The race is on. It’s sort of like a new space race when the US and Soviets scrambled to be the first to reach the moon in the 1960’s. The goal in the new race is less tangible but very significant. The objective is to secure leadership in the next generation of wireless networks. It’s the race to 5G. It’s a critical milestone in this Digital Age in which we live. Some believe that the winner of this race will have a significant edge economically, politically and militarily. Early indications suggest China is winning, if you believe recent reports. Winning also might be an issue of ego. Being the first doesn’t always mean sustainable dominance. But it does sound pretty cool…
It was the 3G rollout which enabled the success of the iPhone that really catapulted connectivity, communication and commerce in 2007. It was a game-changer. Japan was the first to 3G, but that didn’t stop Apple nor Google nor Facebook nor Amazon, among so many others, from capitalizing on the opportunities presented. The fear for 5G is if China delivers widespread access first, its companies like Alibaba, TenCent and Baidu will get a head start on creating the next generation of high-tech products and services. Beijing is quite supportive of its Tech Titans and is in it to win it.
Expectations are high. I’ve heard predictions that the implementation of 5G will contribute to global GDP the equivalent to an economy the size of India. And over the next 2 decades, the value of 5G will support over 20 Million jobs worldwide and produce over $12 Trillion in economic output. That’s really big. The wireless industry forecasts that 5G will bring a massive increase in speed and reliability to mobile devices, bridge the gap between wireline and wireless broadband speeds, and enable a new round of technologies and applications that are perhaps unimaginable to us today. It’s going to be a big upgrade. Keep in mind, the US doesn’t even have the fastest speeds, nor the fastest or most widely available 4G networks today. It lags countries like Finland, Japan, and South Korea in this area. You might have noticed that American infrastructure and airports have fallen behind too.
How fast is fast you might ask? With the 3G network system, it took one day to download a full-length HD movie. The same file on a 4G network today can be downloaded in a few minutes. On a 5G network, it is expected to be a matter of seconds before the same movie was downloaded. Information moves fast today. It will be significantly faster tomorrow.
5G won’t just increase network speeds. It will also expand capacity which should stimulate growth of the Internet of Things. Cars and other smart devices are obvious targets for further enhancements through innovation. Cameras and sensors detect objects and map out future paths for progress. These enhancements are creating a great deal of data. And data is fueling automation. Artificial Intelligence, otherwise known as AI, has taken off. 5G will be critical to the future success in AI, which will indeed have profound influence economically, socially, politically as well as militarily.
Network carriers like Verizon and AT&T are planning the 5G launch in the U.S. as early as the Fall, though most won’t experience it until next year at the soonest. 2020 is more likely. Full rollout will take some time. There are some concerns that it might not cover the whole country at first. 5G will enhance augmented and virtual reality, connected cars and the “smart home”. Imagine your alarm clock going off in the morning, which will automatically trigger the coffeemaker in the kitchen and the defroster in your car which is parked in the driveway on that cold January morning. That car will likely be able to drive itself too. Autonomous vehicles will be able to communicate with other vehicles to determine best routes and help avoid collisions. The Internet of Things will really come into their own. Machines will be able to talk to each other constantly and without lag. 5G will usher in the post-smartphone era.
Perhaps the greatest of concerns about China’s lead in 5G have to do with national security. The Chinese company Huawei has products that are used around the world. The US government has long worried that Huawei could help the Chinese government spy on American citizens, companies, and political leaders. Huawei is effectively blocked from the US market. Intellectual property is a critical component of the trade war between the US and China. It’s not just about steel and aluminum. The Market continues to suggest the US is winning this war on trade, even though realistically there are no real winners. The United States is one of the few major global economies experiencing accelerating growth right now. This is a very strategic time to address the many flaws of so-called called free trade. Is China really winning the race to 5G? It’s too early to tell. The trade war has been exposing some weaker realities in China that perhaps were not understood prior. The Cold War did the same things with the Soviets. The US has the upper hand. The key is to maintain it.
The race to 5G has been a sprint. Who wins and what it means has yet to be determined. It will no doubt be another of a series of game-changers in the Digital Age. It is also very investable.
Have a great weekend. We’ll be back, dark and early on Monday.
Mike
