In 2017, the Ministry of Industry and Information Technology (MIIT), China’s telecom regulator and industrial policy maker, issued the Circular on Comprehensively Advancing the Construction and Development of Mobile Internet of Things (NB-IoT) (MIIT Circular [2017] No. 351, the “Circular”), which sets out the policy goals and plans for NB-IoT development in China and concrete steps in achieving them. NB-IoT is a form of Low-Power WAN (LPWAN) technology dependent on basic telecom carriers’ cellular networks using licensed frequencies.

Highlighting the advantages of mobile IoT (NB-IoT), namely, wide coverage, large amount of connections and low power consumption, the Circular stresses the importance of stepping up the construction of NB-IoT infrastructure, development of related applications, advancing the deployment of NB-IoT networks, and general promotion of innovation in this area in China.

To achieve these policy goals, the Circular calls for strengthening of R&D with regard to the NB-IoT standards, expedited local implementation of 3GPP’s NB-IoT standard and early completion of the upstream and downstream value chain for the domestic NB-IoT industry, including chips, modules, network equipment, applications products and service platforms. In particular, the Circular envisioned that basic telecom carriers in China, i.e., China Mobile, China Unicom and China Telecom, would expedite the already in progress large-scale deployment of the NB-IoT network and build up access capacities; specifically, by the end of 2017, the network would cover major Chinese cities with 400 thousand base stations and 20 million connections throughout China. By the end of 2020, it is envisioned that the NB-IoT network could cover all of China with in-depth coverage for applications such as indoors, transportation networks, underground pipes and so on, with the number of base stations reaching as many as 1.5 million and more than 600 million connections throughout China.

The Circular further encourages the applications of NB-IoT in the following areas:

  • Public services in smart cities: including smart meters for public utilities such as water, power, gas, heating, smart parking management, environmental protection monitoring, etc.
  • Household use and consumption: including smart home appliances, wearable devices, home care, pet tracking, etc.
  • Industrial manufacturing: including the monitoring and control of the manufacturing process, use in the logistics, agriculture, and other sectors.

The Circular also provided regulatory support for the application of NB-IoT in terms of allocation of operating frequencies and coordination of NB-IoT’s network requirements with that of 3G, 4G, and future 5G systems, optimized number and code allocation, enhanced information security safeguards, establishment of industrial alliance and public service platforms, etc.

Developments to date – NB-IoT rollout across China

So far, NB-IoT has gained significant momentum in its deployment in China, particularly, in the innovative technology sectors. For example, the applications of NB-IoT in shared bicycles and smart hardware are particularly encouraged due to the in-depth as well as wide coverage and low power consumption of the technology. Two of China’s leading bike-sharing apps, Mobike and Ofo, have applied the technology in their bikes’ smart locks and to expand their bike deployment. For example, as of October 2017, there were more than 5,000 Ofo shared bikes up and running in Beijing with NB-IoT smart locks. Notably, unlike some other technologies, wireless signals of NB-IoT can reach much lower depths of underground parking, and base stations can cover dozens of kilometers. Once a battery is installed, it can last up to several years.

In recent months, companies in various positions in the LPWAN value chain have also invested heavily in R&D, hardware and platform building. For example, China Mobile, one of the three national telecom carriers, announced an invitation to tender for the procurement of a design and construction service for cellular IoT’s wireless and core network equipment, the construction costs of which are estimated to be in the region of RMB 39.5 billion (approximately US$ 62 billion). The company is also planning to procure 1.11 million antennas for its NB-IoT network during the 2017-2018 period. In 2017, China Telecom also upgraded 310 thousand base stations nationwide to render them compatible with NB-IoT.

Other forms of LPWAN: LoRa and Sigfox also making progress in China

NB-IoT is not the only form of LPWAN technology making an appearance in China; other major complementary or sometimes competing LPWAN technologies such as LoRa and Sigfox share some of its advantages but are different in other respects.

  • For example, LoRa, a propriety LPWAN technology backed by the LoRa Alliance, is not dependent on the basic telecom carrier’s cellular network. Instead it uses unlicensed radio frequencies, which can be constructed to form a private network. This technology has already been used in electrical power metering by power companies nationwide in China. As of December 13, 2017, the MIIT had been soliciting public comments on the draft Technical Requirements for Micro-power Short-Range Radio Transmission Devices (the deadline was January 15, 2018), which may regulate the range of radio frequencies used by LoRa and potentially impact the future development of LoRa in China.
  • Sigfox, another proprietary LPWAN technology running over a public network in the 868 MHz or 902 MHz bands, was previously absent from the Chinese market. However, on January 9, 2018, in the presence of Chinese President Xi Jinping and visiting French President Emmanuel Macron, Sigfox signed a strategic agreement with local partners and the municipal government of Chengdu, a city in China’s western region to begin Sigfox’s trial deployment. This will firstly be done in Chengdu, specifically applied in the context of care for senior citizens, followed by possible further deployment in 20 other Chinese cities.

As China’s regulatory environment for LPWAN matures, a significant surge in the application of diverse IoT technologies in the country is expected, not least in the context of China placing itself as one of the leaders in the IoT space. In light of the business opportunities arising out of IoT development globally, companies should be mindful of the regulatory rules’ impact on their businesses. Covington’s Asian team across three offices in Beijing, Shanghai and Seoul has significant, feet-on-the-ground experience helping clients navigate new regulations. It is also well positioned to address clients’ needs in the IoT sphere, including in relation to their participation in industrial, innovation and competition policy making, legislation and standard-setting, market entries for cross-border investment, IoT related intellectual property rights transactions and dispute resolution, as well as competition, cyber-security and privacy issues. We will continue tracking and advising on local IoT developments and report on the news and insights in the area on a frequent basis.