Communication Industry: Current Situation Analysis and Future Prospects
Insight into the Current Situation of the Communication Industry
Changes in Business Income Structure
In recent years, the revenue structure of China's communication industry has been continuously adjusted. In 2023, the cumulative revenue from telecommunications services reached 1.68 trillion yuan, a year-on-year increase of 6.2%. Among them, the revenue of fixed Internet broadband access business was 262.6 billion yuan, an increase of 7.7% over the previous year, and its proportion in telecom business revenue increased from 15.2% to 15.6%; The revenue of mobile data traffic business was 636.8 billion yuan, a year-on-year decrease of 0.9%, and the proportion decreased from 40.5% to 37.8%. It is worth noting that emerging businesses such as data centers, cloud computing, big data, and the Internet of Things have developed rapidly, achieving a total revenue of 356.4 billion yuan, a year-on-year increase of 19.1%, accounting for 21.2% of telecommunications business revenue, becoming a key driving force for industry revenue growth and demonstrating a strong trend of digital and intelligent transformation in the communication industry.
User development trend tracking
The user level presents diverse changes. The scale of mobile phone users is steadily increasing, with a net increase of 37.07 million telephone users nationwide in 2023, reaching a total of 1.9 billion households. Among them, the total number of mobile phone users is 1.727 billion, with a net increase of 43.15 million households for the whole year, and the penetration rate has risen to 122.5 units per 100 people. The growth momentum of 5G mobile phone users is particularly significant, reaching 805 million households, accounting for 46.6% of mobile phone users. In contrast, the total number of fixed line telephone users was 173 million, with a net decrease of 6.088 million households for the whole year, and the penetration rate dropped to 12.3 per 100 people. In the field of broadband access, by the end of 2023, the total number of fixed Internet broadband access users has reached 636 million, with a net increase of 46.66 million, 94.5% of users with access speeds of 100 Mbps and above, 163 million users with access speeds of 1000 Mbps and above, and 71.53 million users with a net increase of 25.7% of the total number of users. The scale of cellular IoT users is accelerating, reaching 2.332 billion households by the end of 2023, far exceeding the number of mobile phone users and accounting for 57.5% of the total number of mobile network terminal connections. The total number of IPTV (Internet Television) users has steadily increased to 401 million, with a net increase of 20.58 million for the whole year, reflecting the strong demand for high-speed networks, intelligent IoT, and integrated audiovisual services from users.
Progress in Network Infrastructure
The construction of network infrastructure has achieved remarkable results. The layout of 5G base stations continues to be encrypted. As of the end of May 2024, the total number of 5G base stations built in China has reached 3.837 million, accounting for 60% of the global total of 5G base stations, achieving extensive coverage of gigabit broadband in cities, counties, and villages. The total length of optical cable lines is steadily increasing. By 2023, the length of newly built optical cable lines will reach 4.738 million kilometers, and the total length of optical cable lines in China will reach 64.32 million kilometers, laying a solid foundation for massive data transmission. The number of Internet broadband access ports has expanded synchronously, reaching 1.136 billion by the end of 2023, the proportion of optical fiber access (FTTH/O) ports has increased to 96.3%, and the number of 10G PON ports with gigabit network service capability has reached 23.02 million, providing hardware support for the popularization of high bandwidth services, and effectively guaranteeing the high-quality supply of communication services.
Analysis of existing pain points in the industry
Technological bottleneck waiting to be broken
At the technical level, although the communication industry has made significant achievements, it still faces many bottlenecks. The depth and breadth of 5G applications are limited, and its high bandwidth, low latency, and large connectivity characteristics have not yet fully unleashed their potential in various industries. Intelligent manufacturing in the industrial field, due to the landing complexity of 5G network slicing, edge computing and other technologies, is difficult to achieve large-scale accurate control of equipment and real-time data interaction; Remote surgery in the medical industry is affected by network stability and latency fluctuations, resulting in slow promotion. The research and development of 6G is in a critical stage, facing sustainable development challenges after significant improvements in communication performance, such as scarce spectrum resources and sharp increases in energy consumption. The satellite communication and high-altitude platform communication technologies required for the integrated coverage of air, space, and earth pose significant challenges in terms of signal transmission loss, equipment miniaturization, and cost control. Optical communication technology also urgently needs breakthroughs. With the explosive growth of data traffic, the long-distance stable transmission of 400G optical transmission systems in backbone networks, the optimization of optical and electrical performance of optical devices, and the cost and compatibility issues in the evolution of access networks towards 50G PON and even higher rates are all constraining the improvement of network carrying capacity.
