Riding the 5G rollout to riches

Technology: the application of science to solve problems or invent useful things. When new technology is successfully adopted, it’s because it gives us something valuable we didn’t have before.

New technology could yield a new product… Or it could improve an existing good or service – making it cheaper or better. But not all technologies are created equal. Some technologies are narrow in scope and application. The impact they make is small.

Other technologies, however, are so big and useful that they touch on every aspect of life and the economy. They change entire industries over time. They can even change cultures. Techs like these can mint millionaires – for those early enough to grab on to the trend.

Today I am going to tell you about one company that has their foothold in the future of wireless.

And the future begins now.

So what kind of technology can change the world as we know it?

I’m talking about general-purpose technologies.

They include inventions like the movable-type printing press, which democratised access to printed information and revolutionised Europe.

Electricity, another general-purpose technology, made it possible to light our homes at night. It changed how we make things in our factories. Its existence made electrical appliances possible, freeing up time for leisure or more productive work.

General-purpose technologies also serve as platforms for even newer technologies.

For example, there would have been no computer information and communications technology revolution – itself a general-purpose technology – without electrification first. And there would be no internet without information technology.

General-purpose technologies can increase productivity and create new wealth.

They can also create economic booms.

It can take decades for a new general-purpose technology to cause an economic boom.

Electrical power to home and work first started to become available in the late 1800s – but it wasn’t until the 1920s that it became ubiquitous and helped spark an economic boom. First, the technology had to be perfected until it was “good enough”, and associated infrastructure built at great cost. Likewise, modern computer information technology became available in the early 1970s.

But it wasn’t until the 1990s that it drove the internet and yet another boom. Computers needed to be fast enough and cheap enough to be available for anyone, and that took a while. Moreover, the communications infrastructure to connect millions of people on the internet had to be built out.

In each case, there is another common denominator…

The investors riding an emerging general-purpose technology trend made fortunes.

In investments ranging from companies inventing and perfecting the technology, to companies building the infrastructure, to companies finding new applications for the tech…

Right now we’re at the cusp of another big technology-fuelled boom. Fortunes are about to be made again. According to tech analysis firm IHS Markit, by 2035 this new technology will:

  • Create a $3.5 trillion of output value chain and 22 million new jobs
  • Spur $200 billion in annual technology and infrastructure investment
  • Enable $12.3 trillion in global economic output

We’ve actually already been using less advanced forms of this technology for decades, but it hasn’t even begun to reach its full potential. However, it is considered to be so important it’s even received mention as a national security priority in the US.

Okay, the cat’s out of the bag:

I’m talking about 5G wireless technology.

5G – the biggest tech upgrade of our lifetimes

The rollout is already happening and if you are looking to capitalise on the next generation of technology – the stars are aligning before your eyes:

According to CNN “it will truly revolutionise the world”.

In doing so, it’ll generate $12 trillion in new wealth.

To put that into perspective, with that kind of money you could buy a 100% stake in Facebook, Apple, Amazon, Netflix and Google and every single one of the hundred biggest companies in Britain…

And have enough spare change in your pocket to buy every single property in London.

It’s no wonder Forbes called it the “Holy Grail”.

And MIT Technology Review claimed it will bring about “technological paradigm shift similar to the jump from the typewriter to the computer.”

How could this one technology be so valuable?

That’s simple. As you read these words, engineers all over the world are rolling out a new form of the internet.

It’ll increase the speed of internet connections by roughly 100x.

At the same time, the cost of accessing superfast internet from anywhere – inside, outside, or even underground – is going to fall dramatically.

This dynamic is what has enabled companies like Netflix to shoot 10,000% higher… or Amazon to soar 15,000%.

And I’m expecting history to repeat here.

For instance, experts at DPS Group predict this rapid 5G rollout will allow the number of internet-connected devices to grow from 11 billion today… to 125 billion by 2030.

That’s a more than tenfold increase.

Which is going to lead to an explosion of wealth creation.

Will we see gains of 10,000% or more again?

I wouldn’t bet against it.

And I can make you a personal guarantee on that front. The people who will make life-changing gains from 5G will be those who are daring enough to take a stake.

Just consider how rapidly 5G subscriptions are forecast to grow in just the next six years… experts predict we’ll see a jump from four million subscriptions next year to 2.61 billion in 2025.

That’s a 60,425% growth rate.

If that’s the case, you might want to start thinking bigger than a 10,000% gain.

In fact, I wouldn’t be surprised if we saw long-term gains of 100,000% or more here. That’s enough to turn £1,000 into a million pounds.

Keep in mind: the rollout of 5G is happening globally, right now.

In the US, 5G is rolling out in a major way in 2020. By 2023, 32% of all mobile connections will likely be a 5G network. Verizon, C Spire and AT&T are all investing in the technology.

