5G Landscape

Out With The Old, In With The New

Out with the old and in with the new. . . well, not completely. The 5G movement has rapidly sprung into the public’s eye and is now a common buzzword among tech junkies and businesses people alike. Unlike its predecessor, 4G who stomped out the old 3G swiftly, 5G will won’t completely replace 4G. In fact they will work in tandem where 5G compliments and enhances the current 4G network.

So what is the big fuss about? Similar to previous network updates, devices and internet speeds will have faster downloaded times and connectivity. The biggest advantage though, and the reason all major technology companies are focused on 5G, is due to its necessity for the internet of things (IoT). Briefly, IoT refers to the vast network of devices which are constantly “talking” to each other. A simple example is a home in which your microwave, thermostat, TV, locks, Alexa device, cars, etc., are all integrated and sharing data to make your life extremely convenient. In order for these devices to be talking to each other at all times, incredibly high speed network connectivity is required, ergo 5G.

The biggest advantage though, and the reason all major technology companies are focused on 5G, is due to its necessity for the internet of things (IoT).

From a high-level perspective, there are two main components to the deployment of 5G, the manufactures creating the physical parts (towers, chips, antennas, etc.) and the network providers (Verizon, T-Mobile, Sprint, etc.). On the manufacturing side, Chinese producer, Huawei completely dominates the space worldwide. The only other two serious competitors are European manufactures, Nokia and Ericsson but are still nowhere near Huawei’s dominance. The network providers differ in that there is more competition in the US amongst the major players. Verizon seems to have just lost their edge over T-Mobile due to the merger of T-Mobile and Sprint. Their fears of this market loss can be seen in their recent advertisement campaign directly targeting T-Mobile as the inferior 5G network.

If Huawei was based anywhere else but China, the transition to using their equipment would be no issue, but that isn’t the case. Given the heightened tension between the US and China, specifically on IP and data theft, Huawei poses a huge threat due to the vast amount of information they will be collecting from civilian and government sources through the 5G equipment. Although Huawei says they are not influenced by the Chinese state, it is well known that the Chinese government has control over essentially anything they please if it lies within their border. Assuming the Chinese government would have control over Huawei, the highly sensitive data flowing through their technology could be compromised with ease. It is for this reason why the US government has offered incentive programs for companies to develop their own 5G equipment. It has also specifically tasked major companies Microsoft, Dell, and AT&T to develop software which would be able to override any 5G equipment to be used for its own purpose. The hope is to be able to use the physical equipment produced by Huawei, or Ericsson and Nokia, but block it from actually gaining access to the data being used on it. As it stands now there is no alternative but to use foreign equipment exemplified by Europe’s approval for use of Huawei equipment despite the strong US efforts to prevent such thing from happening.

On the other side of the coin, the network provider who will dominate 5G is still up for grabs.

On the other side of the coin, the network provider who will dominate 5G is still up for grabs. Each service provider is approaching the 5G space in a slightly different way. Verizon is tackling 5G by using high speed but low area coverage bandwidth. This means users will have to be in proximity to towers and antennas in order to experience the high speed network. T-Mobile is using a bit of everything with their own bandwidth covering high speed/low area as well as a slower version of 5G that covers further distances from the frequency source. Once the merger of T-Mobile and Sprint is complete, the middle ground coverage, moderate 5G speed and decent area coverage, will be filled as Sprint owns that territory. AT&T has the weakest offering of the top providers, giving its customers 5Ge, essentially a slightly better 4G experience. This means that Verizon and T-Mobile/Sprint will go head-to-head in the race to dominate 5G. As it stands now, T-Mobile/Sprint seem to have a slight edge over Verizon due to their range of coverage and slight head start compared to Verizon.

Similarly to the winners of 4G, who were the beneficiaries of the new network, not the providers of it, IoT and chipmakers stand to profit the most from the new technology.

So where is your best bet to profit from the 5G revolution? Similarly to the winners of 4G, who were the beneficiaries of the new network, not the providers of it, IoT and chipmakers stand to profit the most from the new technology. The connectivity of the devices and the speed at which they will need to talk to each other will require a 5G network. At the center of all those devices will be new computer chips that can process large amounts of data at blazing speeds. Due to the 5G revolution and continuation of technology advancement in general, it is likely that the cyclically of semiconductor stocks will smooth out compared to previous cycles. No longer will there be waves of new chips being needed but instead a constant flow of new chip designs due to the revolution of the tech space.

While the excitement around 5G and the eagerness of companies to announce they have the best network exist today, the proliferation of this type of technology will still take a couple of years. Vast amounts of infrastructure still needs to be put in place and devices need to adapt completely to work with 5G. Hotspot cities are currently testing the new technology, working out bugs and tweaking the overall system before the complete rollout occurs across the country. One can expect an investment around 5G to come to full fruition in 2 – 3 years.

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