The 5G rollout

We venture back beneath the streets of London again today.

As Peter Ackroyd put it in London Under, when you walk the streets of London you “are treading on skin, a skein of stone that covers rivers and labyrinths, tunnels and chambers, streams and caverns, pipes and cables, springs and passages, crypts and sewers, creeping things that will never see the light of day.”

As I showed you yesterday we can add a new resident to the underworld: the “plumbing” of the 5G network, which could create $12.3 trillion in new wealth.

Today I want to dig in to precisely why that is.

The first thing to understand is that the 5G rollout isn’t speculation. It’s happening. Tech companies all over the world are pouring time and money into building the network out. Billions, perhaps even trillions, are going to be pumped into the burgeoning industry.

Now ask yourself: how much of your capital have you positioned to benefit from that growth? Hold on to that thought as we explore just how widespread 5G adoption is…

I can show you all the places in the world that are about to get 5G. And I’m going to. But really, this chart sums the entire opportunity up.

It’s a forecast of the future growth in 5G subscriptions, between 2020 and 2025. And it makes a pretty compelling case:

Woof! That’s a chart to get any growth investor excited. A jump from 4 million subscriptions next year to 2.61 billion in 2025.

I’ll do the maths for you: that’s 6,425% growth.

And I can’t help but ask you again: just how much of your money is positioned to capture some of that growth?

The fuel for that explosion of 5G subscriptions?

A worldwide – and I mean that literally – rollout of the tech over the next 18 months.

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 Communications is investing $4.7 billion in 5G this year. Expect a 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: 5G is coming. All over the world. Right now, as you read these words.

Why is that important?

Well, as I told you yesterday, 5G isn’t just about “faster” internet, in the sense most people think of it. Right now faster really just means “faster downloads”. The quicker your internet connection, the quicker webpages load, the quicker videos and music download or stream and the better the quality of those files.

It makes sense that we think this way. It’s past experience that has taught us to think this. Case in point: the shift from dial-up to broadband internet.

Chances are you’ll remember this well. Before broadband going on the internet required Zen-like patience. Anything you did took an age. Opening even a simple webpage involved watching as the page came into view in tiny increments starting at the top of the screen and slowly – so slowly – creeping down. It was infuriating. Forget video or music.

Broadband changed that. It sped everything up. Now opening a webpage is generally instant, as is playing a video, downloading or uploading to the internet (like posting on social media) or streaming films, music and TV.

So it’s easy to dismiss 5G out of hand. If things are already quick, how will making them quicker really change things? Will webpages taking a fraction of a second less time to load really kick-start a revolution?

It’s easy to think like that. It’s also wrong. And that could cost you big time, in terms of missed opportunities in the stockmarket.

Here’s why. The 5G network doesn’t just enable faster internet in the way we’ve previously understood it. In fact it will bring about a paradigm shift in the way we perceive “speed” of internet altogether.

That’s because of something call latency. The simplest way of describing this would be to say it’s the speed with which two internet connected devices can interact or communicate with each other. Right now, there’s a lag. Soon, there won’t be. And that’s big.

Think about it like this. Imagine you’re video calling your next-door neighbour. (I know that sounds daft, but go with it for the sake of argument.) You’re perhaps ten metres away from each other.

With current internet speeds, you’ll be able to have a conversation that makes sense with pretty decent clarity. But there will be a slight – even infinitesimal – lag in communication. There’ll be a delay. The conversation won’t be as “instant” as it would be were you in the same room.

And that’s when you’re next door. The further away from each other you get, the worse it’ll become. If I call my parents in Manchester via video – which I do most weekends so they can witness the rather worrying growth of their grandchild – there’s a lag which requires an annoying amount of repetition. If I call someone in Australia it’s even worse. 

This is where latency comes in. The 5G network eliminates this lag and allows instant communication between not just two devices, but millions of them, all at once.

I’ll give you two examples of why that’s important – and how it’ll manifest itself in brand new industries that weren’t possible before.

First, think about something like surgery. Remote, robot-operated surgery. Surgeons already use robots to assist them in certain procedures. But it’s generally “on site”. The surgeon, the robot and the patient are all in the same place.

But with instant communication and interaction – regardless of distance – that changes. In theory the surgeon could be anywhere. So long as they have responsive, remote access they could perform the same procedure.

In other words, the distance between patient and surgeon ceases to matter. It’s “distance disrupted”, if you want to talk like some California venture capitalist twit.

Now take the logic of the world-class surgeon and extrapolate that to any number of other tasks that currently require the “operator” of a piece of technology to be in the same geographic location. Imagine having a failsafe pilot with remote access, in case of emergency. Same goes for a train, car, spaceship, boat. It is technology conquering geography. And it’ll likely lead to all kinds of new business models.

Here’s a second example. It doesn’t involve people at all. And that’s apt, because that’s a large part of what 5G is all about – things interacting with other things. Millions of them.

What if the thing in question was a car? All cars, in fact. What if they were all able to communicate in real time – and respond instantly to each other’s location?

That is one of the promises of driverless cars. But whether you’re talking about driverless tech or just as an additional safety net, enabling cars to “speak” to each other in real time, with no lag – that’s the kind of thing that would radically change the way we travel.

The knock-on impacts on safety on the road and fuel efficiency would be enormous. A million people die on the roads each year. And as much as a third of energy in a car is used fighting drag. Anyone who cycles knows that sitting “in the wheel” of the person in front to reduce wind resistance will be able to tell you about the advantages of drafting.

The same is true of motor vehicles. In fact it’s even more the case, because wind resistance increases exponentially the with faster speeds. Cars that are able to talk and respond to each other instantly would be able to safely draft, reducing energy consumption. By the way, this is known in the industry as “platooning”. Another cycling reference: a better term would be “pelotoning”.

Which wouldn’t be true without instant communication. Which isn’t possible without something like 5G. Which brings us back to the point I made yesterday.

Right now we’re in the “engineering” phase of the 5G rollout: the point when the underlying infrastructure is built out. But what comes next will be a period of extreme experimentation as innovators figure out what is possible with the new capabilities. That’ll lead to another kind of opportunity, in what I called the “startup” phase.

If you’re a tech investor, I think you’d be mad not to at least consider either of those two approaches. Given 5G is rolling out right now, seeding a little capital in the engineers and the startups of the network seems to make sense.

By the way, Eoin Treacy – editor of our flagship technology stock-picking publication, Frontier Tech Investor – has already named his pick for the 5G rollout. He may well be adding new recommendations in the coming months. And you can get every single one of his stock picks, plus a copy of my book The Exponentialist, by following this link now.

Best,

Nick O’Connor
Publisher, Exponential Investor

Category: Technology

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