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All Eyes on the Wireless Industry: Players Join 5G Bandwagon
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Of late, many research reports by a plethora of data analytics firms have been surfacing, pointing out that 5G connections will be scaling new heights in the next 10 years. Examples include that of Strategy Analytics whose forecast reveal that the number of worldwide 5G connections will touch the 690 million mark by 2025. Additionally, mobile handset shipments are expected to be around 300 million globally in the same time frame. Meanwhile, a host of industry experts have jumped the bandwagon predicting promising numbers about the surge of 5G technology in the U.S. But are we being too optimistic?
What is 5G?
5G or 5th generation mobile networks or 5th generation wireless systems is the next major phase of mobile telecommunications standards after the 4G/IMT standards. According to Next Generation Mobile Networks Alliance, 5G networks allow data rates of tens of megabits per second for millions of users, 1 Gb per second simultaneously to people on the same office floor, increased spectral efficiency compared to improved 4G coverage, signaling efficiency enhanced, latency reduced compared to LTE.
Industry Trends
To date, almost all of the top wireless companies have initiated 5G trials. Verizon Communications Inc. (VZ - Free Report) has been quite active and is considered to have issued a radio specification of 5G to the industry carrier consortium 3GPP. Other telecom operators such as AT&T Inc. (T - Free Report) , T-Mobile US Inc. (TMUS - Free Report) and Sprint Corporation (S - Free Report) have either tested or are in the process of testing the technology. Additionally, communication equipment manufacturers like Cisco Systems Inc. (CSCO - Free Report) and Ericsson LM (ERIC - Free Report) have helped design the systems needed for 5G specifications. Some telecom companies are even targeting commercial deployment by 2020.
No 5G Standard Yet
The news surrounding the 5G technology at the moment is more about speculation than facts. As it is a futuristic technology still in its experimental stage nothing tangible can be ascertained, until its full-scale deployment by the telecom operators. Moreover, the lack of any particular standard may have led to different approaches in trials by the telecom companies which make it more complicated. So, the International Telecommunications Union plans to set a global 5G standard by 2020.and until there is any standard set, 5G may just be some grand PR stunt by the telecom companies.
Fiber is Complementary, Not a Substitute
One of the myths surrounding the next gen wireless technology is that it will completely substitute fiber. Verizon even termed 5G as ‘wireless fiber’, adding more hype to the myth. However, the truth is far from this as to reach the promised speeds of 5G, more fiber is needed – a fact well known by the telecom industry. The main reason behind this is for a high frequency 5G spectrum, the user has to be close to a base station to access promised speeds. Moreover, the base stations themselves will have to be connected by fiber as fiber can theoretically have unlimited bandwidth.
Thus, in order to expand 5G networks, more wireless base stations have to be put in place first, which in turn requires more fiber investment. However, given the sad state of last mile fiber infrastructure in the U.S., one has to question these optimistic statements about 5G.
The Bottom Line
While investments in fiber and improvement in last mile connectivity is necessary to touch the estimated 5G speeds, it is certainly not impossible. The huge number of wireless base stations that have to be maintained for the technology to be successful poses a serious concern. However, the base stations will be small and easily deployable. Additionally, technologies will evolve and get better in the future, making this expansion effective and efficient. While the telecom carriers may sound too optimistic about 5G for the time being, intensive competition amongst the industry players is sure to squeeze out innovation that can lay the path for 5G going forward.
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All Eyes on the Wireless Industry: Players Join 5G Bandwagon
Of late, many research reports by a plethora of data analytics firms have been surfacing, pointing out that 5G connections will be scaling new heights in the next 10 years. Examples include that of Strategy Analytics whose forecast reveal that the number of worldwide 5G connections will touch the 690 million mark by 2025. Additionally, mobile handset shipments are expected to be around 300 million globally in the same time frame. Meanwhile, a host of industry experts have jumped the bandwagon predicting promising numbers about the surge of 5G technology in the U.S. But are we being too optimistic?
What is 5G?
5G or 5th generation mobile networks or 5th generation wireless systems is the next major phase of mobile telecommunications standards after the 4G/IMT standards. According to Next Generation Mobile Networks Alliance, 5G networks allow data rates of tens of megabits per second for millions of users, 1 Gb per second simultaneously to people on the same office floor, increased spectral efficiency compared to improved 4G coverage, signaling efficiency enhanced, latency reduced compared to LTE.
Industry Trends
To date, almost all of the top wireless companies have initiated 5G trials. Verizon Communications Inc. (VZ - Free Report) has been quite active and is considered to have issued a radio specification of 5G to the industry carrier consortium 3GPP. Other telecom operators such as AT&T Inc. (T - Free Report) , T-Mobile US Inc. (TMUS - Free Report) and Sprint Corporation (S - Free Report) have either tested or are in the process of testing the technology. Additionally, communication equipment manufacturers like Cisco Systems Inc. (CSCO - Free Report) and Ericsson LM (ERIC - Free Report) have helped design the systems needed for 5G specifications. Some telecom companies are even targeting commercial deployment by 2020.
No 5G Standard Yet
The news surrounding the 5G technology at the moment is more about speculation than facts. As it is a futuristic technology still in its experimental stage nothing tangible can be ascertained, until its full-scale deployment by the telecom operators. Moreover, the lack of any particular standard may have led to different approaches in trials by the telecom companies which make it more complicated. So, the International Telecommunications Union plans to set a global 5G standard by 2020.and until there is any standard set, 5G may just be some grand PR stunt by the telecom companies.
Fiber is Complementary, Not a Substitute
One of the myths surrounding the next gen wireless technology is that it will completely substitute fiber. Verizon even termed 5G as ‘wireless fiber’, adding more hype to the myth. However, the truth is far from this as to reach the promised speeds of 5G, more fiber is needed – a fact well known by the telecom industry. The main reason behind this is for a high frequency 5G spectrum, the user has to be close to a base station to access promised speeds. Moreover, the base stations themselves will have to be connected by fiber as fiber can theoretically have unlimited bandwidth.
Thus, in order to expand 5G networks, more wireless base stations have to be put in place first, which in turn requires more fiber investment. However, given the sad state of last mile fiber infrastructure in the U.S., one has to question these optimistic statements about 5G.
The Bottom Line
While investments in fiber and improvement in last mile connectivity is necessary to touch the estimated 5G speeds, it is certainly not impossible. The huge number of wireless base stations that have to be maintained for the technology to be successful poses a serious concern. However, the base stations will be small and easily deployable. Additionally, technologies will evolve and get better in the future, making this expansion effective and efficient. While the telecom carriers may sound too optimistic about 5G for the time being, intensive competition amongst the industry players is sure to squeeze out innovation that can lay the path for 5G going forward.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>