Five key tech trends for 2019, part 2: communication

Continuing our key tech trends to watch out for in 2019, we come to communication.

The last couple of decades have seen two major developments in communication technology. Broadband and 3G mobile phones.

Since broadband became common in the early 2000s, it has steadily increased in speed and price.

Mobile internet had a giant leap with the advent of 3G. It was such a big advancement that a new carrier emerged named after it: Three.

3G moved on to 4G, which was significantly faster, but still slower than broadband.

However, while broadband has been getting more expensive, 4G has been getting cheaper.

I pay £19 for my mobile phone contract, which includes unlimited data and more minutes and texts than I could ever hope to use.

My home broadband coasts £35 a month for a 54Mbps connection.

My phone’s internet gives between 5 and 12Mbps. It’s not fast enough to use as my main connection at home, unfortunately. But it almost is.

This year 5G mobile internet is rolling out across 16 cities in the UK.

5G’s speed is be between 1 and 10 Gbps. That is very fast.

Virgin’s top of the line fibre optic broadband runs at 350Mbps and coasts a whopping £50 per month. That is currently the fastest mainstream connection you can get in the UK.

Even taking the lower end estimate of 5G’s speed of 1Gbps. It will be almost three times as fast as Virgin’s offer.

And in a few years, 5G is expected to reach speeds of up to 50Gbps. More than 140 times as fast as Virgin’s best effort.

So, one of the biggest questions coming up this year in the world of communication is:

How will broadband companies survive?

Like I said, I, and many thousands, if not millions of others, pay £35 a month for 54Mbps home broadband, as well as a phone contract. I’m sure many people pay more.

When my phone contract comes with 5G, which will be a minimum of 20 times as fast as my home broadband, why on earth would I not cancel my broadband subscription?

I would be saving £35 a month and getting a much faster connection at the same time. It’s a no-brainer.

I have been writing about this for a couple of years now, and I still haven’t seen this news gain much mainstream press attention.

Think about how much money broadband providers rake in. The top four broadband providers – BT, Sky, Virgin and TalkTalk – have more than 25 million customers between them.

If these customers are paying £35 a month, that’s around £10.5 billion a year UK citizens will no longer have to fork out to this cabal.

Sure, to start with 5G contracts will likely be expensive. But certainly no more expensive than home broadband. And over time prices will drop, just as they did with 3G and 4G before it.

In just a few short years, UK citizens could be a collective £10.5 billion richer per year thanks to the advent of 5G.

The big question is, what will these broadband companies do?

Will they go bankrupt or will they be able move into the phone business?

When broadband came along, traditional phone and cable companies simply switched into the broadband business.

But we already have a highly competitive and highly specialised mobile phone sector. Phone and cable companies will find it much more difficult to move into this market.

Over the next few years I imagine we will see a massive upheaval of these broadband giants. Once 5G gets going, they simply won’t be needed any more.

(But it’s worth noting that the biggest of the broadband cabal, BT, also owns EE, which is in charge of the UK’s 5G rollout.)

And although I said ordinary people will be £10.5 billion better off for it, it will also mean a massive loss of jobs.

These giant companies employ thousands of people. What will happen to all these workers?

It’s certainly a lot to think about.

From a purely personal standpoint, I can’t wait for 5G to shake things up.

My own life will be much better for it. I’ll be saving hundreds of pounds a year and I’ll have a much better internet connection.

But, if 5G really does take off like it’s expected to, it’s also going to destroy many major players in the communications sector.

It’s easy to think of these broadband companies as faceless entities, taking as much as they can get from us while providing us with as little as they can get away with. But those faceless entities employ real people.

So, from a more social standpoint, it paints a less positive picture.

But things evolve. Technology gets better, more efficient and faster. And with each new evolution it requires fewer and fewer people to sustain and maintain it. If you’re currently wondering what the top 25 tech stocks to buy now are, you should take a look at Nick’s book The Exponentialist by clicking here.
This is why many prominent thinkers, and even a number of governments are seriously looking at the idea of a universal basic income. But that is a topic for another day.

For now, let’s leave the social philosophy aside and get back to the reality of 5G.

As I said, 5G will soon reach speeds of around 10 gigabits per second.

What it means in reality is that you’ll be able to download a full HD film in around three seconds.

If your mobile phone has a 32GB hard drive, you’d be able to download enough data to completely fill it in less than 30 seconds.

With speeds like this, we’ll become even more reliant on cloud storage. After all, why have all those files clogging up your phone or laptop when you can download anything you want almost instantly?

Companies and individuals alike will need much more storage capacity and jobs will be created in these sectors. Cloud computing is already a massive industry, but with 5G in place it is set to balloon.

A new dawn of communication

Aside from raw speed, 5G has two other major advantages. Low latency and high network capacity.

What those terms mean in real life, I’ll explain now.

What is latency and why is it important?

Latency is the delay it takes for networks to communicate with each other. So say you click a link on a website, the time the network takes to respond to that click and start loading the webpage is the latency.

If you have a very fast connection, but a high latency, your internet will seem slow. Skype conversations will be out of sync, for example. And webpages will take a long time to load.

