Supportive Policies

for a Sustainable Mobile

Industry in the 5G Era
March 2020
Executive Summary
The mobile industry plays a key role in boosting the growth of the global economy. In 2019, mobile technologies
and services generated 4.7% of GDP globally. By 2024, the mobile industry's contribution will reach $4.9 trillion
(4.9% of GDP). Research shows that every $1 invested in digital technologies over the past three decades has
added $20 to GDP, on average. [Digital Spillover, Huawei and Oxford Economics, 2017]
5G will be a key pillar of the era of intelligent connectivity, supporting economic growth, transforming businesses
and delivering innovative new services. However, the outlook for the mobile industry is subdued, with revenue
growth modest at best. While global mobile traffic has grown 1,000 times in the past decade, operator revenue
growth was lower than GDP growth in many countries. This is a challenge to the future development of the mobile
industry, despite its role in supporting the digital transformation of both society and economies. Moreover, 5G
deployment will bring new challenges, including the large cost incurred by the demands for more spectrum, the
heavy financial burden of network deployment as well as multilateral coordination with diverse vertical industries.
Therefore, more supportive policies are needed from governments and regulators if the mobile industry is to
realise the full potential of 5G and so enable both digital transformation and to further support global economic
growth.
In this white paper, a number of recommendations from 5G pioneering countries are reviewed, including those
from China, Finland, South Korea, Saudi Arabia and Germany. Based on the learnings from 5G national plans,
the paper highlights the following elements for countries deploying 5G networks:
- More exclusive spectrum assigned to mobile operators at more reasonable prices.
- Lower taxes and tax reliefs to stimulate 5G investments.
- 5G as a critical enabler for national broadband ambitions.
- Policies to encourage innovation and industrial collaboration.
- Facilitate access to public infrastructure to accelerate 5G deployments.

1
Contents

Executive Summary 1

Contents 2

1 5G will be the key enabler for national ICT transformation 3

2 A supportive public policy environment underlies the sustainable development of 5G 5

3 Best practices for supportive policies 8

3.1 China: Reduction of frequency utilisation fees, "Dual Gigabit Plan" to speed up
digital transformation 8
3.2 Saudi Arabia: Reduction of annual fees 10
3.3 South Korea: Lower taxes and light-touch policy for 5G innovation 10
3.4 Finland: Digital infrastructure strategy 11
3.5 Germany: Infrastructure measures to accelerate 5G deployment 11

4 Policy implications 13

2
 5G will be the key enabler for national ICT
transformation

ICT (Information and Communication Technology) Mobile industry plays a key role in boosting the fast
has become a fundamental element of modern soci- growth of global economy. In 2019, mobile technolo-
ety and can help to deliver sustainable economic gies and services generated 4.7% of GDP globally, a
growth. Research shows that every $1 invested in contribution that amounted to $4.1 trillion of economic
digital technologies over the past three decades has value added. By 2024, mobile's contribution will reach
added $20 to GDP (Gross Domestic Product), on $4.9 trillion (4.9% of GDP) as countries around the
average. This is an enormous return compared to globe increasingly benefit from the improvements in
non-digital investments, which delivered an average productivity and efficiency brought about by
return of around US $3 to US $1 invested. [Digital increased take-up of mobile services.
Spillover, Huawei and Oxford Economics, 2017]

3
 billion

$4,930
$4,760
$4,590
$4,420
$4,270
$4,110
$2,930 $3,020
$2,720 $2,820
$2,530 $2,620

$510 $530 $550 $570

$480 $500

$1,100 $1,150 $1,190 $1,240 $1,280 $1,340

2019 2020 2021 2022 2023 2024

Direct Indirect Productivity Total

Source: GSMA Intelligence

Figure 1: Mobile industry contribution to global economy (2019~2024)