Market competition imbalance
The market competition pattern is showing an imbalanced trend. The homogenization of business among telecom operators is severe. China Mobile, China Unicom, and China Telecom have similar package contents and pricing strategies in personal mobile communication packages and broadband access services, relying more on price wars to grab users, resulting in weak growth in ARPU value (average revenue per user) and pressure on industry profitability. The competition in the high-end market for communication equipment manufacturers is intensifying. Although domestic manufacturers such as Huawei and ZTE have shown impressive performance in the global layout of 5G base station equipment, their overseas expansion faces geopolitical and technical standard barriers, which often hinder the supply of core components such as chips; International giants such as Cisco and Ericsson dominate the high-end markets in Europe and America with their patent advantages and brand accumulation, while emerging enterprises struggle to survive in the cracks and find it difficult to form scale advantages, resulting in limited R&D investment and falling into a vicious cycle. Small and medium-sized enterprises are constrained by funding, technology, and talent, making it difficult for them to compete with giants in emerging vertical fields such as the Internet of Things and the Internet of Vehicles. They lack product differentiation and are often marginalized by the market.
Security and privacy concerns
Security and privacy issues have become the sword of Damocles in the development of the industry. Frequent data breaches have occurred, with American telecommunications giant AT&T exposing over 70 million user information leaks, involving sensitive data such as names, dates of birth, and social security numbers, causing serious violations of user privacy and triggering a crisis of trust. The means of network attacks are becoming increasingly complex, with DDoS (Distributed Denial of Service) attacks, malware intrusions, Advanced Persistent Threats (APT), and other threats making communication networks vulnerable and affecting service continuity. For example, Ukraine's telecommunications infrastructure was once subjected to a large-scale network attack, resulting in widespread network outages, communication paralysis, and endangering national security, social stability, and economic operations. 5G and the Internet of Things have introduced more terminals and connections, expanding the attack surface. The construction of a security protection system from the core network to edge nodes is not yet perfect, and there are risk vulnerabilities in data transmission, storage, and processing. It is urgent to strengthen the full process security measures such as encryption, authentication, and monitoring.
Exploring future development opportunities
Empowered by cutting-edge technology
Looking ahead, cutting-edge technologies will inject tremendous momentum into the communication industry. The research and development of 6G is in full swing, and it is expected to be commercially available around 2030. Its performance will have a qualitative leap compared to 5G, with a peak speed of up to 1Tbps and transmission latency reduced to microsecond level, achieving seamless coverage of air, space, earth, and sea. The 25th Institute of the Second Academy of China Aerospace Science and Industry Corporation has completed the first real-time wireless transmission communication experiment of terahertz orbital angular momentum in China, laying the foundation for the development of 6G and serving the internal short-range broadband transmission scenarios of spacecraft in the future. At the same time, quantum communication, with technologies such as quantum key distribution and quantum teleportation, ensures absolute security of information transmission and has enormous potential for applications in government, finance, national defense, and other fields. The scale of China's quantum communication market continues to grow, and is expected to increase to 89.2 billion yuan by 2024. The integration of artificial intelligence and communication is deepening. On the one hand, AI assists in intelligent operation and maintenance of communication networks, optimizing resource allocation. For example, China Mobile uses AI to achieve intelligent diagnosis and rapid repair of 5G network faults, reducing operation and maintenance costs; On the other hand, communication provides a data transmission channel for AI, supporting the expansion of applications such as smart security, smart home, and smart healthcare, and promoting the intelligent transformation of the industry.
Application scenario expansion
The continuous expansion of application scenarios will open up vast opportunities for the communication industry. In the field of industrial Internet, 5G, edge computing and other technologies enable intelligent manufacturing to achieve remote control of equipment, real-time production monitoring and intelligent production scheduling. Haier Group is building a 5G+MEC enterprise private network to improve production efficiency and product quality. In the future, more factories will transform towards digitization and flexibility, leading to a surge in demand for communication networks. In the field of intelligent transportation, the Internet of Vehicles is flourishing, and 5G vehicle road collaboration makes autonomous driving safer and more efficient. The Wuhan National Intelligent Connected Vehicle Testing Demonstration Zone uses 5G to achieve automatic vehicle driving and intelligent scheduling. With the popularization of new energy vehicles, the market size of the Internet of Vehicles is expected to continue to expand. In the construction of smart cities, communication networks support the intelligence of urban management and livelihood services, realizing functions such as smart lighting, smart parking, and environmental monitoring, and creating a convenient living environment for citizens. In addition, applications such as telemedicine and online education have shone brightly during the pandemic, and will continue to be optimized in the post pandemic era, providing assistance in solving the problems of uneven medical resources and educational equity, and promoting comprehensive growth in communication demand.
Policy oriented support
Policy guidance provides strong support for the development of the communication industry. The country vigorously promotes the construction of 5G networks, and various regions have introduced special plans and subsidy policies to accelerate the layout and application promotion of base stations, and enhance industrial competitiveness. Digital infrastructure has risen to become a national strategy, with communication as a key link. Under the promotion of new infrastructure policies, infrastructure such as data centers and cloud computing have ushered in an investment boom, consolidating the foundation of the digital economy. The "East Calculation West Calculation" project optimizes the allocation of computing power resources and drives the demand for cross regional transmission of communication networks. The frequent emergence of technological innovation policies encourages enterprises to increase research and development investment, overcome core technologies such as 6G and quantum communication, and gradually build a collaborative innovation ecosystem of industry, academia, research and application, creating a favorable policy atmosphere for industry technological breakthroughs and sustainable development, and helping communication enterprises to climb new heights.
