China Will Pioneer 5G NG Core Deployments

Chinese telcos, and particularly China Mobile, have been incentivized by the Chinese government to look beyond simple connectivity and invest in features that will enable Industry 4.0. Chinese industries are currently in the first wave of digital transformation. It is a political and cultural norm to plan for the long term rather than focus on tactical industry issues. Robotics, industrial automation, digital twins, and many other digital transformations are being pioneered in China, the largest manufacturing market in the world. It is thus normal that China Mobile – the largest telco in China – is betting on the long-term prospects of 5G, which is Next-Generation Core and network slicing, and perceived to be anticipating the core network features of 5G, compared with the rest of the Western markets that are feverishly expecting 5G New Radio. China Mobile is also by far the largest telco in the world, and very likely to be among the first telcos to deploy advanced 5G features, including network slicing and vertical applications, which will require major vendor support and R&D efforts. Western telcos may be anticipating these developments and take advantage of Chinese telcos’ experiences indirectly, through the very same vendors.

The Chinese telecoms market is in a developing phase, with 4G subscriptions still growing. At the same time, the government is pushing for advanced telecommunication features, which will likely have a direct influence on Chinese telco network deployment strategies and ultimately, Chinese vendor R&D. This head-start in advanced 5G features may become a critical advantage for Chinese vendors, especially since NG core deployments are likely to be greenfield, and this environment will become a competition that requires completely different vendor expertise and background. For example, NG Core contracts are likely to be awarded according to software and cloud-native capabilities, rather than hardware and legacy features. As such, having a head-start – and a massive one from the Chinese market – may be a competitive advantage Western vendor cannot counter. It could also be said that this is also materializing: at a time when most telcos and vendors focus on mmWave and 5G NR, Orange and ZTE signed a partnership to test NG Core features and deploy a multi-site network that will test advanced 5G features, including cloud-native applications and network slicing.

Even though initial NG Core partnerships and alliances have already taken place, the industry is very far from any hint of a commercial NG core deployment, let alone implementation of advanced features such as network slicing. Above all, this will require a tangible business model, not just aspirations that verticals will buy telco services offered through a service-based 5G network. Moreover, there are operational issues to be solved before a NG Core deployment can be monetized. For example, the technology to enable these advanced features may be deployed a day after the full standard is ratified, since it will run on software and cloud-native architectures. However, this technology will have no impact if telco operations cannot create the agile services needed to monetize them and react to market changes in a matter of days rather than months or years.

And this is exactly the area where vendors may need to help telcos more proactively, rather than consultants or in-house development. Collectively, vendors hold more expertise and patents know-how compared even with the largest telcos. Vendors should take this a step further and lead rather than expect a telco pull for the next wave of service innovation. The fact that Chinese vendors could be in the forefront of Industry 4.0 developments may give them a major competitive advantage and experience in the largest global industrial market.