How 5G will change your life
How 5G will change your life
5G stands for the fifth-generation wireless network. It is the latest iteration of cellular technology, engineered to greatly increase the speed and responsiveness of wireless networks and the amount of data transmitted. 5G is reaching speeds of 20 to 100 times faster than the current 4G network, (depending on which 4G service you are referring to).
Why should we get excited about a new mobile phone network? Well according to the research team at Deutsche Bank, 5G’s biggest effect could come from outside smartphones. It will enable predictive maintenance on cars and fleets of trucks, virtual reality films, autonomous cars, and other Smart City and Smart Factory applications.
The increase of speed of communications has usually gone hand-in-hand with economic growth. The latest technology is allowing unprecedented spread of communications. In particular that is leading directly to increased education rates in developing countries. In fact, if the current increases in education rates continue, the 200 million additional educated workers that enter the workforce over the next three decades will compensate for most of the expected decline in the workforce in the more-developed world due to demographic problems.
5G will also allow for an emerging market technology skip. Smartphones have been the technology skip as they are cheap and run on new and fast networks. They enable micro-entrepreneurship without the need for other, more expensive computing equipment thus allowing for increased productivity across broader catchment areas, some previously untapped.
The research team at Harbour Asset Management have reached a similar conclusion about the 5G network. Fifth generation mobile networks (5G) will provide a transformational shift in the telecommunications landscape. The introduction of 5G may have significant implications for investors in the listed telecommunications sector, as well as knock-on effects for companies which could harness this technology.
Why is this change so important?
- It enables new technologies, like driverless cars, mobile medicine, the Internet of Things
- It may accelerate the transition from fixed to wireless networks encouraging substitution, and
- The 5G proposition is radically different from its predecessors opening the world to smart cities
5G is more than just an evolution to higher speeds and more capacity. It is the precursor to supporting a range of new industries and the enabler of new technologies.
5G is seen by many as having the potential to significantly lift productivity and open new business investment opportunities. In contrast, the step from 3G to 4G largely seemed to benefit consumers wanting to upload video content and share photos. 5G is more than just an evolution to higher speeds and more capacity; it is the precursor to supporting a range of new industries and the enabler of new technologies.
Source: International Telecommunications Union
Samsung has called 5G “wireless fibre”, promising a super-fast low latency network everywhere. For instance, at 10GB per second, you could download the average two-hour movie in 3.6 seconds.
In terms of investment implications to New Zealand, consumer uptake of 5G is a key consideration. It seems clear that pricing, coverage, handset availability, speed, latency and applications will be key factors in 5G take-up and substitution from fixed line broadband.
From the mobile operators’ perspective, the proposition to move to 5G is enhanced by “cutting the fibre loop” to consumers (and thereby bypassing Chorus’ network). Those within the mobile industry see a much higher take-up of 5G. Many analysts expect wireless broadband to take between 15% - 20% of the market over the next five years with the key market players being Spark, Vodafone and Chorus.
If you have any questions and would like to discuss this further, please speak to your financial adviser.
Disclaimer: This article has been prepared for the purpose of providing general information, without taking into consideration any particular investor’s objectives, financial situation or needs. Any opinions contained in it are held as at the report date and are subject to change without notice. This document is solely for the use of the party to whom it is provided.
1 How 5G will change your life, Jim Read researcher at Deutsche bank, downloaded 12 July 2019.
2 5G to Enable New Technology Platforms, Harbour Investment Horizon, www.harbourasset.co.nz, downloaded 10 June 2019
Over the past year, the pace of growth in developed economies has slowed, and there has been some talk about economic dark clouds gathering on the horizon. But there are in fact strong areas of innovation which paint a different picture - one of optimistic growth. A good example is the area of cloud computing.