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With 5G, the fifth generation of mobile phone networks, a broadband speed of 1 gigabit per second will become a reality. This will pave the way for an increasingly connected world, with better services and greater efficiency in a myriad of applications, and entire sectors that will be transformed, generating opportunities for companies that tune in to change. “5G should represent a turning point in the creation of a future connected and digital society. Without 5G, the full potential of the Internet of Things, smart cities, independent driving, robotics, artificial intelligence and remote health care may be unattainable,” comments Luke Barrs, Head of Client Portfolio Management for Goldman Sachs Asset Management’s Fundamental Equity EMEA team.
5G, in particular, will transform our experiences with data in three different ways, explains Barrs. First, in terms of frequency and speed. “5G will operate in higher frequency bands than 3G or 4G, allowing significantly higher data rates,” the expert points out. Currently, according to data from the International Telecommunications Union, 4G LTE (high-end 4G network) allows you to download a short HD movie to a mobile device in about an hour. But it is expected that 5G networks will be able to transfer an entire high-resolution movie in 2 seconds.
The second aspect of the incoming change will be the ‘extraordinary improvement in latency or ‘response time’: the delay between requesting a content or action and receiving that action on your device. The current 4G response time is about 50 milliseconds of delay between the instruction and the time when the response occurs. 5G could reduce this delay to less than 1 millisecond,” says Barrs.
What does this mean? Minimizing the response time is crucial, for example, to develop adequate responsiveness of self-driving cars to their surroundings to avoid collisions.
The third aspect is virtually infinite bandwidth. “The usefulness of the 3G and 4G network is limited by the reduced availability of bandwidth at the necessary frequencies. 5G will expand the available capacity through the opening of new and less congested frequencies and the more intelligent and more targeted use of these. It is thought that if 5G is implemented correctly, the wireless bandwidth may be infinite. 6G may never be needed,” he adds.
Although there are logistical and financial challenges associated with the arrival of this new technology, the evolution of 5G will be primarily software-based, which can be upgraded more easily than hardware and at a lower cost. “Globally, we are preparing for the introduction of 5G in the coming years, with the knowledge that this technology will be crucial for future industrial strategy, business competitiveness and social progress,” explains the GSAM expert.
The developments of 5G, from data providers to infrastructure providers, could be profound. “Companies preparing for this potential digital revolution offer interesting investment opportunities. Although the Millennials generation is the main driver of adoption trends across a more connected world, the Covid-19 has amplified the adoption rate for older generations by increasing opportunities in this area,” says Barrs.
It’s no coincidence that 5G has become a closely monitored theme in the world of asset management among disruptive technologies that may bring new opportunities. T. Rowe Price notes that in the wake of 5G they expect positive spin-offs for telecom tower companies. For example, “T-Mobile and Dish have invested significantly in this area and will need to buy traffic on the towers to make these investments pay off. For T. Rowe Price, 5G is also expected to push a positive cycle in the smartphone industry towards the end of next year: “The new standards require significant changes in the internal structure of cell phones. Apple, for example, is investing heavily in factory automation to be able to produce 5G compatible iPhones, which will also benefit many of its suppliers.