Despite severe volatility in Wall Street, national wireless service providers have performed reasonably well so far in 2019. A growing U.S. economy speeds up demand for real-time voice, data, and video manifold. Forget 4G LTE (Long-Term Evolution) the stage is set for a 5G wireless race in the U.S. telecom space.
Special Features of Telecommunications Industry
Telecommunications is a necessary utility. The need for telecom in both rural and urban areas, and its role in the infrastructure of both developed and developing markets, will continue to grow. Therefore, telecommunication services can never be out of demand.
The industry is characterized as a barrier to entry. The lack of public airwaves (spectrum) in the telecommunications industry creates a high barrier to entry. The U.S. telecom market is controlled by just four national players, as regional low-cost operators are not eligible to compete with large carriers.
Furthermore, it is not easy to establish a new telecom carrier since it requires government approval to transmit voice, data, and video on public airwaves. Spectrum licenses are limited and therefore quite expensive. Moreover, the deployment of network infrastructure requires significant capital expenditure, which very few entities can afford. Thus, this barrier protects the profits of incumbents.
Strong Wireless Market
The major thrust for the wireless industry is coming from within the space as a result of continuous network and product upgrade along with innovation by its participants. The escalation in demand has encouraged wireless operators to undertake large network extensions while upgrading plans.
The rising demand for technologically superior products has been a silver lining for the wireless industry in an otherwise tough environment. Year to date, the national wireless operator industry has surged 19.8%, surpassing the benchmark S&P 500 Index’s gain of 18.2%.
With rapid growth in video and other bandwidth-intensive applications, the wireless industry participants are making considerable investments in LTE, broadband and fiber in order to provide additional capacity and ramp up Internet and wireless networks. The LTE network has the highest penetration rate of 91% in the North American region.
The impending 5G boom is likely to propel the wireless industry to newer heights. The success of 5G technology hinges on substantial investments to upgrade infrastructure in the core fiber backhaul network to support anticipated growth in data services.
Advantage of 5G Wireless Network
The United States is progressing well to lead the world in 5G — the next generation of wireless connectivity — which will enable faster speeds and low-latency wireless broadband services. 5G networks will be 10 times faster than 4G networks. Although 5G network is not likely to replace existing 4G standards on a large scale before 2020, several telecom behemoths are expected to launch 5G smartphones in this year.
Latency period of 5G data delivery will be in milliseconds. Further, 5G technology is designed to be more power efficient than any other standard wireless network available now. Consequently, 5G-enabled mobile devices are likely to last significantly longer than their 3G or 4G counterparts.
In this respect, the superfast 5G mobile networks will be of utmost necessity in managing the exponential growth of Internet-connected devices, popularly known as Internet of Things (IoT).
The 2G wireless network significantly increased voice traffic globally while the 3G wireless network enabled seamless Internet connectivity to mobile phone. Meanwhile, the 4G standard helped companies that thrive on mobile (especially smartphone) connectivity. Notably, 5G wireless network is likely to boost high-tech artificial intelligence-based products significantly.
Major 5G Network Operators
In the United States, all four national wireless operators – Verizon Communications Inc. (VZ - Free Report) , AT&T Inc. (T - Free Report) , T-Mobile US Inc. (TMUS - Free Report) and Sprint Corp. (S - Free Report) will start rolling 5G networks in 2019. Moreover, United States Cellular Corp. (USM - Free Report) , Comcast Corp. (CMCSA - Free Report) and Charter Communications Inc. (CHTR - Free Report) are also likely to follow suite.
Price performance of U.S. wireless operators in the past three months.
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