The move to 5G is expected to become an important driver for the operating momentum of Taiwanese networking companies after growth of the local mobile communication industry slowed from last year, Yuanta Securities Investment Consulting Co (元大投顧) said last week.
New and more mature radio frequency technology for 5G new radio have enabled local networking companies to enter the telecommunication office equipment market for the first time, Yuanta said.
Looking ahead, such companies are on track to launch services such as vehicle-to-everything, traffic management, semi-automated vehicles and the Internet of Things in the Taiwanese market, the equity consultant said in a report on Thursday last week.
Meanwhile, the government has completed the high-speed standard and will complete the standards for low latency and massive machine type communication in June, with the 5G international standard to be completed in 2020, the report said.
However, there are still many challenges to be overcome, such as the maturity of 5G technologies, diversification of related services and applications and determining whether the coexistence time of 4G and 5G will exceed market expectations, Yuanta said.
“Domestic networking companies mainly specialize in manufacturing high-power base stations, while the industry is still lacking in terms of millimeter wave — 28 gigahertz [GHz] and 39GHz — technologies, which is an issue to be tackled when developing 5G,” Yuanta analyst Calvin Wei (魏建發) said in the report.
Wei said that the local networking industry is competitive in terms of chip, module, small base station and core server manufacturing capability, but it is relatively weak in software technologies.
The market expects the government to begin granting 5G licenses for 3.5GHz and 28GHz in 2020, but, there are pros and cons for the two bands, Wei said.
The downside to both is poor signal penetration, he said. The signal penetration of 3.5GHz is inferior to 4G.
The speed of the 3.5GHz band will depend on the bandwidth allocated to each operator, Wei said.
If each operator is allocated 50 megahertz (MHz), it will be difficult for transmission speeds to reach 1 gigabit per second, he said.
However, if each operator is allocated 90MHz, transmission speeds could easily exceed 1 gigabit per second.
Simply put, if operators in the 5G era receive the same bandwidth as in the 4G era, speed improvement will be very limited, even if operators switch to 5G equipment, Wei said.
“As such, designing an ideal 5G environment for users will be most important for telecoms,” he said.
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