5G is the fifth-generation wireless technology for digital cellular networks. Compared with 4G, 5G utilizes a range
of spectrum (including much higher frequencies) and a new network architecture to help significantly boost overall
performance. 5G will potentially deliver data rates of over 10 Gbps, millisecond-level latency, and the capability to
support massive connections. With these features, 5G could herald a world filled with unlimited possibilities and
an exciting new era that promises the connectivity of everything.
5G will herald a range of services and capabilities for both consumers and enterprises, accelerating industrial
transformation and digitisation, and act as the cornerstone of the digital society.
- 5G will elevate the role of mobile networks to not only connect people, but also connect and control a whole
new range of machines, objects, and devices, and provide enhanced capacity with always-on connectivity.
- 5G will deliver new levels of performance and efficiency that will empower new user experiences and help to
develop new industries. The wide range of potential 5G applications will act as a driving force for entrepre-
neurial development and innovation, as well as accelerating industrial transformation and digitisation.
- In the future, 5G will be deeply integrated with cloud computing, big data, AI (Artificial Intelligence) and edge
computing; building a new generation of ubiquitous intelligent infrastructure and serving as the cornerstone
of the digital society.

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2
A supportive public policy environ-
ment underlies the sustainable de-
velopment of 5G

The mobile industry underpins the digital society,

requiring better infrastructure in future
Over the past decade, the rapid development of the growth, doubling at a rapid rate of every 12 to 18
mobile industry, especially with the deployment of 3G months.
and 4G networks, has created a range of new These huge investment from mobile operators not
services and in particular new ways for people to only support the growing volumes of data traffic and
communicate. Nowadays, people's social activities, facilitate consumers' new digital lifestyles, but also
shopping, transportation, and entertainment are facilitate the digital transformation of other vertical
heavily dependent on the use of mobile networks and industries. For example, internet players have relied
services. This is not just a change in technology, but on the ongoing improvements in mobile network
also relies on huge investment in mobile communica- speed and coverage to grow their user bases. Goo-
tion infrastructure by the operators. Global mobile gle's market value has tripled in the past decade;
operators have invested hundreds of billions of Netflix's market value has risen by more than 20
dollars each year in the construction and mainte- times; and Facebook has risen by more than 100
nance of mobile communications to meet the growing times.
demand for data traffic. The widespread use of In the future, the growing number of mobile subscrib-
smartphones, affordable data plans, and the diversity ers and a range of new services will further fuel the
of apps and content have further stimulated the growth of mobile traffic. This huge growth in data is
growth in mobile data traffic. Global data consump- supported by the ongoing efforts of the entire mobile
tion across mobile networks has increased from 0.04 industry, including investment in spectrum, sites, and
to 38 Exabyte (EB) per month from 2009~2019 new network technologies.
[Ericsson Mobility Report]. It's about 1000 times

5
The mobile industry faces a range of
challenges in the 5G era
Mobile industry revenue growth has stagnated in recent years. In contrast to the rapidly growing data volumes
and associated network costs, the revenue growth of operators has been declining. The growth rate of mobile
carriers' revenue in the past decade has fallen from the 6%~ 7% range to less than 1.5%. Considering an average
of 3% global inflation rate over the past decade, in real terms operators' revenue growth has been almost stag-
nant. Going forward, GSMA Intelligence forecasts the overall industry revenues will grow at a compound annual
growth rate (CAGR) of 1.3% over the period to 2025.

Revenue growth lower than inflation

6.30%

6.62% 6.57%

5.10%

3.60%
3.20% 3.20%

1.57% 1.41%

0.87%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Global inflation rate Global MNO revenue growth(YOY)

Source: IMF& GSMA Intelligence

Figure 2: mobile operators' revenue trend VS global inflation rate

The rapid growth in data traffic volumes requires could further hinder the 5G deployment progress.
significantly more spectrum, which leads to higher Many countries around the world have adopted
spectrum costs for operators. Driven by the ever-in- auctions to assign spectrum. While auctions can be
creasing demands of mobile data consumption, one an efficient market-based approach when properly
of the critical improvements that 5G offers over previ- designed, a number of auctions appear to have
ous generations of cellular technologies is the focused on revenue generation rather than efficient
support for additional spectrum bands, including in spectrum allocations. The high spectrum prices in
higher frequencies. This will allow 5G networks to those markets have seriously hampered operators'
deliver a multi-gigabit user experience and a mas- ability to invest in networks and negatively impacted
sive increase in capacity. However, the need for new network quality and coverage.
spectrum may incur heavy costs for operators, which The significant investment in 5G deployments will

