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5G IS COMING (Not the Latest Korean Boy Band)

Delwin Graham - Nov 09, 2018
Every decade or so, the wireless industry rolls out a new cellular communications standard that can transmit more data more quickly. The next much-hyped standard is called “5G” . . .

Every decade or so, the wireless industry rolls out a new cellular communications standard that can transmit more data more quickly. The next much-hyped standard is called “5G” because it is the fifth major generation of standards for encoding and transmitting data over radio waves. The infrastructure overhaul that is required for 5G will bring disruption but also opportunities. Growth-oriented investors will want to be there. 

The first generation of wireless telephone technology, retroactively called 1G, was a fully analog system for transmitting voice only. These large handsets were launched in the early eighties. In contrast, 2G phones transmitted voice and data digitally. They were launched in Finland in 1991 and enabled such data transmission as text messaging and the transfer of pictures or photos but not video. It was not until the introduction of third generation smartphones that data transmission rates increased to allow for 3D gaming and mobile TV. Technical improvements with 3G in 2000 and 4G in 2010 brought data rates up from 200 kilobits of data per second to hundreds of megabits per second. 5G is expected to transmit 1 gigabit per second – and perhaps as many as 10. To put this in perspective, a two-hour film could be downloaded in approximately 26 hours with 3G, in 6 minutes with 4G and 3.5 seconds with 5G (Cf., Jan Rabaey, “What is 5G? The Next Generation of Wireless, Explained”, May 17, 2018, www.theconversation.com).

Speed is important. Data-transfer speeds affect productivity by allowing us to access information in a timely manner. But 5G isn’t all about speed. The world is going mobile, and we are consuming more data every year, particularly as the popularity of video and music streaming increases. Existing spectrum bands are becoming congested, leading to breakdowns in service, particularly when a number of people in the same area are trying to access online mobile services at the same time. This problem will only increase exponentially with machine-to-machine wireless communications.

5G is much better at handling thousands of devices simultaneously, from mobile phones to equipment sensors, video cameras to smart street lights. 5G uses higher frequency bands, that is, 3.5 GHz (gigahertz) to 26 GHz and beyond, for increased signal capacity. However, the shorter wave lengths at this bandwidth means that their range is lower; therefore, they are more easily blocked by physical objects like buildings and even rain. As a result, a much higher number of transmitters and receivers are needed. Today’s 4G networks rely on 60-meter towers to blanket large areas with signal. 5G base stations could be placed every 250 meters, rather than the every 1 to 5 km needed for 4G (Cf., Rabaey, “What is 5G?”).

5G technology should also lower latency, that is, decrease the delay between when a signal is sent and when it is received. 4G latency is about 9 milliseconds (ms). With 5G, that will drop to 1 ms. While latency is an issue in providing a seamless experience in virtual reality and video gaming, it is critical in automotive applications. Comparing the distance a car travels at 110 kph in 9 ms and 1 ms, the difference in stopping times can mean the difference between life and death (Cf., Eric Zeman, “What is 5G? A Guide to the Transformative Wireless Tech That’s Being Hyped to Change Everything”, October 9, 2018, www.fortune.com).

Because of the much faster data download and upload speeds, wider coverage and more stable connections that it offers, 5G is required for machine-to-machine communication. As such, 5G is expected to usher in the much-vaunted era of the “Internet of Things”, that is, smart cities and smart homes, connected cars and just-in-time healthcare. The information services that will be required can be expected to evolve in many unexpected ways. In the past, software services have been consumed by human beings by either a human talking to another human or, in the case of the internet, by the human requesting services and experiences from software. However, moving forward with machine communications, software will request the service and will be talking to other software. And so, the whole dynamics of what services are going to be delivered through wireless networks will change (Cf., Scott Fulton III, “What is 5G? Everything You Need to Know about the New Wireless Revolution”, April 30, 2018, www.zdnet.com).

When can we expect the rollout of the 5G network? The major US-based carriers, AT&T, Sprint, T-Mobile and Verizon Wireless, are all working on their 5G networks and each anticipates that they will be implementing a version by 2020 or earlier. A mixture of 4G and 5G technology can be expected. Lower frequency bands (600-800 MHz typically) are better over longer distances, and so network operators will concentrate on improving their 4G coverage in parallel with 5G roll-out in areas of more dense usage, like major cities. Telecommunications equipment providers are supporting these efforts. Qualcomm and Intel are developing 5G modems, while Ericsson and Nokia are creating towers and backhaul gear that will be used in the US and Europe. China’s ZTE and Huawei will play a larger role in 5G networks in Asia. LG hopes to launch the first 5G-enabled phone early next year (Cf., Zeman, “What is 5G?”).

This is a disruptive enterprise. According to Scott Fulton, “5G is a collective bargain between the telecommunications industry and society. To allow for anything close to evenly distributed coverage over a metropolitan area, the base stations containing the transmitters and receivers (the ‘cells’) must be smaller, much lower in power, and much greater in number that they are today. . . . We’ve borne telephone and electric poles through our neighborhoods and, not that long ago, willingly installed TV aerials the size of kites on our chimneys. Some of us still use those old mounting posts for our satellite dishes. In exchange for the hopefully minor blemish on our landscapes that 5G may bring, we’d all wave a cheerful goodbye to dead spots.” (Cf., Fulton, “What is 5G?”).

Please contact me (Delwin.Graham@canaccord.com; 780-408-1518) for more details and a few actionable ideas.