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Everything's connected

Rasmus Soegaard, from our sister company, Quilter Investors, explains how the 5G roll-out makes previous network upgrades look pale by comparison. This time around he says, connectivity moves to warp speed and jumps the fence to link everything from the devices we use, to the cars we drive and the clothes we wear.

The roll-out of the fifth generation of wireless telecoms, aka 5G, is gathering pace. Just last month, the BT-owned operator EE launched the UK’s first 5G network in six UK cities: London, Manchester, Edinburgh, Birmingham, Cardiff and Belfast with ambitious plans to reach 1,500 or so sites by the end of the year. Meanwhile, fellow mobile operator Vodafone has announced plans for a seven-city 5G launch at the start of July with another dozen cities currently promised to follow before the year ends.

Around the world, infrastructure spending on 5G is already in the hundreds of billions a year. An estimated 200 operators in 85 countries are busily investing in 5G in some way or another1 with around 80% of the wealth going on the hardware and network transformation projects needed to support the new 5G standard.

This, coupled with the hordes of new-age technologies that are set to come charging over the horizon once 5G becomes a reality, and the fact that the US is doing everything it can to make 5G the centrepiece of its clumsy trade war ambitions, makes 5G easily one of the most pervasive investment themes of the coming decade.

Running to stand still

Although the Trump White House has labelled 5G as a ‘race’ that the US must win at all costs, and done its level best to make life hard for key market players such as Huawei and its Chinese compatriots, such sloganeering falls a long way short of capturing what’s really going on here.

The 5G roll-out will actually take a decade or more, there are no blueprints for what each country’s network will look like when complete (so they’ll probably be quite different) and the US is unlikely to ‘win’ by any stretch of the imagination. Indeed, it’s still many years behind its peers in getting 4G off the ground.

More pertinently, only a handful of the leading 5G players are US companies and these are mostly chipmakers like Qualcom and its peers.

For now, the US notably lacks a significant 5G infrastructure business such as Huawei, which currently heads the field by several lengths. Meanwhile, Huawei’s two closest competitors Nokia and Ericsson, the former handset giants, are both European.

Regardless of US sabre-rattling, thanks to its new generation of small antenna arrays and the cloud, 5G is the platform that will support the next generation of communications-based technologies as the world around us begins to literally teem with endless streams of invisible data (much like the movie The Matrix).

1 Global mobile Suppliers Association (GSA)

Taking the red pill…

Just like the move from 3G to 4G, which ushered in the age of the smartphone – a new era of mobile commerce, mobile banking and online streaming – the next generation wireless network is going to take us places we’ve never been before and this time at mind-bending new speeds.

When it becomes reality, 5G is expected to be about 100 times faster than 4G and at least 10 times as fast as the average broadband connection. This faculty, along with the increased signal strength, constancy and security that 5G engenders means that the new network has everything it needs to hoist Herculean levels of data. It’s estimated that by 2025, 1.2bn people will have access to a 5G network with around a third of them in China.

In essence, 5G is a workhorse that will power a host of whizzy new technologies that, if the dawn of 4G is any guide, will quickly become engrained in everyday life. In doing so, 5G will change the face of our society and set off a series of seismic shifts in the global economy.

Future tales

For the average mortal, 5G will mean mobile video and high-speed internet streaming that should be indistinguishable from regular television – it will also mean pricier phones and higher data charges in the early years. But there’s any number of ground-shaking new technologies queuing up to make use of 5G.

Among these is the autonomous vehicle; 5G will give rise to the first fully networked self-driving cars, trucks, trains, buses, drones, planes and even taxi planes. Germany’s Lilium, for example, is one of an estimated 200 start- ups currently jostling to get a fleet of robot flying taxis off the ground. Those that succeed will be kept aloft by 5G interfaces.

