Big News toward the End of the Year: China Decides to Open up Mobile Network Spectrum to Enterprises Directly

The Chinese Ministry of Industry and Information Technology (MIIT) surprised observers in late November 2022 with an announcement of the country’s first allocation of 5G spectrum for a private 5G enterprise network for the Commercial Aircraft Corp of China (COMAC). This announcement is remarkable from two different perspectives. First and foremost, this is the first allocation of mobile network spectrum to a commercial entity other than a carrier, as parts of the C-Band (5.925 – 6.125 GHz) and Millimeter Wave (mmWave) (24.75 – 25.15 GHz) spectrum will be available directly to COMAC. And second, MIIT’s decision to open up a section of the 6 GHz spectrum for cellular has reignited the debate around the conflict between 5G and Wi-Fi for enterprises, as these two technologies tussle for the 6 GHz band.

While it is interesting to see the Chinese regulators now also make spectrum available to enterprises directly, there are several small indications that give way to speculation that the announcement about COMAC might remain a special case. First, we should be reminded at this stage that COMAC is a state-owned organization; therefore, the government remains in possession and control of spectrum, despite allocating it to an enterprise directly. Second, MIIT has not published any kind of information that specifies how enterprises may gain access to this spectrum, nor the underlying business model or timeline and duration of licensing. Even with these caveats, the announcement is a first movement toward liberating spectrum and shows that for Communication Service Providers (CSPs), licensed spectrum will continue to lose its bargaining power as a monetizable asset, even in traditionally very tightly regulated markets like China.

The choice of spectrum bands is also interesting, as MIIT seems to have reopened a debate that was long thought be settled. While the global community appears to have found a consensus to leave the 6 Gigahertz (GHz) band to unlicensed technologies, such as Wi-Fi, MIIT has chosen to dedicate at least the lower part of the 6 GHz band to 5G connectivity. The reopening of the 6 GHz discussions fits into a broader trend within enterprise connectivity technologies that ABI Research has identified throughout 2022—that of the long-forgotten battle lines between 5G and Wi-Fi, which are re-emerging. Previous publications have highlighted how the immediately tangible applications for enterprise 5G center around how 5G can deliver the same use cases as Wi-Fi, but more economically (see ABI Research’s whitepaper with takeaways from the International Manufacturing Technology Show (IMTS) in Chicago in September 2022). From this standpoint, targeting the same spectrum resources seems to be the logical extension to this step back of the industry.

What may appear to be good news for enterprise 5G in China is not necessarily good news for the adoption of enterprise cellular on a global scale. Certainly, opening up additional spectrum resources will attract more enterprises to think about deploying 5G connectivity as an immediate effect. On the whole, this reemerging of old battle lines will reintroduce unnecessary levels of confusion for enterprises, as it runs the danger of positioning 5G and Wi-Fi as equivalent technology alternatives for the exact same use cases. This, in turn, will create more complicated decision-making processes for enterprises, which could deter them from looking at either Wi-Fi or cellar connectivity for enterprise digitization. What is needed instead is a set of reliable rules and regulations that enterprises can use to orient themselves. Furthermore, both telco and Wi-Fi industries should accept the coexistence of both technologies, and focus on defining actionable guides that assist enterprises in deciding which connectivity technology is ideal for which use case.

While ABI Research is convinced that opening up spectrum to enterprises directly is an important building block to foster enterprise cellular, both regulators and the telco industry need to consider that enterprises—especially multinational corporations with multiple sites across different countries or even continents—are looking for homogenous spectrum arrangements that make deploying cellular connectivity across numerous sites as effortless as possible. Therefore, any regulator in the process of setting aside spectrum for enterprise connectivity should bear in mind that the European Commission not long ago published a so-called “mandate” to suggest that its member states set aside C-band spectrum between 3.8 GHz and 4.2 GHz for enterprises. Building on top of that, both regulators and telco industry players wishing to influence regulator decisions should focus their efforts on this 400 Megahertz (MHz) of spectrum, as this will be the most interesting to enterprises. Reopening a debate about the 6 GHz band at this point in time doesn’t seem particularly helpful in this context.