As you can probably imagine, latency is a huge problem for driverless cars. They need to communicate with the network and one another in real. If they don’t, accidents will happen.

The big breakthrough of 5G is its latency. Current 4G networks have a latency of around 50 to 80 milliseconds. This is just too slow, and could lead to major issues in traffic. 5G has a latency of just 1 millisecond.

What network capacity and why is it important?

Network capacity is how many devices can share the same connection without slowing it down.

You might notice that all broadband and mobile internet speeds are “estimated”. This is because when there are a lot of people using the network the speeds slow.

You can think of this like a congested road, the more cars, the slower it all goes.

4G networks can get clogged up fairly easily, and this is one of the main reasons they aren’t suitable for critical operations, like driverless car communication.

Home broadband has a much higher capacity. But it does slow significantly at peak times.

The other advantage of 5G is its very large network capacity. It will allow over 1 million devices to use the network per square km, without significantly slowing.

Set up your smartphone phone as a mobile hotspot today and it will struggle as you connect more and more deceives to it.

Try connect a TV streaming Netflix, a laptop playing YouTube and an Echo streaming Spotify and everything will slow to a crawl.

With a 5G phone working as a mobile hotspot, this won’t be an issue.

So, when and where is 5G rolling out this year?

In November 2018, EE announced it will be rolling out 5G to six major cities by mid-2019.

Those cities are:

  • London
  • Edinburgh
  • Cardiff
  • Belfast
  • Manchester
  • Birmingham

With the following ten being added by the end of 2019:

  • Glasgow
  • Newcastle
  • Liverpool
  • Leeds
  • Hull
  • Sheffield
  • Nottingham
  • Leicester
  • Coventry
  • Bristol

But I wouldn’t expect these 5G networks to cover much more than these places’ city centres at first.

Who are the major players?

Well, the company at the head of the 5G rollout is EE, which is owned by BT.

So, even if BT starts losing out on broadband deals, it will likely make it all back from EE’s 5G customers. Or at least some of it.

Three, O2 and Vodafone are also heavily involved, as you may expect.

One company that has recently been shut out is arguably the worldwide leader in 5G hardware and networks, Huawei.

Until about half way through 2018, Huawei was the king of 5G. But then the US told all members of its “Five Eyes” programme to sever ties with Huawei.

Australia, Canada and New Zealand were quick to answer their master’s call and promptly complied. The UK remained on the fence for a number of weeks, but then eventually caved.

The background to this is the US-China trade war. The US doesn’t like its allies using Chinese tech, even if it is by far the most advanced.

It’s hard to tell if this is one of those “cutting off your nose to spite your face” things, or if the US genuinely believes that Huawei poses a security risk. In reality, it’s probably a little of both.

But that does mean that “the West” will be playing catch up when it comes to 5G.

In fact, the US has such a distain for Huawei that in December, you might remember it ordered Canada to Huawei’s CFO (who also happens to be the founder’s daughter) and extradite her to the US to face trial.

The reason given was that Huawei has been breaking trade sanctions and secretly selling its wares to Iran. How much is true is anyone’s guess.

But that put a stop to all the Five Eyes nations, as well as Germany and a number of others using Huawei to build its 5G infrastructure.

Again, I’m getting a little off topic here, though. So let’s bring it back in for our final part.

When can we get 5G smartphones?

Although the infrastructure is being rolled out, most handsets aren’t ready.

The first 5G phones are set to be released in the first quarter of this year.

The following companies have all announced 5G handsets will be released this year.

  • Samsung
  • Xiaomi
  • OnePlus
  • LG
  • Huawei (unsurprisingly)
  • ZTE
  • Vivo
  • Oppo
  • Honor

Notably absent from the list is Apple, which has said it will not be releasing a 5G handset this year. It has stated its first 5G handset will come in 2020 at the earliest.

Of the above list, the one which will make the biggest splash will undoubtedly be Samsung.

And I would guess that for Samsung investors that splash can’t come soon enough, given it missed analyst’s profit estimates by 22% for the fourth quarter of 2018.

If you’d like to know more about 5G, and how you can invest in it, I can highly recommend reading my publisher Nick O’Connor’s book, The Exponentialist.

He spent months tracking down and interviewing leaders in many areas of cutting-edge technology. His aim was to get a clear picture of what the future will bring us, and how you can invest in it.

It’s a great read, and it has a lot of insight in it. But then I would say that wouldn’t I? Why not see what it’s all about for yourself by clicking here.

Okay, that’s all for today. Tomorrow I’ll be looking at the key trends to look out for in big tech.

Until then,

Harry Hamburg
Editor, Exponential Investor

PS You’ve probably noticed that over the last few months tech stocks have not being doing well. Apple is down 39% from its all-time high in October, and other tech giants aren’t faring much better.

What most people don’t realise is, you can easily make money when markets like these fall. And that’s what Tuesday’s Predictable Profits Summit is all about.

This is a first of its kind online event at 2pm on Tuesday 15 January. In it Nickolai Hubble will show you how to make money when markets are falling – as well as a number of other investment secrets.

If that sounds like something you’d be interested in, you can get your name down for it here.

Category: Technology

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