The rise of the smart city is another 5G prospect. These employ data gathering sensors of all sorts to improve the quality and efficiency of urban services such as energy, transport, traffic management and utilities by reducing resource consumption and waste and streamlining costs. Seoul was named as the world’s first smart city some five year ago thanks to its new-age healthcare facilities for the disabled and elderly.

It’s since been overtaken in the listings by the likes of Tokyo, European cities such as London, Vienna, Amsterdam, Stockholm and Paris and US cities like Boston, San Francisco and New York but it’s likely to regain this lead as Korea looks set to become the first fully- fledged 5G country.

Similarly, 5G will catalyse great leaps forward in virtual and augmented reality and spawn the growth of ‘edge computing’, namely high power real-time data processing that doesn’t rely on the cloud (it’s located near the business that needs it, hence the name).

5G will also provide the broad back necessary to make remote or ‘telesurgery’ a reality. This could see drone-style aircraft ferrying robotic surgeons to remote or hazardous areas. Once on site they could perform life-saving operations overseen by surgeons who use augmented reality interfaces to guide scalpels and thread needles from wherever they may be in the country.

Naturally, such advances depend as much on stable wi-fi as they do on steady hands. By offering just this, 5G presents tremendous opportunities for technologies to convergence and evolve further.

Having said all that, by far the most significant societal change that 5G will usher in is the ‘internet of things’. The world, quite simply, will never look the same again once this becomes a reality.

Things get interesting

The term ‘internet of things’ was coined by the British tech visionary Kevin Ashton. It describes the evolution of a new breed of smart devices covering everything from light bulbs, thermostats and washing machines to airports, foundries and hydro-electric dams.

By equipping our gadgetry with new generation sensors and wireless connectivity we’ve enabled them to turn the world around them into raw data and to communicate that data with one another (and us). This is the basis of the smart city or the smart factory and, paired with advances in complimentary technologies such as machine learning, artificial intelligence and ‘big data’, it offers almost unlimited potential to improve industrial processes, revolutionise healthcare and automate many of the things we still take for granted.

Industry estimates vary wildly, but according to one credible source2, the number of connected devices ‘talking’ to one another (and us) is projected to hit 200bn by next year. This, we’re told, equates to around 26 smart objects for every person on Earth, each one quietly monitoring some aspect of our daily lives.

Leaders in the field

Make no mistake, 5G is an epoch event, both in terms of the impact it will have on our daily lives and how it’s likely to re-shape the landscape for telecom companies, manufacturers, healthcare providers, retailers and the armies of chip and component makers around the world that supply them.

In the US, where government policy has forced providers away from a shared platform, the costs of the 5G telecom build out has already sparked merger attempts by national carriers such as Sprint and T-Mobile (reducing choice for US consumers along the way). And, thanks to Mr Trump’s trade war, these costs can only rise in the US.

If he’d looked before declaring it “imperative that America be first in fifth-generation (5G) wireless technologies,” Mr Trump would surely have noticed that his country is poorly equipped for the challenge. Indeed, his administration’s belligerence has increased the cost of building out 5G wireless infrastructure in the US by hundreds of millions of dollars a year thanks to its blacklisting of all manner of Chinese providers and adding special tariffs of up to 25% on pretty much all Chinese telecom tech.

If it were somehow the ‘race’ that Mr Trump imagines, the US has turned up about five years late for the start and opened its campaign by complaining that the ‘big boys’ (who started years earlier) have somehow cheated, despite the amassed might of the US intelligence community being unable to produce any evidence of how such foul play took place.

While such theatrics are great for headlines they have little prospect of derailing 5G’s global roll-out which is barrelling down the track like a freight train. And don’t forget that things change fast, both in the tech sector and the White House. Mr Trump and his antics could be in the rear-view mirror as soon as November of next year while 5G, as the US wireless giant Qualcomm recently claimed, looks set to be ‘bigger than electricity’.

2 The International Data Corporation, Intel, United Nations Global mobile Suppliers Association (GSA)

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