6
increase the pressure on the industries' finances. restricts the potential development of new mobile
The mobile industry in the 5G era will continue to services. 5G technology and infrastructure will
expand into machine communications through become more and more important in the ecosystem
connecting a broader range of devices, as well as value chain, such as through enabling new services
engaging more closely with vertical industries to such as ultra-HD video. Governments will need to
explore new opportunities. However, the industry is create appropriate broadband development strate-
facing challenges from the level of investment gies and plans in order to avoid a case where data
required for 5G network deployments and the ongo- demand outstrips capacity on existing broadband
ing deterioration in its traditional businesses. These networks.
factors are making operators more cautious on new The diversity of regulations in verticals complicates
investments, which may in turn affect the pace and the issue of industry coordination. To fully realize the
extent of 5G network deployments. Reduced invest- potential of 5G networks and their capabilities, oper-
ment into 5G networks may also affect the scope for ators will need to work closely with vertical industries
digital transformations of industries that could poten- to explore new business models and to help acceler-
tially benefit from the capabilities of 5G networks. In ate their ongoing digital transformations.
addition, sector specific taxes, fees and other levies The deployment of 5G networks requires many more
would have a significant impact not only on operators' sites, as it requires more base stations and small
costs and consequently affordability of services for cells to achieve the required coverage as compared
end users, but also on the entire mobile ecosystem. to 4G, which is likely to lead to increasing difficulties to
In some countries, the speed of mobile broadband is gain new site access, especially in dense urban
still much lower than that of fixed broadband, which areas.

Supportive policies are required to realise

the full potential of 5G
5G will be more than just a traditional consumer-fo- weak growth and rising costs, the challenge is to
cused mobile broadband service. It is believed by construct a supportive policy environment that will
some that 5G will become a General Purpose Tech- encourage operators to invest in 5G and to break the
nology to enable a diverse range of industrial trans- barriers of cross-industry innovation and collabora-
formations, although. cross-industry efforts might tion.
bring higher risks and greater costs. In the face of

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3
Best practices for supportive policies

3.1 China: Reduction of frequency utilisation fees,

"Dual Gigabit Plan" to speed up digital trans-
formation

Reduction of frequency utilization fees

The Chinese government has made the deployment policies in order to make this vision a reality, including
of 5G networks a national priority, recognizing the the 13th Five-Year Plan and Made in China 2025
potential economic benefits that 5G can bring. The strategy. One of the key policy areas concerns spec-
"Report on the Work of the Government" by the State trum.
Council of China in March 2017, clearly stated the In order to encourage the overall development of 5G,
government's commitment to accelerate the devel- the National Development and Reform Commission
opment of 5G. The Ministry of Industry and Informa- and the Ministry of Finance issued a directive to
tion Technology also formulated the "5G Develop- reduce the 5G frequency utilization fees on April 26,
ment Guidance Document" that identified 5G as an 2018. It detailed a plan to waive the first three-years
important infrastructure component for China's of fees from the commencement date of the 5G
economic and social development. The Chinese licenses and a phased approach for the following
government has announced a series of national three years: 25% in the fourth yer; 50% in the fifth

8
year; and 75% in the sixth year; before returning to tors' spectrum cost burden and allow the operators to
normal fees from the seventh year. Such extensive invest more into network deployments, laying a solid
measures to reduce spectrum fees was a first for foundation for the sustainable development of 5G in
China's mobile industry. This will reduce the opera- China.

100% 100% 100%

75%

50% ...

25%

0% 0% 0%
1 2 3 4 5 6 7 8 9 ...

