Focus on Funds: How revolutionary is the 5G evolution?

5G has arrived and while currently only available in a handful of cities (six at launch in the UK) it is estimated that 40% of the world’s population will have 5G coverage[1] by 2024.

The fifth generation of wireless networks promises to provide users with better responsiveness, greater bandwidth and faster download speeds. It will give operators the ability to develop new products, applications and services and deliver them more cost-effectively.

All this will allow consumers to access the internet faster, get quicker mobile connections, upload videos more quickly and stream movies more smoothly.

To give an idea of the step-up from 4G, according to Borje Ekholm, CEO at Ericsson: ‘No previous generation of mobile technology has had the potential to drive economic growth in the way that 5G promises.

It goes beyond connecting people to the possibility of making the internet of things (IoT) and the fourth industrial revolution a reality. 5G has the ability to drive a digital society where everything that can benefit from being connected will be connected.’
 

[1] Ericsson Mobility Report; January 2019
 

While the previous four generations have all been about delivering faster connectivity, 5G is much more enterprise and company focused.

It will allow applications ranging from the IoT – anything with a chip in it such as an alarm clock, a vending machine or smart TV – to connected cars, autonomous trucks and cloud-based gaming.

These are all genuinely cutting-edge innovations.

One of the key improvements of 5G is low latency, meaning a high speed of signal being sent and received, the speed an action follows an instruction – imagine playing Fortnite and there being a noticeable delay between moving the controller and moving your on-screen character.

‘I think this is the beginning of the fourth generation of the industrial revolution’

More broadly, low latency should enable the proliferation of the IoT, potentially challenging how data is created, stored and analysed in the future.

Another area to benefit is the radio access network (RAN), which is that part of the mobile telecoms system that sits between a device and a signal, connecting a device to a network. 5G will support a network upgrade in a market that has seen little if any growth, leading to greater capacity and efficiency for users.

This whole area is not without risks – witness concerns around Huawei technology’s security, the arrest in Canada of its chief financial officer and the possibility of it violating Iran sanctions. The result has been that several countries, spearheaded by the US, have boycotted Huawei products.

Then there are the extremes of views on 5G. For example, Kaan Terzioglu, Turkcell’s CEO, says: ‘I think this is the beginning of the fourth generation of the industrial revolution. 5G will be the platform linking billions of devices together’. However, Ron Marquardt, Sprint’s vice president of technology is more circumspect, saying: ‘I think a lot of the hype is where things are going to be 10 years from now with 5G, not what it will be at launch’.

The answer is likely to be somewhere in between as while 5G remains in its infancy today, momentum is building nicely and we expect it to move from hype to reality over the coming years.

Fatima Iu

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