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China Will Expand 5G Network to Rural Areas Despite Cost Concerns

By Isabelle Li and Qin Min / Jul 24, 2019 04:42 AM / Business & Tech

Photo: VCG

Photo: VCG

China’s planning for the next-generation 5G wireless technology will first be carried out in bigger cities and key regions this year, but in the next phase rural areas will also become a focus, said Wen Ku, head of information and communication development at the Ministry of Industry and Information Technology (MIIT).

Wen made his remarks Tuesday at a press briefing regarding the country’s progress in telecommunications in the first half of 2019. Rural areas have always been included in the priorities of the ministry’s developmental plans, Wen said. The country has been developing 4G networks across the countryside. By the end of this year, more than 98% of 550,000 villages in China will be covered by 4G, Wen said.

Industry experts, however, expressed concerns on costs. As profit slumps for major telecom operators, industry insiders say they are confused where they will get funding to build costly 5G networks.

“Building 5G networks in rural areas will cost heavily,” one telecom industry expert told Caixin. “Where will the money come from?” 

Spurred by international competition, China raced early into 5G by issuing commercial 5G licenses ahead of original plans in early June. But the new-generation telecom technology will cost significantly more than 4G networks. According to Nomura Securities, the costs for 5G from 2019 to 2025 will reach around 1.2 trillion yuan, 8% higher than yearly outlays in the 4G era.

Related: In Depth: China Races Early Into the 5G Era

Contact reporter Isabelle Li (liyi@caixin.com)


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