Old price（RMB k/MHz/Year） New Price（RMB k/MHz/Year） 1 USD≈7 RMB

Source: official website of the state council of China

Figure 3: Deduction on Spectrum License Fees in China

Set up "Dual Gigabit Plan" to speed up digital transformation

As it stepped into the 5G era, China's government cance to the development of the "Giga city" concept.
announced its "Dual Gigabit Plan", gigabit fibre + Under the guidance of the Ministry of industry and
Giga 5G, to accelerate digital society transformation information technology (MIIT), the broadband devel-
and promote sustainable economic growth from 2019 opment alliance and China Academy of Information
onwards. The state council of China declared the and Communication Technology (CAICT) have joint-
target that "This year (2019), fibre-to-household ly organized relevant units to study and formulate the
access ports will account for more than 90 percent of "Gigabyte urban construction index system" in China
the total, and 5G gigabit broadband access networks through field research, in-depth analysis, research,
will be deployed in more than 300 cities, bringing fixed discussion and consultation.
and mobile broadband into the Gigabit era." Specifically, the first phase focuses on network infra-
On November 1, 2019, China's "Gigabyte urban structure capacity and coverage. It includes the
construction index system" was officially released, coverage of urban gigabit optical fibre networks, the
which clarified the development direction and key proportion of urban 10G PON (Passive Optical
work of current China's urban Gigabyte optical fibre Network) ports, the proportion of 5G base stations,
broadband and 5G deployment. It is of great signifi- the coverage of Gigabit broadband and the coverage

9
of 5G network in key locations. ness application and industry promotion. The focus
In the second stage, the evaluation indicators will of consideration will be on the enterprise proportion of
mainly consider the development and users pene- 5G data traffic, HD IPTV users, available download
tration rate, mainly including the development and rates of fixed and mobile users, 5G internet of things
popularization of Gigabit fixed broadband service and connections and applications in key industries such
5G mobile broadband service users. as industrial internet, the internet of things and the
The third stage evaluation index is focused on busi- internet of vehicles.

3.2 Saudi Arabia: Reduction of annual fees

In 2016, the kingdom of Saudi Arabia developed its Saudi Vision 2030 plan to reduce Saudi Arabia's dependence
on oil, diversify its economy, and develop public services such as health, education, infrastructure, recreation and
tourism. The National Transformation Program 2020 for the transformation of the ICT sector was launched to fill
the policy gaps and to meet the requirements of Vision 2030, as well as to identify the main challenges over the
next five years. Goals include reinforcing economic and investment activities, increasing non-oil industry trade
between countries, and increasing government spending on manufacturing equipment. Broadband infrastructure
was one of the major challenges identified. To help achieve these targets, the government reduced the top three
mobile operators' annual royalty fees from 15% to 10% of net revenues to encourage the national ICT transfora-
tion.

3.3 South Korea: Lower taxes and light-touch

policy for 5G innovation
In January 2014, the then Ministry of Science, ICT the creation of a number of 5G-based strategic
and Future Planning (now Ministry of Science and industries. It outlined that South Korea would create
ICT) announced its plan to inject $1.49 billion into programs to support advancements in industrial
local businesses to help build 5G networks in South structure (10 trillion won between 2019~2021), a KP
Korea. Innovation fund (1.2 trillion won between 2019~2022),
In December 2018, South Korea reviewed its taxation and a smart factory fund (300 billion won for
framework and cut a further 2-3% from the tax on 2019~2021).
network investment to support the roll out of 5G infra- Based on the carrier networks, 13 open test
structure. platforms were built in five areas providing test and
In April 2019, South Korea announced its 5G+ strate- demonstration services for small and medium-sized
gy to further develop the 5G ecosystem and to foster enterprises, reducing the barrier for 5G innovation.

