The Ministry of Industry and Information Technology has formulated a policy: What will the 5G technology bring to the three major operators?
Introduction: Recently, the Ministry of Industry and Information Technology and the State-owned Assets Supervision and Administration Commission jointly issued the “Implementation Opinions on Deepening the Speeding up of the Network and Reducing Expenses and Accelerating the Development of New Economic and Developmental Energy 2018 Campaigns”, which requires the acceleration of the development of 5G industrial technologies.
Recently, the Ministry of Industry and Information Technology and the State-owned Assets Supervision and Administration Commission jointly issued the "Implementation Opinions on Deepening the Speeding up of the Network to Decrease Fees and Accelerating the Development of New Economic and Developmental Energy 2018 Campaigns," and called for accelerating the development of 5G industrial technologies.
From the national level, investment in the 5G industry will have a certain role in promoting the entire communications industry. In the medium to long term, after the rollout of 5G networks, the technical and market characteristics of 5G will be destined to allow three operators to enter into homogenized services and low-price competition, which will further reduce the profitability of downstream companies throughout the communications industry. It may even trigger the collapse and transformation of some communications companies.
From four perspectives, the impact of 5G network deployment on operators and their downstream industries can be seen.
First, the operator's revenue has approached the ceiling: From China Mobile’s 2017 earnings report, which accounts for 70% of mobile phone users, we can see that the penetration rate of China Mobile's 4G users is already close to 70%, which is close to the number of 2G users and the APPU value. The (average revenue per user) growth rate has been between 5% and 5% for the past few years. The main reason is that since 2015, user data traffic usage has increased by 5 times, and the per-user traffic usage proportion has reached 54%, while voice Usage has dropped to 25%, and traffic charges have been hit by Unicom's "ice cream" and other unlimited packages. The traffic of the three mobile operators will be declining in the future. Simply put, the number of mobile users will increase to the ceiling in the future, and the ARRU value will not change or decrease. That is to say, in the era of 5G, the revenue growth of operators in the future is basically weak.
Second, 5G technology will reduce the cost of investment: From the 5G network technology point of view, 3GPP (5G protocol development organization) will specify that the future 5G network will be a network first, there will no longer be 2G-4G multiple protocols The situation of coexistence, at the same time, due to advances in technology, has reduced the number of vertical nodes in the network, that is to say, the investment in equipment and project maintenance in the future 5G construction will be reduced. According to Japan's NTT Docomo estimates, in the future, 5G adoption of new technologies will reduce operator investment costs to 50% of the 4G era, which will greatly affect the number of orders and revenues of downstream equipment vendors and service providers.
Third, a single standard of 5G terminal will compress the mobile terminal market: 5G terminals will have only one unified standard, and mobile phone users will not need to differentiate mobile phones according to different operators. For example, if you go to buy an iPhone, you do not need to consult a 5G mobile phone to buy a 5G mobile phone. This mobile phone is to support mobile, or telecommunications, or Unicom's. According to the "China Mobile Phone Market Operation Analysis Report" of the China Institute of Information and Communications, as of the first quarter of 2018, China's mobile phone sales have been continuously negatively increased for 13 months, and sales in March 2018 have also dropped by 27% year-on-year. From the sales of mobile phones can fully explain the user's saturation, if the next 5G unified system will only further reduce the market size of the entire mobile phone sales.
Fourth, future operators will lose the user's bundling rights: After 5G, operators will vigorously promote esim cards (embedded sim cards). Users' future mobile phones will be directly embedded in sim cards. Users only need to pass software according to their own needs. Select the operator. Such a seemingly small technological change will in fact possibly change the business model of the entire communications operator. Individual users will no longer be bound by a single operator. It is conceivable that future mobile phones or APP portals will hijack users' choice of operators. Power, the user may be in the situation of no perception, mobile phones and APP will automatically help users choose the current use of the network location, the lowest cost, better signal carrier network, the original China Mobile’s advantage to attract users through the coverage will be weakened, If China Mobile can't converge on price with other two companies, it is very likely that future users will use the low-cost carrier network (or wifi) in a fixed place most of the time, and will only choose to move if the signal is not good for some time. Therefore, in the future 5G era, the three operators can only compete on low-price networks that are homogenized, thereby further reducing profits.
Compared with the U.S. communications carrier market, the U.S. is currently entering the era of operator oligopolies. The profit rates of the three largest operators, Verizon, AT&T, and T-Mobile, have gradually converged in recent years, and the EBITDA rate is 25% higher than in 2014. In 2017, the difference is only less than 10%. Like China, three operators have gradually introduced unlimited packages. According to estimates of US operators, after entering 5G, the profitability of China's three operators will further increase. Convergence, but also will further reduce the investment in network construction