The introduction of the next generation of mobile internet connection – or 5G – is expected to usher in a new era of superfast connectivity – but what will this mean for us?
So far, much of the media discussion about 5G has taken a negative slant. Concerns about its impact on cyber security have been exemplified by the spying allegations between the US and China, that resulted in many countries excluding Huawai from their 5G infrastructure plans. 5G was erroneously blamed for causing the coronavirus pandemic, according to some conspiracy theorists. Additionally, the proliferation of new infrastructure and the replacement of existing equipment required for the 5G roll-out has rightly raised questions about whether appropriate environmental measures are in place. Yet, the reality is that the scope of positive, albeit potentially disruptive, improvements for both society and business are enormous. Furthermore, the scale of spending required to achieve a world-wide roll-out will create a host of opportunities for investors.
How will 5G differ from 4G?
On the surface, the major difference between 4G and 5G is all about speed, but in reality this improvement will open up so many more options regarding how technology can be used. Firstly, in terms of speed, 5G is expected to be up to 20x faster than 4G – this means the time it takes to do simple tasks on your mobile, such as downloading a movie, will reduce from around 6 minutes to less than 20 seconds.
Expected improvements from 4G to 5G1
The second improvement is about scale. By incorporating a greater use of the radio spectrum, 5G will massively increase the number of devices that can be connected to the mobile internet at the same time. This significantly opens up the market for smart connectivity.
Finally, the time it takes to transfer data from point to point, or from instruction to action (known as latency), will be around ten times less meaning these actions will effectively be performed in real time. Collectively, these three areas of improvement will radically transform the way we use technology in our day-to-day lives, as well as disrupting the world around us.
While the potential for 5G is inspiring, there is a huge amount of investment required to build the infrastructure and this will take some time to realise. The world’s major phone operators and tech companies are leading the way in this venture and, as of September 20201:
- 397 operators are investing in 5G mobile or 5G fixed wireless access/home broadband networks
- 118 operators have announced the deployment of 5G within their live network
- 96 operators have announced 3GPP (protocols for mobile telecoms) 5G service launches
By 2025, it is expected that the world will have around 1.8 billion 5G connections, but these will largely be situated in Developed Asia and North America. Other regions are progressing their 5G rollout, but by 2035 it is expected that just seven countries will account for 79% of all 5G-related investment1.
2035: Rank of countries’ 5G capabilities1
Industry: the disruptive potential of 5G
5G is likely to be most revolutionary in the industrial landscape. While 4G has been instrumental in improving our domestic way of life, there are still issues across the network that limit its industrial usage. Such lags are expected to be virtually eliminated in the 5G network, opening up the business world to an infinite number of imagined possibilities, as well as allowing for the potential of those that have not yet been thought of.
- Automation: The potential of 5G could herald a new era in manufacturing, as automation and advanced robotics are used to increase productivity and precision. Such ‘smart factories’ would streamline the manufacturing process and enhance efficiency, thereby cutting costs. Overall, the impact of 5G is estimated to provide a USD400-650 billion boost to industry by 20301.
- The Internet of Things (IoT): 5G is set to vastly expand the use of connected devices (or IoT) beyond their current use in the domestic sphere and on to the world around us. Cities will become ‘smart’, accelerating the transition to self-driving cars, which will become safer due to the ability to make split second decisions. Moreover, these cars will also be able to speak to and learn from different sensors placed around cities, improving navigation, reducing the number of accidents and also identifying parking spaces. City authorities will also be able to use this technology to improve public safety, monitor air quality and, ultimately, improve the quality of life for its citizens.
- Smart skills: healthcare is a great example of where 5G will help with the transfer of expertise over greater distances, with surgeons using robots to perform operations from remote locations. The use of smart medical devices will also help doctors’ ability to test and diagnose patients remotely, as well as receiving real-time updates on the progress of their conditions.
These are just a handful examples of how 5G has the potential to completely change the way businesses operate, a transformation that will generate significant revenue growth. Data provider IHS Markit, estimates that the 5G value chain will generate USD3.6 trillion in economic output by 20352.
— Andrea Mossetto, Head of Investment Specialists, CPR AM