In Canada, Rogers Communication is investing $4.7 billion in 5G this year. Expect wider rollout to kick off in 2020. Mexico could get 5G this year. And so could Puerto Rico.

Chile’s 5G rollout began in 2018. It has continued this year, as Entel (the largest telecommunications company in the country) and Ericsson partner to build the network out. Argentina will likely follow the same timescale. Brazil will follow next year. Ditto for Colombia.

In South Korea there are already 4,000 5G substations in Seoul alone. As many as 85 cities will join the network by the end of 2019.

China and Japan are pushing on too. Last year a Mitsubishi-led trial tested a version of 5G designed to work in vehicles. And China’s director of Ministry of Industry and Information Technology has said that “The goal is to launch pre-commercial 5G products as soon as the first version of standards comes out…”

In other words, we stand on the cusp of a technology event that will change the world.

According to tech firm Qualcomm, “it will, like electricity or the automobile, benefit entire economies and benefit entire societies”.

The Telegraph went even further. It claimed 5G will be “one of the most important developments in human history”.

There’s every chance 5G will change the world for good.

These are the 5 things you must know if you want a chance to get rich with 5G:

1. A new age of connectivity

When new 5G wireless networks come online, bandwidth will be 100 times greater than your current wireless connection. Data will move from one end of the network to the other ten times faster.

That speed will make all kinds of new technologies possible.

Multiple smart devices, from cars to machines, will be able to communicate with each other. Movies will download in seconds, and new applications, like augmented and virtual reality, will be perfected.

In fact, I predict we’ll see new tech innovations like we’ve never seen before.

The best way to think about this shift is by comparing it to when households moved from dial-up to broadband internet. Once there was enough speed for consumers, the internet took off and fortunes were made.

In fact, your 5G wireless connection will be so fast it will make current 4G feel like dial-up. And we won’t have to wait long. 3GPP, an international wireless standards organisation, is wrapping up specifications for how 5G will work. This is important so that telecommunications companies, handset and device makers and more can all interoperate on the speedy new fifth-generation wireless network.

The US will be a leading implementer as 5G will start to roll out this year at select locations. Other early-adopter countries will include South Korea, Japan and China.

The earliest 5G applications won’t be for your mobile phone. They will be for mobile locations as American wireless companies begin to offer an alternative to the wired internet we are used to having in our homes.

That’s right… your wireless will be fast enough to compete with, and even beat, that connection you have coming into your home. A trickle of 5G subscriptions later this year will turn into a flood as 5G wireless projects progress and millions – then billions – of subscribers make the switch. And that figure doesn’t include billions more “Internet of Things” devices.

Swedish telecom company Ericsson predicts this part of the wireless market will grow to 3.5 billion units by 2023.

The reason I am talking to you today about this is because I see a similar set of circumstances evolving which draws a clear line between blockchain, fog computing and 5G. These three sectors are about to become synonymous with one another and not in the murky future, but in 2020.

This is exactly what I saw with cloud computing many years ago. There was a group of companies that did not seem to have a great deal in common but fast forward a few years and everyone has heard of cloud computing and is using it in one way or another on a daily basis. Once 5G launches we are going to see the same thing with fog computing and blockchain.

The performance of related shares, whether Microsoft and its leadership in blockchain as a service, Cisco in terms of 5G infrastructure or the cryptocurrencies and their commoditisation of trust, tells us something is afoot.

These are not individual unrelated moves but are part of a much wider tapestry. We need to take a step back to see the whole picture.

2. Mr Makimoto’s Wave

There is a long-term decennial cycle in the semiconductor sector which trends between standardisation and specialisation. It was first reported in the 1990s but the cycle began in 1957.

Every decade there has been a move from agreed standards to developing specialised chips for specific use cases.

The most recent example of this has been the surge in demand for graphic chips, due in large part to the evolution of cryptocurrency mining, artificial intelligence and deep learning. However, the primary reason for the evolution of dedicated chips for specific tasks was because Moore’s Law was not delivering the improvements necessary for standardised chips to complete new tasks adequately.

This kind of push and pull between standardisation and specialisation occurs when a leap in performance is made which makes general spec chips much more useful. However, as products are developed that use up that efficiency, demand for specialised products increases.

The big question then is whether the market is capable of now moving back towards a standardised business model. As the atomic limits of a silicon atom are approached, it is natural to ask whether Moore’s Law is now obsolete and the market will be permanently locked in a specialist sector.

There is a clear use case evolving where the specialist chips being produced become so prevalent in the market that they become the standard for big chunks of the global economy. The simple fact is that artificial intelligence needs different chips than cryptocurrency mining, which is different from what deep learning and data centres require.

