China’s Government-Led National 5G Rollouts to Accelerate Video Services

Subscribe To Download This Insight

3Q 2019 | IN-5609

China recently announced that it will accelerate the implementation of a nationwide “One Network” infrastructure. The plans were announced by China’s National Radio and Television Administration (NRTA), the executive body that serves the Central People’s Government. This body oversees state-owned radio and Television (TV) enterprises in China.

Registered users can unlock up to five pieces of premium content each month.

Log in or register to unlock this Insight.

 

China Takes a Centralized Approach to 5G

NEWS


China recently announced that it will accelerate the implementation of a nationwide “One Network” infrastructure. The plans were announced by China’s National Radio and Television Administration (NRTA), the executive body that serves the Central People’s Government. This body oversees state-owned radio and Television (TV) enterprises in China.

The One Network is a national information network that aims to create a unified national cable TV network operating system and implement 5G networks for nationwide radio and TV by 2025. In order to achieve this, the NRTA plans to transform cable TV into fiber-optic and Internet Protocol (IP)-based networks. 5G is also planned to be integrated with mobile communication operations, which will strengthen smart cities and improve construction of rural bearer networks.

Digital Transformation Expected in Video Streaming Market

IMPACT


The national development of IP-based TV will increase the shipment of High-Definition (HD) and UltraHD set-top boxes in China. According to ABI Research’s Set-Top Boxes and Broadband CPE (MD-STB-172) Market Data, 4K/UltraHD-capable set-top box shipments as a percentage of total set-top box shipments are forecast to increase from 27% in 2019 to 94% in 2024 for the Asia-Pacific market. This increases Asia-Pacific’s ranking of 4K/UltraHD-capable set-top box shipments as a percentage of total set-top box shipments from fourth place, behind North America (77%), Western Europe (76%), and Eastern Europe (58%) in 2019 to third place, behind North America (100%) and Western Europe (100%) by 2024.

While ABI Research finds Asia-Pacific’s Average Selling Price (ASP) of IP-based TV set-top boxes to be lower than that of North America’s, the total market for HD and HD Digital Video Recorder (DVR) IP-based TV set-top boxes in Asia-Pacific (US$3 billion) was much higher than that in North America (US$300 million) in 2018. According to ABI Research’s State of OTT Services and OTT STBs 2019 (AN-5051), the growth of the IPTV market in Asia-Pacific has been driven by China, which increased its IPTV subscriber base by 70 million over the last few years. ABI Research believes that this was supported by the high levels of broadband connectivity in China, with 85% of its households connected with Fiber-to-the-Home (FTTH) access.

Given the accelerated institution of the One Network infrastructure, ABI Research believes that China’s HD and UltraHD video streaming services will increase over the coming years. This goes beyond the residential video streaming market, and as identified by ABI Research’s 5G Millimeter-Wave Developments (AN-5093) Application Analysis Report, real-time transmission of UltraHD surveillance videos is a use case that will benefit from 5G implementation. This is due to the increase in bandwidth of millimeter waves used by 5G to allow the transfer and analysis of real-time HD and UltraHD videos. ABI Research expects 5G-enabled video surveillance to be first implemented in public spaces, such as airports, train stations, or shopping malls, which are places with the highest efficiency gain potential. This would enhance the development of the social credit system in China, opening opportunities to apply facial recognition on real-time HD and UltraHD videos to identify offenders for the sake of public safety.

Fixed Wireless Access to Complement FTTH

RECOMMENDATIONS

While 5G Fixed Wireless Access (FWA) and wireless backhaul will not be a major use case for China due to its strong fiber-optic network, it can potentially provide last-mile connectivity for rural areas. This is because it is uneconomical to deploy fiber optics in certain rural areas of China, such as Tibet, which are dominated by mountainous and hilly regions. In such cases, 5G FWA and wireless backhaul would be an option to provide broadband connectivity without cable installations. The One Network initiative will slowly close the “digital divide” in China, and drive up rural base station shipments. According to ABI Research’s Mobile Cellular Deployment Solutions for Rural Cell Sites (AN-5226), rural base station shipments are forecast to increase from 80 million units in 2019 to more than 90 million units in 2024.

An upgraded information network will drive the penetration rate and development of smartphones and wearable devices, as well as Augmented Reality (AR) and Virtual Reality (VR) devices in an Internet of Things (IoT) ecosystem for China. ABI Research expects the top three segments for Machine-to-Machine (M2M)/IoT gateway applications in terms of revenue in 2024 to be home security and automation, fleet management, and condition-based monitoring in Asia-Pacific; see ABI Research’s M2M/IoT Gateways and Routers (MD-M2MRG-104) Market Data. Based on the same research, agriculture is forecast to have the highest Compound Annual Growth Rate (CAGR) of 53% between 2019 and 2024 in terms of M2M/IoT gateway revenue. While most of these M2M/IoT devices are connected to each other using short-range technology, such as Wi-Fi, the gateways require a long-range connection to a remote location, such as a cloud environment, for analysis and storage. This is when FWA becomes a viable solution with 5G, which provides higher throughputs and efficiencies.

However, ABI Research does not believe that FWA will replace FTTH connections in China, but rather see a convergence. ZTE’s recent launch of its 5G/FTTH dual-mode home gateway shows how FWA is a complement to FTTH in China. For areas not covered by fiber-optic, users can use the dual-mode home gateway to connect to the 5G network for broadband services. For areas with a strong fiber-optic network, users can switch for a more stable and economical FTTH experience. ABI Research expects IPTV to become much more reliable and continue to be a core component of China’s TV market. Video streaming service adoption rates will be accelerated with the transformation of cable TV networks to fiber-optic based IP networks, and the eventual introduction of 5G as complementary to FTTH connections.

Services

Companies Mentioned