5G networks is in full swing, doubts and confusions about the commercial value of 5G have always lingered in ears.

Logically, the evolution of 5G is in line with the industrial logic of intergenerational renewal of wireless communication networks, and "4G changes life, 5G changes society" has become a well-known hope on the street.

But in practice, we often face statements that the investment in building 5G is too large, the operation and maintenance costs of multiple networks at the same time are high, and 5G has not yet proved its value to mainstream consumers in the early stage.

Whether the commercial value of 5G can be realized and how to move towards sustainable commercial success is the core concern of every operator in the world.

This series of puzzles, during MWC 2023, which has just begun, has come to the moment of unveiling.

On February 27, Peng Song, President of Huawei's ICT Strategy and Marketing, delivered a keynote speech entitled "Multi-dimensional Value Monetization to Accelerate 5G Business Success", mentioning that operators with a 5G user penetration rate of more than 20% have achieved commercial success and generally achieved significant mobile service revenue growth. In the future, value can be monetized from multiple dimensions of ToC/ToH/ToB to make 5G business more successful.

A 5G "equation" is clearly written in front of the eyes of the world - advanced networks drive commercial success, and commercial success further drives network development, and the two are closely adapted and complement each other, fulfilling the promise of "5G to change society".

Through this equation, we can see the relationship behind 5G networks and business models.

The equation for 5G success is gradually becoming clear

Any advanced technology, product, and solution can only produce value and be truly accepted by our society if it proves to be commercially successful. So, is the commercialization of 5G a success?

This question requires a frame of reference to answer. 4G has created a boom in the mobile Internet economy, and its success is widely recognized. Against 4G, we can assess what the level of commercialization progress of 5G is.

1. Adoption rate. Mass consumer adoption is the key to the success of the web. According to Omdia, 5G users are growing four times faster than 4G LTE. Between the third quarter of 2019 and the third quarter of 2020, 225 million new 5G subscribers were added worldwide, an achievement that took four years for 4G LTE and only one year for 5G. Driven by the expansion of the scale of 5G users, the proportion of 5G traffic in mobile Internet user access traffic continues to expand, and the speed of user growth and traffic migration indicates that the 5G adoption rate is very benign.

2. Network quality. The new generation of networks will provide faster download and upload speeds, and 5G network construction will transform the existing base station system, reallocate spectrum resources, and even upgrade the entire broadband network. Taking China as an example, the 5G Capital boutique network built by China Unicom Beijing and Huawei can reach 2,000Mbps with measured speeds, fulfilling the promise of 5G gigabit.

3. Apply innovation. The success of 4G networks has driven innovation in mobile devices and Internet applications, and remember that when 5G was just commercialized, the most concerned topic in the media was "5G has no killer applications". At present, cloud gaming, VR/AR, high-definition live broadcast, etc., have greatly increased the traffic and usage time of 5G consumers, and 5G has been fully utilized in industrial scenarios such as the industrial Internet, moving from the "demonstration hall" to the field dock mine pasture. It can be seen that 5G applications are rapidly germinating.

4. Mobile service expansion. Network evolution should create new revenue streams for mobile network operators, such as 4G bringing new services such as mobile payment, digital finance, and mobile healthcare. At present, in addition to traffic revenue, 5G brings new private network service capabilities to operators, thereby expanding revenue on the C/B side. In addition, operators can transform into digital integration service providers, provide solutions and services for industrial digitalization, and obtain incremental benefits.

These are signs that 5G commercial success has come true and that the industry is worth much more than anticipated in previous years. With the commercial success of 5G, a clear industrial "equation" has emerged, and the interaction between network upgrades and commercial success has led to each other.

Stretching the Universe: Solving for 5G's Long-Term Boom

In the early days of 5G construction, business models were difficult to predict, and a stable relationship could not be established between network upgrades and commercial success. With a definite industry equation, we can predict what's next for 5G development? The answer is long-term prosperity.

Based on the field equations of general relativity, Einstein proposed the theory of the expansion of the universe, and the energy and mass of space-time continue to accumulate, so that the tensor of space-time increases, and the boundary of the universe is constantly stretched outward. The industrial logic of 5G is similar, high-quality 5G network can support the exploration of commercial space and the continuous gathering of users, thereby continuously stretching the business potential of 5G.

Peng Song combined Huawei's extensive 5G commercial practices to share several "stretched" dimensions of 5G commercial success:

ToC: The star of personal applications.

C-end (personal) user demand can effectively drive operators' revenue and is the key to 5G's commercial success. At present, new applications and new services of 5GtoC are booming, bringing a larger market increment.

In terms of applications, 5G's high-speed and high-stability network characteristics have brought a significant upgrade of user experience for high-definition video, AR+VR/metaverse, and cloud gaming, and the application experience is increasingly rich. For example, during the 2022 Beijing Winter Olympics, global audiences experienced a large number of 5G new technologies and applications, such as 4K ultra-high-definition real-time broadcasting, VR viewing, etc. In daily life, 5G-supported distance teaching, telemedicine, and high-definition conferencing have promoted cross-regional collaboration, alleviated the current situation of unbalanced urban and rural resources, and brought new development possibilities to more individuals.

