Supply chain
Commercial applications essential to Taiwan 5G development
Ninelu Tu, Taipei; Steve Shen, DIGITIMES

Smart-centric commercial applications derived and based on the traits of 5G networks such as IoT and smart manufacturing represent not only new business opportunities but also best buffers for Taiwan's telecom operators transitioning from 4G to 5G technology.

While most industry observers are saying that the looming 5G commercial operations will bring great benefits to upstream chipset makers such as Intel, Qualcomm and MediaTek, to telecom equipment providers such as Nokia, Ericsson and Huawei, and as well as end-market device players including Samsung Electronics, LG Electronics, Huawei and Xiaomi, Taiwanese telecom operators have been cautious about the prospects, at least at the initial stage, to be brought by 5G networks.

It is not chips, equipment or end-market devices that telecom operators count on to develop their 5G businesses. Instead, the development and advancement of their 5G business will rely on whether 5G-related services and applications can be accepted by the market.

After all, most local telecom operators are still reeling from the unfavorable business model - unlimited data access - which they have adopted for 4G services. The ROI (return on investment) for 4G infrastructure has been lower than expected for most of the telecom players so far.

Data from Taiwan's National Communications Commission (NCC) also showed that the ARPU (average revenue per user) for Taiwan's 4G services reached only NT$463 (US$15.18) a month in the second quarter of 2019.

Given that the density of 5G base stations is to be 1.6-2.7 times that of 4G's and the power consumption of 5G base stations is likely to be 2.8-4.7 times that of 4G, it is crucial for the telecoms to be able to hike ARPU for 5G networks.

The local telecom operators will have to optimize the traits of high speed, low latency and wide connectivity of 5G networks to develop related solutions for industrial applications.

A number of highly anticipated applications such as autonomous driving, IoV, smart manufacturing and smart city will not be able to take off without the features of low latency and wide connectivity typical of 5G.

There are quite a few actual field test cases that have introduced 5G into industrial applications. For example, Foxconn Electronics (Hon Hai) has built up lighthouse factories in China; BMW plans to connect over 100 of manufacturing sites worldwide through 5G networks; and Samsung is actively promoting smart manufacturing as part of its upgrading efforts.

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