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3.4 Finland: Digital infrastructure strategy
The Digital Infrastructure Strategy 2025 is Finland's overarching national policy to position itself in line with global
trends and development, such as 5G, artificial intelligence, and IoT, and to empower the country to establish
infrastructure that supports and propels innovation, digitalization and new service creation.
It places 5G and supporting facilities such as fibre as key to enable the digitalization of services and businesses,
sets out to create an active and progressive spectrum policy and promote cost-effective and fast construction of
networks, all of which will ultimately accelerate the progress of its utilization of automation, robotization and
real-time data economy.
It outlines measures to:
- allocate appropriate spectrum for 5G.
- cost-efficient construction of telecommunication networks.
- streamline network permit procedures according to the 'one-stop shop' principle.
- supporting research and innovation.
This strategy was developed through considerations of needs of both businesses and consumers.

3.5 Germany: Infrastructure measures to acceler-

ate 5G deployment
The Federal Ministry of Transport and Digital Infrastructure of Germany announced its 5G strategy ( '5G Strategy
for Germany' ) in July 2017. The strategy includes the target of 5G coverage along all major roads by 2025. The
strategy also highlights that the co-use of passive infrastructure particularly in terms of the development of small
cell networks in city centres, as well as facilitating access to public infrastructure. Road infrastructure which
already has power connections today, for example traffic lights and street lamps, can be used for the cost-effec-
tive development of picocells. The Act on the Facilitation of the Deployment of High-Speed Digital Networks (Digi-
Netz) has defined some requirements with regard to:
- the co-use of public supply infrastructure for fibre and the co-deployment of fibre within the framework of
public road construction schemes, as well as.
- the use of public passive infrastructure to install micro or picocells.
For the co-use of public passive infrastructure, a working group was setup within the framework of the deploy-
ment of fibre networks. It comprises representatives from the federal states, the local government associations
and the telecommunications sector and is to provide information on issues related to the technical implementa-
tion. The working group is analysing which of the passive infrastructure that the DigiNetz Act makes reference to,
for instance traffic lights, traffic signs, street furniture, crash barriers or manhole covers, are particularly suitable
for the deployment of 5G by means of co-use.

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4
Policy implications

The learnings from 5G commercial deployment in the pioneering 5Gccountries carry

a number of implications for developing policies with the ambition of creating a sus-
tainable mobile industry. The following aspects could be beneficial for countries which
plan to launch 5G commercial deployment in the near future:

More exclusive spectrum assigned to mobile op-

erators with reasonable prices
Spectrum mid-bands such as 2.3/2.6/3.5/4.9 GHz are emerging as the primary bands in the early phase of 5G
deployment, providing an optimal balance between coverage and capacity for cost efficient implementation. It is
believed that the availability of at least 80-100 MHz of contiguous spectrum per mobile operator in these bands
will ensure a tenfold increase in user experience with one tenth of the per bit cost. In order to relieve the huge cost
burden of new network deployment in the early stage of 5G build outs, governments can and should cut down the
cost of new spectrum and of renewals for existing spectrum. Doing so allows operators to focus their cash flows
on 5G network deployments. Where appropriate, and after full and open consultation with stakeholders, the
corresponding annual spectrum fees could be further reduced or exempted if operators are willing to meet
reasonable deployment incentives.

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Lower taxes to stimulate 5G investment
Reducing or removing sector specific taxes and providing tax reliefs for network deployments by operators can
help achieve a greater socio-economic impact in the long-term across the society.

Clear national broadband strategies to enable 5G

innovation
Governments should consider setting up national broadband plans to define short- and mid- to long-term devel-
opment targets for broadband deployments, which not only accord with existing national conditions but also meet
the needs of economic development in the coming 3~5 years.

Policies to encourage innovation and industrial

collaboration
To facilitate 5G empowered digital transformation across sectors, governments will need to adopt more holistic
digital policies to encourage innovation across the sectors. This could include the measures to coordinate
cross-sector policies, supporting research and innovation and encouraging industry collaboration.

Facilitate access to public infrastructure to accel-

erate 5G deployment
A good infrastructure policy will not only help operators reduce the cost of deploying 5G networks, but also expe-
dite the deployment of their 5G networks and bring high-quality 5G services to people more quickly. Governments
should facilitate access to and improve the co-usability of public buildings and street infrastructure (such as
bus-stop shelters and street light posts owned by municipalities) to help remove a significant hurdle to deploy-
ment.

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