In terms of services, the upgrade of 5G networks and technologies has made it possible to provide 5G private networks for individual users, and private network services require private network protection by providing customized network services for individual users, such as cloud gaming and high-definition live broadcasting, so as to open up new payment models.

ToH: The constellation of home network upgrades.

The digitalization of home space is accelerating, smart devices and smart applications are widely landing in homes, distance education, telemedicine, entertainment office, etc. must be carried out at home, but the cost of urban fixed network upgrading is large, some urban network upgrades are slow, and home digital experience has encountered challenges, which has also become a new opportunity for operators.

5G FWA has a large capacity, has achieved a fiber-like experience, fast deployment, low cost, and can provide alternative wired broadband access in some areas, becoming the fastest growing home broadband technology.

By the end of 2022, 95 operators around the world had commercialized 5G FWA services, developing more than 10 million home users, and operators in Europe, the Middle East and Africa had achieved outstanding business results.

ToB: The galaxy of industrial digitalization.

A core of 5G changes society is to establish deep business connections with enterprises, enable the digital transformation of industries, and bring social and economic benefits. 5GToB is a trillion-yuan market, and it is also the key for operators to transform their business models, boost growth, and rebuild their competitiveness.

At present, the industry application of 5G ToB is showing an accelerated development trend. Since 5G is a blank in most industrial scenarios, China's 5G industry chain has formed a joint force of government, industry, academia and research to move forward, and has formed an enterprise service market of great value for operators.

From key industries to thousands of industries. IDC predicts that by 2023, 60% of China's top 1000 vertical industries (such as manufacturing, logistics, etc.) will carry out 5G-based applications.

From typical apps to full joins. First, in key scenarios of key industries, such as automatic inspection of smart grids, underground communications, unmanned vehicles at docks, and remote grazing in plateau pastures, etc., create cases of 5G and industry integration, and then replicate them on a large scale throughout the process and industry. The 5G fully connected lighthouse factory covers more than 30 subdivided scenarios in eight categories, including manufacturing, visual management, smart logistics, smart parks, intelligent R&D, and smart marketing and services.

It can be seen that the 5G industry space is being stretched like never before, and business scenarios are scattered, based on the "network-business" equation, global operators can solve the password for 5G commercial success by themselves.

Be the forerunner of 5G success

The traction of the planets to each other forms a symphony of the universe, and the resonance of the global digital economy brings infinite possibilities for wireless communication.

Digital development can activate economic growth, respond to environmental crises, reduce connection costs, and enable remote collaboration, which has gathered a general consensus on the world, and it is imperative to upgrade network infrastructure and evolve to 5G and even 5.5G.

Global resonance has brought unprecedented business space, and operators can see opportunities, but more unknowns and challenges.

First, the pressure of network upgrades. Network upgrades will stimulate new requirements, new industrial logic, and landing scenarios, and when we believe that today's data transmission and network communication capabilities are sufficient, we will soon call for a network with greater capacity, lower latency, and higher reliability. Reasonable and advanced layout of next-generation networks, operators are still under pressure.

Second, the complexity of application innovation. Compared with traditional operators' services, operators need to build a package of innovation capabilities in terms of technology, solutions and integrated services, which has become a new issue for operators.

In addition, the opening of commercial channels. Warren Buffett once said that a good business model is very simple, and if a business model is not clear for hours, it either does not exist at all or is deceiving people. Although the business model of 5G seems simple, it has to face a diverse network customer group such as C/H/B/G, and there is a long way to go for commercialization.

Huawei's value emerges at this node. As a "forward", we continue to push the industry forward from all dimensions and create more space for operators and industry partners.

Innovation outpost. To do a good job in the innovation of technology, standards and products, only after completing the accumulation of network capabilities can you be qualified to discuss commercialization. China Unicom combined many of Huawei's self-developed communication technologies, such as distributed large-scale antenna technology, air-frequency multi-dimensional 5G capability fusion, carrier aggregation, intelligent dynamic beam, and large uplink, to ensure communication requirements throughout the Winter Olympics.

App Outpost. Explore and activate 5G applications in C/B/G, set a benchmark, promote the close adaptation of networks and applications, and break the deadlock of "chicken and egg, egg and egg". For example, Huawei's AR River Map has been implemented in many fields such as personal entertainment, museums, classroom teaching, mobile game development, and industrial Internet, activating a large number of 5G+AR applications in vertical fields.

Landing outpost. Work with operators to find industrial landing space, build 5G one-stop solutions, provide basic networks, O&M tools, application development, algorithm marketplace and other support, help operators build a package of innovation capabilities from 5G private lines to comprehensive technologies and services, and build core competitiveness in the enterprise service market.

From the chaos at the beginning of the flood to the gradual clarity of industry rules, MWC 2023 shows the world an equation that identifies the deterministic relationship between 5G networks and commercial success. From technology to standards, from network construction to commercial applications, everything is as logical and interconnected as the si-temporal rule.

Deriving this "equation" step by step, liberating the productivity of one enterprise after another, bringing more possibilities to users, and the promise of "5G changing society" will surely be fulfilled. In this magnificent and vast new arena, global operators will continue to unlock the infinite possibilities of wireless communications.

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