China Unicom And China Telecom Sign Cooperative Deal To Build Shared 5G Infrastructure

China 5G Network
A sign of 5G is pictured at the booth of China Telecom during an internet expo at the fifth WIC in Wuzhen (Photo: Reuters / Jason Lee)

The second and third-largest telecommunication companies in China are now partnering up to establish a single nationwide 5G network. China Unicom and China Telecom announced on Monday that they have already signed a cooperation agreement to build the network.

According to both Chinese firms, the partnership should drastically reduce the cost of building the underlying infrastructure for the fifth-generation ultra-fast wireless network.

Both China Telecom and China Unicom will reportedly be using the same network for their respective 5G services. The companies stated that the level of service both of them will provide should be very similar when they finally make them available to subscribers.

Apart from the benefit of reduced construction costs, the partnership is expected to also reduce operator pressures amid a contracting domestic telecom services market.

The partnership should also allow both China Unicom and China Telecom to better compete with China's current largest carrier, China Mobile.

The three major Chinese telecommunications providers co-own the China Tower Corp, which means that the integration of services and assets should be easy for China Telecom and China Unicom.

Both companies are reportedly planning to cooperatively build new 5G networks in 15 major Chinese cities, including Beijing, Shanghai, Tianjin, and Nanjing. To avoid overlapping some of their services in smaller cities, both companies will be establishing separate 5G networks independently.

China Unicom announced that it will be building its own 5G networks in 9 cities, including in Guangdong, eight cities in China's northern regions, five cities in China's Zhejiang province, and in some cities in the Inner Mongolia autonomous region. Some of the cities including in its list are Hebei, Henan, Liaoning, Shandong, Heilongjiang, and Shanxi.

Meanwhile, China Telecom will also be building its own 5G networks in 10 cities in Guangdong province, Zhejiang province, and in cities in China's southern provinces.

Industry experts have stated that the partnership is likely a strategic move to better meet the government's mandate to reduce mobile data cost and to significantly boost internet speeds. Most operators are currently being pressured to meet the government's demand, which has caused a significant drop in revenues for smaller players.

The only real way for major operators to meet the government's demand and to generate respectable profits is to quickly adapt to newer technologies such as 5G.

Providing the new type of wireless service should give operators new streams of revenues and potential new opportunities in emerging technologies such as autonomous driving, artificial intelligence systems, and internet of things (IoT) devices. 

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