Nonetheless, each of these use cases is so massive that they have the capability to drive product development phases in the global chip sector all by themselves.

The single most important sector where we need to see standardisation prevail is in blockchain.

Right now, a war is going on to promote the most effective solution to a range of problems. Ethereum and the Lightning Network that is being developed to sit on top of it has the capacity to be a standard solution for quicker transaction times. Directed acyclic graphs (DAG) also have the potential to fill that role.

Today, the sector is balkanised but the trend is definitely heading towards a winnowing of the field where a reasonably small number will prevail. That’s something that will turn the attention of participants towards commercialisation.

It is that move which will boost demand for services and therefore the size of the network. It will also allow the specialised chips in the market today to gain a much bigger market share.

Above the decade-long Makimoto cycle sits another cycle of centralised versus decentralised computing. In the 1960s we had computer mainframes that did everything. Then in the 1980s we saw the evolution of the personal computer and that ushered in a lengthy period of decentralisation.

Now we have the cloud which is basically a set of mainframe computers we access via the internet. The quantity of data being produced today is putting progressively more pressure on the existing cloud architecture

If we take what we know about the Makimoto Wave and how it has been influenced by the end of Moore’s Law, then the logical conclusion is we are entering a period of specialised decentralisation.

For example, Google is setting up a new gaming cloud service, Stadia, which will allow users to access a game from anywhere and via just about any device without the need for a gaming console. Supplying full HD and 4K over the internet, with no lag, is going to put massive pressure on cloud services.

To launch the service, Google had AMD create a specialised chip to perform the work needed. This is a specialised cloud and probably represents the pinnacle of what is achievable with today’s technology.

In the next couple of years, we will see specialised fogs or decentralisation. The term fog computing was created by Cisco because it sees the future of data centres as doing the heavy lifting while more of the computing work can be done in the local area network.

3. At last – the Internet of Things

The big point about the Internet of Things (IoT), which is now synonymous with 5G, is that sensors need to be small. Putting a chip in each one of them is expensive and unnecessary.

Instead, there is a clear potential for having better computing power in the network, which can process the data coming from sensors and relay what is necessary back to the cloud mainframe. If the cloud is overhead, then the fog will be all around us. That is what 5G is going to deliver.

The reason 5G is so appealing is because it promises to boost internet speeds up to 10-gigbits. The only way that can be achieved is by driving down the latency of the network. (Latency is the time take for a signal to reach its destination and return.) That is what fog networks deliver – 5G latency decreased to sub-millisecond intervals.

The network is driven by high-frequency millimeter waves which connect a 5G cellular user to a base station, which in turn will be connected to the network. That reduces latency. On the other hand, rising demand for cloud services increase latency and therefore reduce the speed of the network. Therefore, the base stations need to have more computing power and that is where the fog comes in. That is leading to the creation of computing-rich 5G networks which greatly enhance the capacity of the cloud to provide quick wide-ranging computing power.

This is particularly attractive for blockchain/DAG overlays because it is creating a ready-made infrastructure that can be used to propel the next, much bigger, rollout of blockchain-based products and services. That’s why I think we are seeing such a high degree of commonality in the performance of 5G, fog and crypto assets.

Gartner estimates 20.4 billion “things” will be connected to the internet within the year. The world is producing 2 exabytes of data a day. That is 2 billion gigabytes. The networks we have today are just not fast enough to deal with that traffic. If you are looking for a reason why 5G is being rolled out, that is it.

Qualcomm, which produces the first range of 5G handset chips, estimates that once 5G’s full potential is realised, sometime around 2035, it will have created $12.3 trillion in value, 22 million jobs and $3 trillion in GDP growth. That’s why we are talking about it today. The network is about to go live and the use cases are lining up.

The speed and connectivity 5G delivers, is what is required to deliver paradigm shifts in transportation, healthcare, entertainment and education.

For example, the rollout of V2X (vehicle to everything) connectivity is what will allow vehicles to communicate with traffic infrastructure in real time and will be of particular use to autonomous vehicles as they are rolled out.

What I find particularly interesting is CEOs of companies that are going to be disrupted by the evolution of autonomous vehicles opine they are many years away. However, if we look at what is in fact happening in the real world, the connectivity network is almost fully in place and trials are underway.

That tells me the “far in the future” forecast is more wishful thinking than anything else. In short, 5G is a massive enabler of autonomous vehicle features.

Google is rolling out cloud gaming but the next iteration of the gaming trend is wireless virtual reality headsets, augmented reality and the rollout of the skill as a service business model. One of our first recommendations in this service was Intuitive Surgical.

The company was set up with the aim of providing surgeons for battlefield conditions from a remote location. The kind of connectivity 5G represents will make that ambition a reality.

