5G, Not Just Another Phone Upgrade…

Industry experts expect great things from 5G, the latest generation of wireless technology. To understand why, it helps to know a bit about how cell phones function. Cell phones convert voice and data into electrical signals and then transmit those signals over radio waves to the nearest cell tower. The cell tower then passes the signal along either through physical phone lines or by radio waves to the end destination.

The infrastructure used to transmit and receive signals today, everything from chip sets to antennae, has been designed for lower radio frequencies. Thanks to the explosion of mobile usage, these frequencies are getting saturated. Dino Flore, a Technology VP at Qualcomm, estimates that there are over 8 billion cellular connections today. Without change, the strain on the existing network will cause transmission failures and delays.

China out Front pg 4.jpg

Fortunately, engineers from around the globe have been working together to develop new cellular architecture standards capable of handling the growing network demands. 5G, which transmits data at higher frequencies, is the result of these efforts. In addition to increasing network capacity, 5G also reduces “latency” or the time it takes for devices to respond to each other. When fully deployed a 5G network, for example, will be able to connect 1 million devices per square kilometer, or transfer a full length, high-resolution film in 2 seconds. Industry experts believe this reduced latency will spur significant innovation. In medicine, for example, 5G could improve doctor/patient relations through higher quality video-conferencing and allow remote surgical procedures. Though less revolutionary, gamers could enjoy a more seamless streaming experience.

While promising, a full rollout of 5G will take time. The new network’s technical requirements make widespread adoption particularly expensive and challenging. High frequency signals are more fragile and, as such, require a vast number of close range micro cells and antennae. Technology consulting firm Greensill estimates that 5G related spending could hit $2.7 trillion by 2020. These investments will be challenging for network carriers like Verizon who must figure out how to get consumers to pay for their enhanced service.

China is furthest along in the race to build out a 5G network where firms like Huawei hold a significant share of 5G patents. On the infrastructure side, Deloitte estimates that since 2015, industry leaders Huawei and ZTE have deployed 10 times as many cell sites as we have here in the U.S.

5G pg 4.jpg

The recent move by the U.S. to prevent domestic tech firms from exporting network infrastructure to China on national security grounds highlights how high the stakes are in the race to gain technological advantage. While these trade spats may slow down the pace of 5G adoption, they are unlikely to stop it. Handset manufacturers in both the U.S. and China are already releasing 5G phones albeit with limited range. Denying Huawei chips and other technologies may actually backfire and cause them to speed up efforts to develop homegrown technology solutions.

If history is any guide, I would not dismiss 5G’s potential impact. Ten years ago, 4G’s rollout lead to the rise of whole new businesses like Uber and Airbnb. I would expect this time to be no different.