News that China Telecom Group will launch optical module collection for the first time
According to informed sources, China Telecom will launch optical module collection at the group level next month, which is the first time for domestic operators to collect optical modules at the group level. Prior to this, some provinces have already carried out pilot work on collecting and collecting.
At present, the scale and category of China Telecom's collection are not yet known. The application scenarios of optical modules are very extensive, including transmission, access, data communication, and in the field of 5G base stations.
The industry believes that the collection is still testing the water, China Telecom will not completely change the original bidding model in the short term. Previously, China Telecom's procurement was for equipment manufacturers, and equipment manufacturers to purchase from optical module manufacturers. In the new model, the procurement process has been reduced, which means that there is more cost space. For equipment manufacturers, this is not good news, but for optical module manufacturers including Guangxun, Hisense, Xuchuang, Huagong Technology, Mingpu, and Motai, it is a huge advantage.
After years of speed-up and fee reduction, the three major operators including China Telecom have begun to face enormous cost pressures. On the one hand, ARPU has stopped and even declined. On the other hand, the explosive growth of traffic requires operators to upgrade their networks every year, and capital expenditures must remain high.
Especially on the eve of 5G commercial, this pressure is more obvious. Wei Leping, executive deputy director of the Communication Science and Technology Committee of the Ministry of Industry and Information Technology, pointed out that according to the capacity station construction, the 5G investment is about 1.5 times that of 4G. Overall, the 5G investment is expected to reach 1.2 trillion yuan, and the 5G investment cycle may exceed 8 years. Wei Leping explained that the 5G working frequency band is high, the base station is large, the base station is expensive, the power consumption is high, and the investment will increase greatly.
In the 5G investment map, the optical module will usher in a huge opportunity. It is assumed that the 3.5GZ 5G base station is twice as large as the 1.8GHz 4G base station. The base station is considered by three sectors. It is expected that the entire 5G network will bring tens of millions of dollars. Level 25/50/100Gbit/s high speed optical module usage. Further consider the huge development space of China's data center (the United States accounts for 45% of IDC, China's broadband users are 3 times that of the United States, but only 8%), and the development and use of optical modules is even more impressive.
It is estimated that the domestic telecom optical module market will be about 8.5 billion yuan in 2019 under the 5G drive, with a year-on-year growth rate of about 31%. The growth rate in 2020 is about 79.9%. Considering that the domestic operators have 4G transmission network in the second half of 2018. To expand the capacity to prepare for 5G transmission, we judge that the domestic telecom optical module market demand will enter a stage of rapid growth since the second half of 2018.
It is against this situation that China Telecom has chosen a new path, which is to directly purchase for module manufacturers and reduce costs by compressing transactions. In fact, this is not the first of China Telecom. In the OTT and cloud service markets, users are basically directly purchasing, for example, Google directly purchases for Xu Chuang.