I was speaking with a friend in Arizona recently. For his remote location, a team of doctors fly in once a month and perform 200 eye injection procedures for diabetes patients, in a day, then fly out again.

This is about as efficient as the system can provide with today’s technology and patients have to wait for service. The future is a robot which can be installed in any location and the doctor can perform the procedure with minimal onsite assistance and that will be enabled by 5G connectivity.

4. Didn’t I hear somewhere that 5G doesn’t penetrate walls so it will never work?

It is true very high frequency waves do not penetrate walls very well. That is an obvious limitation if one does not think about how the short-range and inability to penetrate concrete has been dealt with.

The first way this objection has been handled is to use the fact that the signal does not penetrate buildings to bounce it around in the urban environment. That ensures there is a thick web of signals outside.

Then how do we get the signal from inside to outside and vice versa? This has been solved by ensuring 5G-enabled devices have multiple antennae. Additionally, 5G signals are being broadcast as different wavelengths. That ensures the base station inside a building can communicate with people on the fly in their daily lives and while some signals are very short in range, others can reach out to 2km.

That means 5G networks will be a lattice of signals being broadcast at different frequencies. All of that is going to require plenty of programming capacity in the local area network which enhances the need for fog computing.

Major companies like Amazon, Apple and Alphabet have been eagerly ensuring homes all over the world now have smart speakers installed. These speakers serve a dual purpose.

First, they obviously entwine people with the ecosystem of their parent company. However, the long-term plan is to beef up these speakers to support the 5G signals.

5. The China question

Unless you’ve been under a rock, you’ve probably already heard about Huawei and the US government’s campaign to contain it. The company’s kit has supplied about one third of the world’s 4G kit and is heading towards about 50% of the world’s 5G equipment.

5G is a global standard so if China controls 50% of the market it will get to dictate what standards are set for the rest of the world. That represents a significant threat to the security of global networks and most particularly at a time when geopolitical tensions are rising.

Many people have no issue with sharing their data with the major FANG companies but obviously there are clear questions about doing the same with the Chinese government.

As the world wakes up to the reality of China competing on every front, that is something governments are going to have to deal with. The fact neither Germany nor the UK have banned Huawei hardware from their respective markets is a testament to the fact that China is a major trading partner and there is a clear risk of losing contracts if its products are turned away.

That raises the clear question about security and brings me to the biggest challenge to the successful rollout of the product range for which we all hope 5G, fog computing and the blockchain will provide. Security.

Join the dots…

Cybersecurity companies able to keep the online world safe – against the new and abundant threats this tech upgrade is creating – could provide investors with the biggest opportunities.

The past doesn’t tell us what will happen next. But it can nudge us in the ribs and provide a hint.

The first wave of internet security companies like Norton, McAfee and Cisco gave countless businesses the confidence they needed to innovate and commercialise the internet. Early stake-holders in those companies are sitting very pretty today.

As this new internet age begins, the next generation of security firms could be set to capitalise – and hand decisive investors some of the biggest potential rewards.

Eoin Treacy
Investment Director, Southbank Investment Research

PS. You may have heard…

The 5G “conspiracy”, explained:

Rumours and conspiracy theories tend to pick up steam faster now than ever before.

Of course, it gathers momentum more aggressively online than anywhere else. Rumours about 5G being harmful to our health are all over internet forums and conspiracy theory websites. Just like we see claims that vaccines give children autism, there are claims that 5G can make people sick.

Here’s an irony for you: these conspiracy theories are probably reaching people faster because of the increased speeds of 5G connections!

But what is it all about – and is it true?

Well, for decades people have worried about the dangers of antennae. There are even stories of people tearing down (what they suspect to be) 5G transmitters from lamp posts.

5G technology hasn’t been around long-enough (by a long-shot) to jump to any conclusions. There is no way as yet to reasonably assess any impact. And, according to The New York Times, there is nothing to be concerned about. Again, much in the same way that anti-vaxxers cling to a single discredited research paper, the 5G ‘health conspiracy seems borne from spurious data.

“Over the years, Dr. Curry’s warning spread far, resonating with educators, consumers and entire cities as the frequencies of cellphones, cell towers and wireless local networks rose. To no small degree, the blossoming anxiety over the professed health risks of 5G technology can be traced to a single scientist and a single chart.

Except that Dr. Curry and his graph got it wrong.

According to experts on the biological effects of electromagnetic radiation, radio waves become safer at higher frequencies, not more dangerous. (Extremely high-frequency energies, such as X-rays, behave differently and do pose a health risk.)”

So let’s debunk that one and concentrate on the impact this tech upgrade is having on the world…

And how you could make a potential fortune from its roll-out.

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