Outlook on Industry Development Trends
Technological innovation drives change
Technological innovation has always been the core driving force for the development of the communication industry. In the future, communication technology will continue to innovate, and network performance will achieve a qualitative leap. The research and development of 6G has entered a critical stage, and it is expected that its transmission rate will be 10 to 100 times faster than 5G, with latency reduced to microseconds. It can achieve truly seamless coverage of the entire sky, earth, and sea, providing ultra reliable connections for complex scenarios such as smart factories, autonomous driving, and remote healthcare. At the same time, optical communication technology will also reach new heights, and ultra high speed optical transmission systems with single wavelength of 400G, 800G, and even 1.6T will gradually be commercialized, greatly improving the carrying capacity of backbone networks; In terms of access networks, 50G PON and 100G PON technologies will accelerate their popularity to meet the growing demand for high bandwidth in households and enterprises. The level of device intelligence will also continue to deepen. Network devices such as base stations and routers will be equipped with AI chips, which have intelligent operation and maintenance, fault self diagnosis, and dynamic resource allocation capabilities, reducing operating costs and improving network efficiency. Innovative businesses based on new technologies will continue to emerge, such as holographic communication and touch Internet, making remote interaction more immersive, reshaping the communication experience in an all-round way, and expanding industry boundaries.
Collaborative development of industrial ecology
The synergy of industrial ecology will become the main theme of the development of the communication industry. The upstream and downstream links of the industrial chain will further strengthen cooperation, with operators, equipment suppliers, chip suppliers, software suppliers and other closely linked entities working together to overcome technical challenges and accelerate the transformation of achievements. In the research and development of cutting-edge technologies such as 5G Advanced and 6G, equipment manufacturers such as Huawei and ZTE have deeply cooperated with operators such as China Mobile and China Telecom to carry out field trials and commercial trials, in order to feed back technology optimization with application demand; MediaTek, Ziguang Spreadtrum, and other chip manufacturers are laying out in advance to provide compatible chips for equipment manufacturers, ensuring the synchronous advancement of industrial chain technology. The trend of cross-border integration is becoming more and more significant, and the communication and finance, medical care, manufacturing and other industries are deeply penetrated, which has led to the emergence of new formats such as mobile payment, telemedicine, and industrial Internet. Financial technology companies utilize communication networks to achieve real-time online transactions and precise risk control; Medical institutions rely on 5G and cloud computing to build remote consultation platforms, allowing high-quality medical resources to sink; By introducing 5G and edge computing, the manufacturing industry has built an intelligent factory to improve production flexibility and quality control. All parties are integrating and winning together, building a mutually beneficial and symbiotic industrial ecosystem, and promoting the prosperity and development of the industry.
Expanding into a new era of globalization
The expansion of globalization will open up a new era for the communication industry. Domestic communication companies are accelerating their overseas layout with a complete industrial system and leading technological advantages. Huawei is widely involved in 5G network construction in Europe, the Middle East, Africa and other regions, providing high-quality base station equipment and solutions for local operators; ZTE has also achieved significant success in the Southeast Asian and European markets, contributing to the digital transformation of many countries. Enterprises actively participate in the formulation of international standards. In the development of 5G standards, Chinese communication companies have contributed a large number of core technology proposals, held key discourse power, and injected Chinese wisdom into the development of the global communication industry. Faced with an increasingly complex international competitive environment, domestic enterprises are strengthening independent research and development, breaking through bottleneck technologies such as chips and operating systems, and reducing external dependence; On the other hand, we will engage in diversified cooperation with international peers, jointly building global infrastructure such as submarine cables and satellite communications, expanding international market share through competitive cooperation, enhancing global influence, and writing a new chapter in the global development of the communication industry.
Conclusion
The communication industry, as the cornerstone of modern society and the engine of the digital wave, is at a critical juncture of profound transformation. At present, although facing many challenges such as technological bottlenecks, disorderly market competition, and security and privacy threats, we should also see the vast opportunities brought by the vigorous empowerment of emerging technologies, diversified expansion of application scenarios, and precise policy guidance.
At this historic moment of connecting the past and the future, all parties in the industrial chain need to work together, break through the shackles of development through technological innovation, unite the mighty forces through industrial synergy, and expand the new market map through globalization layout. Operators, equipment manufacturers, software vendors, research institutions, etc. should break down barriers, strengthen cooperation, increase research and development investment around cutting-edge fields such as 6G, quantum communication, and artificial intelligence, and accelerate the transformation of scientific research achievements into real productivity; Actively participate in industrial Internet, intelligent transportation, smart city and other application practices, dig deep into industry needs, customize personalized solutions, realize the deep integration of communication and thousands of industries, and promote the birth of new business types and new models. The government and regulatory authorities continue to improve policies and regulations, optimize the market competition environment, strengthen network security supervision, and assist enterprises in carrying light equipment and innovating with peace of mind.
Looking ahead to the future, the communication industry is expected to overcome numerous obstacles and stride towards high-speed, intelligent, secure, and ubiquitous directions, injecting a continuous stream of power into global economic recovery and social progress, and writing a new chapter in information and communication.
