Around the world operators are in the midst of their network buildouts and device vendors are pushing 5G capable handsets, tablets and wearables to the market.
But there are two countries that stand out in the speed at which consumers and enterprise have adopted 5G services. According to GlobalData’s mobile broadband forecasts, by end of 2020 China and South Korea outpaced the world in adoption with 26% and 24% 5G subscription penetration of the population respectively compared to the Global penetration of 5% at the end of the same period. This rapid adoption is beginning to help operators in these markets grow revenue from mobile services and drive ARPU uplift in China and South Korea with overall 2021 mobile service ARPU expected to rise.
5G in China and South Korea is supporting both consumers and enterprise and even contributing to social welfare. On the consumer side new value and revenue streams for consumer 5G is being driven by next gen content like AR/VR experiences, the ability to stream 8K anywhere, providing multi-camera views for live events, offering dedicated gaming networks and new consumer IoT applications.
On the enterprise side networks are being deployed as an enabler for enterprise services alongside technologies like multi-access edge computing (MEC) and IoT platforms and industrial applications to support use cases like (industrial automation, AI video applications, drones, smart city). Often these enterprise solutions are supported by a combination of 5G, IoT and multi-access edge computing (MEC). China Mobile alone has entered contracts to construct dedicated 5G networks for private industry with 470 enterprise customers, in 2020. The company claims these projects support 15 different industry segments and represent over US$620m (RMB 4bn) in revenues.
Beyond typical consumer and enterprise services, 5G has supported the pandemic response in both countries, with hospitals in Wuhan being rapidly connected with 5G networks and telehealth for the elderly being delivered in South Korea.
What is driving success?
For customers to see value, 5G networks need to provide next generation speeds alongside ample coverage. To achieve this, operators in China and South Korea invested heavily in network CAPEX. For example, in South Korea all three operators rapidly increased 2019 CAPEX levels. SK Telecom (SKT) totaled US$2.5bn (KRW 2.9 Tn), the highest since 2012, Korea Telecom $2.8bn (KRW 3.2 Tn), the highest since 2013 and LGU+ US$2.3bn (KRW 2.6 Tn), highest since 2012.
Meanwhile in China the three leading operators drastically increased their 5G CAPEX. China Mobile’s 2020 5G CAPEX totaled US$15.7bn (RMB 102.5bn), 57% of all CAPEX up from US$3.7bn (RMB 24.0bn) (14% of total CAPEX) in 2019. Meanwhile the combined 5G CAPEX of China Telecom and China Mobile, who are sharing 5G infrastructure, totaled US$11.3bn (RMB 73bn) in 2020, 48% of total combined CAPEX, up from US$2.7 (17.2 bn) in 2019 (13% of total combined CAPEX).
The result is that South Korean users have wide 5G coverage and experience truly next gen speeds. For coverage in China All provincial level cities had 5G coverage by the end of last year. Furthermore, Data from the MIIT indicates that there were 720,000 active 5G base stations by end February 2021. For, South Korean Coverage, the capital city Seoul already has near 100% population coverage while the rest of the country is expected at 90% overall population coverage for NSA this year.
The investment has also resulted in next generation speeds for users. For example, according to Ookla’s “Speed Test”, the median 5G downloads speeds, in Mbps, for the three leading Chinese operators were 304.6 for China Telecom, 303.4 for China Mobile and 292.0 for China Unicom, in June 2021. Meanwhile, in Seoul, the operators have been able to achieve speeds that rival some residential fiber broadband. Network download speeds for the operators in Seoul in 1H 2021 according to Root Metrics were 642.5 for LGU+, 604.9 for SKT, and 548.4 for KT.
Chinese and Korean operators have not only driven adoption of 5G services based on coverage and speeds but have also been working to support both enterprise and consumers with new value services and use cases. We will now explore two use cases from China and Korea, one supporting enterprise and one consumer.
Case Study B2B: China Mobile 5G Smart Mining
The Shan Xi Hua Yang Group, an energy provider, wanted to digital transform its mining operations. The company had Goals of increase automation, increased efficiency and increased safety and reduced carbon footprint at its Xinyuan mine.
China Mobile’s 5G offering
In 2020, in collaboration with Huawei and other industry vendors across software, IoT and specialty equipment, delivered a differentiated 5G network, an on-site MEC solution and software suite to manage disparate systems.
Key use cases for the deployment are real-time communications network connecting workers and equipment in the mine with those in the control center, remote control of mining equipment and sensor and monitoring platform across video, equipment, and environmental sensors. The solution was deployed at the site of the underground mine shaft and above ground control center
Through the implementation of the 5G network, MEC and IoT systems, the mine was able to deliver reduction in labor costs, reduction in non-labor operation expense and decrease in equipment failures. More specifically the connection of mining equipment to the IoT sensor platform reduced device failure by 15% compared to the previous year. Automation of certain surveillance tasks reduced the required manpower onsite in the mineshaft, increasing worker safety and lowering cost of labor by around US$770 thousand (RMB 5m).
Case Study B2C: LGU+ AR/VR for 5G
LGU+ was the third leading operator in South Korea prior to the launch of 5G networks in the country and wanted to differentiate its 5G services by offering value add for consumers immediately, beyond improved download speeds.
LGU+’s 5G offering
LGU+ invested in developing content services specific to 5G customers that leverage high bandwidth to deliver better experiences. The 5G content experiences that can be accessed via various applications, with some coming free for subscribers and others with a monthly fee, including an AR shopping platform, an AR and VR content library including K-pop and sports content, and remote learning applications.
While LGU+ overall market share at end of April 2021 was 21%, its 5G market share is 23%, with overall service ARPU increasing since 4Q 2019. Other operators have also seen the value of providing 5G content to their customers with both Chunghwa Telecom and AIS entering into agreements to purchase AR/VR content from LGU+.