Supply chain
5G operations to be capital intensive, says Digitimes Research
Benson Wu, DIGITIMES Research, Taipei

In the 5G era, choosing the communication standards is not a core issue, but players need to decide which application market segments should be given priority. None of the 5G technology deployments will come cheap, and competition in commercial 5G operations will be capital-intensive under the "X as a Service" business model.

A number of benchmark telecom operators have expressed eagerness to enter the 5G commercial market as early as possible, as the growing homogeneity on the improvement of network coverage, transmission bandwidth and mobile service experience in the prevailing 4G networks has driven the 4G service market into a phase with fierce competition.

It will cost China-based telecom operators a combined capital expenditure of CNY300-500 billion (US$47.18-78.63 billion) for network coverage of 5G base stations in metropolitan areas operating under 4.5GHz/4.9GHz/26GHz/28GHz 5G networks, excluding other costs for peripheral transmission, 5G core and wireless access networks, Digitimes Research estimates. China's actual capital spending for 5G networks will be much higher as the aforementioned estimate is just coverage in the metropolitan areas.

Digitimes Research also believes that with the exception of large-scale telecom operators in a number of countries/areas, most operators will be conservative about investing in 5G networks because of a number of reasons: the existing 4G networks have yet to be fully depreciated; the cost of 5G networks is too high; and they have yet to identify feasible business models for 5G emerging applications.

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