Southeast Asia's Leading Machine Vision Distributor

The Impact of Covid-19 pandemic on 5G Buildout

Slowing 5G buildout due to Covid-19 pandemic

In April, National Bureau of Statistics of China announced that China’s GDP in the first quarter of 2020 plunged 6.8% year on year. It was the first decline since 1992 when the country started publishing quarterly GDP data. The U.S. Commerce Department also announced that its economy contracted at a seasonally and inflation adjusted annual rate of 4.8% in the first quarter of the year. Business investment fell 8.6% at the same period. Congressional Budget Office projects that the U.S. economy will decline further at a 39.6% annual rate in the second quarter.

The bleak economic outlook is affecting the pace of 5G buildout. Japanese telecommunications company NTT DoCoMo planned to deploy 10,000 5G base stations by mid-2021 to expand its 5G commercial services. At the online financial result briefing in April, however, DoCoMo’s CEO Kazuhiro Yoshizawa acknowledged that the achieving the 10,000 stations target “will be extremely difficult,” due to the impact of Covid-19. In March, the U.S. Federal Communications Commission (FCC) announced that the auction of the 3.5 GHz scheduled in June was postponed for one month to protect the health and safety of Commission staff during the auction. The mid-band spectrum is considered as ideal for 5G because it can carry large amounts of data over long distances. Other countries hit by Covid-19 pandemic, including Spain, France and Austria, also announced a postponement of the airwave auction for 5G. In the UK, a conspiracy theory that baselessly links 5G technology with the coronavirus has resulted in over 70 cases of arson attacks targeting cell phone towers. In addition, there have been cases where people attacked, either physically or verbally, engineers while they were maintaining network infrastructure. While the rate of such attacks was slowing, the pandemic is likely to slow down the buildout of 5G infrastructure, at least in the short term. The rising unemployment and economic damage due to the pandemic also negatively affect the sales of expensive 5G-compatible smartphones.

5G opportunities under Covid-19

Having said that, it is also true that Covid-19 triggers rapid expansion of online-based businesses such as online healthcare, education and streaming services. The demand for high-speed and reliable Internet connection also increase as the growing number of people now work from home. Key advantages of 5G network – highspeed, low latency and the capacity of connect more devices – is particularly useful for online healthcare and education. In Wuhan, for example, 5G network was introduced at Huoshenshan Hospital dedicated to treat patients suffering from the virus, allowing doctors to communicate over high vision video. More than 3600 hospitals participated in tele-health platforms set up by China Telecom, treating some 580,000 patients. In China and other places, drones, AGV and robots are increasingly used to patrol, monitor people’s temperature, disinfect the environment and deliver medical supply.

As experts warn of second and third waves of pandemic over coming months or even years, it is likely that social distancing remains to be the norm of the society for some time, at least until the vaccine is developed and distributed. Adoption of telework will continue to rise as countries explore options to restart the economy while minimizing the risk of infection. In this context, 5G will help increase productivity of tele-workers. In the manufacturing sector, 5G related investment is expected to increase in the long-term as more and more companies try to achieve Industry 4.0 standards. This is in line with the findings of a recent study by 451 Research, “COVID-19 and 5G: Short-term Pain for Long-term Gain”. While the report predicts that the delay of auction will bring a midterm blow for 5G buildout, it also asserts that Covid-19 will result in stronger demand for 5G over time. To support 5G infrastructure expansion in the U.S., FCC has proposed a fund of $9 billion for buildout in rural areas that would not see timely deployment of 5G service. Other countries also provide various support to accelerate 5G service, but China is especially active in this area.

Accelerating 5G investment in China

China lifted the lockdown of Wuhan in early April, and has gradually lifted many of its limits on work and travel in recent weeks in a cautious approach to restart the economy. Here, accelerating the development of the “new infrastructure”, including the deployment of 5G networks and data centers, is considered as a top priority for China’s central government. On March 25, the Ministry of Industry and Information Technology issued a notice demanding faster expansion of China’s 5G network. The notice also reiterates that the expansion of 5G service remains a national strategic priority. In response to this government call, three major telecom companies in China (China Unicom, China Telecom and China Mobile) announced that they will invest around 180 billion yuan ($25.5 billion) into their 5G rollouts in 2020. The figure is more than four times the investment in 2019.

“China 5G Economic Report 2020”, released at China 5G Economic Seminar predicts that total investment in 5G will reach 900 billion yuan in 2020, creating 540,000 jobs. China Academy of Information and Communications Technology also expects that the direct investment in 5G network construction will reach 1.2 trillion yuan by 2025, and 5G-related investment in other sectors such as industry, agriculture and transportation will be 3.5 trillion by the same year.

5G at the center stage of U.S. – China confrontation

A year ago, Huawei was added to the U.S. Department of Commerce’s Bureau of Industry and Security Entity List, following an executive order from President Trump. In May this year, President Trump extended the order until 2021. In addition, Commerce Department tightened export controls on Huawei, and extended Temporary General License for another 90 days. The Trump administration is moving aggressively against Chinese telecom companies and government, and 5G is at the center of the conflict. In an interview with Fox Business Network in April, U.S. Secretary of State Mike Pompeo said China’s response to Covid-19 is likely to force countries to rethink their telecommunications infrastructure plan. Asked about the use of Huawei and 5G, he said, “I am very confident that this moment — this moment where the Chinese Communist Party failed to be transparent and open and handle data in an appropriate way — will cause many countries rethink what they were doing with respect to their telecom architecture”. As Zoom, Microsoft Teams and Google Meet replace face to face meeting, the 5G infrastructure will become ever more important. How the U.S.-China relations unfold over coming months will have significant influence on the future of 5G.

*This text was published at IIOT Times powered by LINX

Share on facebook
Share on twitter
Share on linkedin