Highlight 1: 5G private network

2021 is the first year of 5G to B development. This year, with the huge financial support of the government and the accumulation of resources from operators and manufacturers, various industries have supported a large number of 5G benchmark applications, such as 5G factories, 5G terminals, and 5G mines.

The question in 2022 is how to replicate these benchmark projects at low cost.

In other words, if the country stops spending money, will 5G survive on its own merits? Operators and manufacturers can still manage from "focusing on guaranteeing a single project" to "generally supporting N projects".

The further advancement of 5G to B has aroused people's attention to the 5G private network. The construction of the 5G public network has reached the initial goal. Will the private network become a new growth point?

In fact, our country's policy on private networks is relatively strict, and the control of spectrum resources is very tight. For enterprises, there is basically no room for independent network construction. Moreover, the technical threshold of the private network is too high, and the construction and maintenance costs are also high. Therefore, with the exception of state-owned enterprises such as electric power, petroleum, and railways, most enterprises do not have strong motivation and willingness to build private networks.

From a technical point of view, the advantages of 5G are mainly concentrated in latency and bandwidth, and there are not many scenarios that really need it. If you build a 5G private network with your own money, most companies will carefully weigh the pros and cons.

If you want to develop a private network, financial support alone is not enough. It is still necessary to consider more loosening in terms of policy, technology and spectrum, so that companies have more choices. We are not building a private network for 5G, but a private network for digital transformation. Rather than overemphasizing the role of 5G in private networks, it is better to pay more attention to the importance of all-optical campus networks and cloud-network integrated access, and use cloud services to drive users' demand for networks and stimulate the construction of private networks.

Highlight 2: The price trend of chips and modules

In 2021, there is "chip shortages" seen everywhere, and this situation is likely to continue in 2022.

Against this background, the price of communication pan-terminal chips has not dropped significantly as expected. Especially the price of 5G chips is still very expensive.

On the one hand, digital transformation is accelerating, and IoT applications have exploded. On the other hand, the prices of chips and modules cannot come down, which is problematic.

Among several chip manufacturers, Huawei is now the next best thing because of sanctions, pursuing a stable supply of chips with a lower process (28nm). Although this kind of process is not enough for 5G mobile phone terminals, it can at least meet the needs of base station, data communication, and optical communication main equipment.

Another domestic manufacturer, Ziguang Zhanrui, has started to export product results after years of accumulation. Zhanrui is not like Huawei, they do not have their own terminals. From a long-term point of view, the domestic industry chain should increase its support, let more terminal enterprises use it, and it will become better when someone uses it, and protect this unique seedling. Zhan Rui himself has to be careful to be targeted, time is still very tight.

In 2022, the shipments of domestic chip modules will only increase, and Cat.1 and NB-IoT have great growth potential. 2G and 3G will accelerate the withdrawal of the Internet, and the market share of the Internet of Things will have a big reshuffle. The cost determines the market pattern after the shuffle.

Also facing cost issues, there are high-speed optical modules.

In terms of transmission backbone network, the topic that cannot be avoided is 400G. 400G, after all, is the cost and price.

The capacity expansion of the backbone network has not stopped, and the number of data centers stimulated by cloud computing is growing faster and faster. These all have a strong demand for high-speed optical modules. In 2026, the global optical module market is expected to reach USD 14.5 billion.

Correspondingly, the price of high-speed optical modules, like the price of 5G chips, has fallen slowly. The situation in which the prices of 1G and 10G optical modules dropped rapidly in that year no longer exists.

The overall situation of the global economy determines the rise in resource prices, as well as the price of final products. Rising prices mean that operators' CAPEX remains high. Ultimately, the cost will still be passed on to the user.

In this round of the market, who will benefit and who will suffer, only time can tell us the answer.

Highlight 3: Gigabit Optical Access and F5G

The development of domestic optical access infrastructure is extremely rapid. For more than ten years, we have gone from 1M to 8M, 10M, 20M, 50M, 100M, 200M, 500M. Today, many families have entered the Gigabit (1000M) era.

At the same time as the rapid popularization of Gigabit, operators are already committed to promoting the standardization of 50G-PON.

The client access speed brought by 50G-PON is 5Gbps. In fact, from the perspective of user needs, just like 5G, people do not know what such high network speed can bring us besides the increase in tariffs?

Only VR/AR and future holographic videos can use such a high speed. Judging from the current domestic people's dislike of the Metaverse, there is still a long way to go for an immersive digital world experience. It is estimated that 200Mbps is a threshold for the standard bandwidth of home network speed. If it is higher, the user experience will not be much different.

In addition to home broadband access, the demand for enterprise commercial office fiber access should be given full attention by operators.

The cost of commercial optical access is too high, the uplink rate is too low, and there is no external network IP, all of which are pain points.

In the context of enterprises migrating to the cloud, users' needs for solving these pain points have gradually exceeded the needs for simple download rates. Can operators give up some benefits to bring more convenience and experience upgrades to users?

Highlight 4: Internet of Vehicles

In 2021, affected by the development of the entire new energy vehicle, people will pay a lot of attention to the car.

The Internet of Vehicles, autonomous driving, and unmanned driving, are also focused on by the public and capital. Huawei and Xiaomi have entered this field one after another, which has stimulated further escalation of attention.

In fact, from a technical point of view, the progress made in the Internet of Vehicles, especially the vehicle-road collaboration, is not particularly significant.

The Internet of Vehicles requires a lot of investment, and the possibility of extensive construction is very small when the technology is not fully mature. In most places, small-scale experiments in demonstration areas are still the main focus.

Now the industry is also aware of this problem, so it has begun to mention the Internet of Vehicles in "closed or semi-closed" environments.

Highlight 5: Small Cells

The construction of 5G macro stations has reached a threshold. Starting in 2022, 5G will focus on the construction of indoor base stations.

This means that the market opportunities for small base stations are gradually emerging.

Speaking of small base stations, how much market can Open RAN, which everyone has been paying attention to, have? At present, the development of global Open RAN base stations is neither good nor bad. There are not many operators in use. Mainstream operators basically give priority to wait and see.

As the world's largest mobile communication market, China's attitude towards Open RAN directly determines the fate of Open RAN. I personally think that the conditions for the large-scale use of Open RAN in the public mobile communication market are still immature. Especially for Chinese operators, it is too difficult to define the responsibility for operation and maintenance, and the energy consumption is not very reassuring. It is estimated that it will be tried on a small scale, or on a private network, and then decide whether to use it in batches in the next step.

It is reported that the collection of small base stations will be held in the first half of the year. Not sure who will benefit from this big pie.