1. Fixed gigabit networks: A new area of competition
In China, the penetration rate of both 100M 4G and fixed networks has exceeded 98%, indicating saturated demand. However, the penetration rate of fixed gigabit networks still has much room for improvement.
By the end of 2021, China had about 520 million fixed network users, of which less than 15 million were gigabit network users, less than 3% of the total. When the number of gigabit network users soared to 40 million, the penetration rate of gigabit networks in China was just 7%. With 5G's penetration rate now over 20%, the penetration rate of fixed gigabit networks represents a strategic breakthrough point.
China Mobile continues its leadership in 4G mobile gigabit networks. Its 5G market share exceeds 50%, much higher than other carriers. China Telecom and China Unicom have formed a defensive posture in 5G through the collaborative construction and sharing of sites.
If China Mobile works to increase its investment in fixed gigabit networks, it can secure its dominance in fixed networks. Similarly, if China Telecom and China Unicom make breakthroughs in fixed gigabit networks, they can increase their market shares, which are currently 20% to 30%, and challenge the dominance of China Mobile. The two carriers can collaborate to change the entire gigabit market landscape using the 5G market as leverage.
2. Gigabit application planning: 3 flows drive 4 use cases
To change the current market landscape through fixed gigabit networks, carriers must identify the core value-based needs of the market and customers; streamline strategic application planning; and drive solutions across the device, pipe, cloud, security, and ecosystem domains through collaborative innovation. Carriers can only make breakthroughs by first introducing products into the market, then leveraging applications to increase traffic and driving network and platform development with traffic. This will form a virtuous development cycle while ensuring closed-loop business development.
Figure 1: Four strategic use cases that drive gigabit network development
In the mobile Internet era, user flow, data flow, and capital flow are used to identify major market development opportunities and planning applications. User flow reflects the perception of value, data flow represents business stickiness, and capital flow determines growth and profitability. However, Chinese carriers, which are at the forefront of the gigabit network industry worldwide, need to gain insights into incremental users, traffic, and value in the market, and plan for the four use cases in the Chinese market:
LHPUGC new videos: Traditional video companies are making innovative videos with new technologies in response to value-based market demands. These companies are integrating technical, artistic, and cultural elements to create localized new videos with PUGC attributes.
For example, top artists integrated different elements and used XR video technologies to create "Guardian Warriors of Longmen", "Night Banquet in the Tang Dynasty", and "Pray" for Henan TV, and "The Divine Damsel of Devastation" for the game Genshin Impact. These works have put the spotlight on the rich potential of cultural history, winning critical acclaim, going viral as soon as they were released, and topping search rankings.
Convergent, intelligent enterprise communication applications: Due to the pandemic, convergent, intelligent communication services, such as online office, online education, online healthcare, and online government services, have witnessed a surge in growth.
As the pandemic continues, the market demand for videoconferencing is expanding horizontally and vertically. Horizontally, the market expects the quick and extensive adoption of such systems. Vertically, videoconferencing systems are expected to be deeply integrated with security, service quality, and internal service systems. This will make them easier to use and provide a better user experience.
Videoconferencing applications (such as WeLink) on large screens (such as the 98-inch IdeaHub) will be integrated with office systems (such as Office, CRM, and ERP) on computers, and connected to the app system on smartphones, offering a three-in-one integrated application experience with a large screen.
These applications feature security, SLAs, private lines, and E2E solutions. Their profit models are competitive and they have great potential for growth.
Intelligent home videoconferencing: In 2021, China Telecom launched gigabit visual networking, which integrates home security surveillance, gigabit video, and home videoconferencing applications to offer a new experience for high-end home users. On March 16, Huawei launched its FTTR-based All-in-One Smart Home solution to meet the needs of high-end home users for gigabit applications.
Live streaming of sports events over gigabit networks: Multi-angle, 8K/16K, AR/VR, and more new video technologies have been used to achieve breakthroughs in video solutions, boosting the growth potential of high-end commercial videoconferencing.
3. Gigabit solutions: Building experience and value-based competitiveness horizontally and vertically
To implement new business, applications, and services, carriers need to deploy a set of innovative solutions based on gigabit networks. They can build up value-based horizontal competitiveness first and then vertical.
"Horizontal" means that they should build the best network in the industry to meet the experience and value-based needs of vertical services and applications. Therefore, horizontal solutions should focus on streamlining the topology of E2E network solutions and building superior gigabit networks to meet the needs for QoE/QoS, security, reliability, service quality SLA, capacity, coverage, cost, and services.
Figure 2: Technical specifications of the horizontal gigabit solutions (live network data in China in 2022)
"Vertical" refers to accurately identifying potential top applications that can drive user, traffic, and revenue growth in the four use cases, and working with or integrating application partners to achieve breakthroughs in application innovation. Currently, the core of the four major use cases is convergent, intelligent communication service applications. Devices are being integrated to achieve the convergence of large and small screens and of hardware and software.
Gigabit networks have the highest SLA and secure private line capabilities. Carriers can link the most powerful partners across devices, pipes, platforms, and applications through an ecosystem cooperation model for shared success. This aims to develop vertical solutions that are gradually iterated and optimized to meet the standards of experience and business value, and achieve sustainable user, traffic, and revenue growth.
Figure 3: Horizontal and vertical gigabit solutions
4. From excellence to beyond on the second development track
In the value distribution of the ecosystem, carriers dominate connections and traffic. Therefore, gigabit network connections and traffic represent the first development track for carriers.
In the development cycle of gigabit networks and industrial Internet, new technologies are usually taken as the second development track in industry planning. For example, carriers can develop and build capabilities in new services such as cloud, big data, artificial intelligence, IoT, video, private line, and green development.
Currently, global and industry-wide transformation practices have exposed a huge gap between practical results and objectives. Therefore, we need to keep the use cases in the market and provide customers with applications and services that offer new value based on their needs. Integrating fragmented technologies and products to build solutions that enable application innovation is what customers need and want.
An intelligent digital platform based on the convergence of networks and technologies, such as cloud, big data, artificial intelligence, and security, will enable carriers to upgrade services. Carriers can monetize data through platforms and monetize information through upgrading services to achieve growth on the second development track.