The promise of 5G

Find out where we're headed with the next generation of wireless technology

14 Jun 2018

There has been a large emphasis on the incoming fifth generation of wireless technology, also known as 5G. Kevin Dennean, IT & Telecom Equity Sector Strategist from the UBS Chief Investment Office (CIO), writes that it will increase broadband speeds and lower costs.

In the future, 5G will be used as an alternative broadband access technology, potentially spurring new competition. In the longer term, it is expected to allow for autonomous driving, the massive internet of things (IoT), telemedicine, as well as other applications.

As of now, 5G is currently defined more as a set of requirements than a new technology, but this open-ended definition of 5G reflects that this next generation of wireless is seen by proponents as a platform. The 5G platform will allow for new applications to exist, in addition to the possibility of operating multiple applications under the same infrastructure.

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Where does the development of 5G stand today? What challenges does the technology face? And what are the associated investment opportunities? Find out in a UBS On-Air interview with Kevin Dennean, IT & Telecom Equity Sector Strategist from the UBS Chief Investment Office.

Further, it will permit greater agility and efficiency, as carrier systems will operate more similarly to modern cloud service provider networks. One of the potential new applications, fixed wireless access (FWA), will provide high-speed broadband to consumers and open new business areas for wireless carriers, which will be able to compete with the incumbent wireline and cable providers. This application is on track to become the first commercially deployed 5G service, with initial deployments planned for this year.

5G has been criticized due to the fact that it does not significantly modify the radio access network in terms of technology. However, widespread deployment of it will require the underlying network to evolve and new technologies to be developed. This is because current wireless networks generally utilize low band spectrum, which offers relatively long-distance transmission but at lower speeds. 5G will offer greater speeds, but at the expense of reach. Thus, it will depend less on traditional macro base stations, such as cell towers, but instead on small cells, which will exist in greater number. These small cells are much cheaper, and can be managed remotely as well. Therefore, carriers will have unparalleled scale and flexible control, while also decreasing costs.

The platform approach of 5G is different from previous generations of wireless technology, but it is the key reason allowing for multiple applications on the same infrastructure. Potential applications may have broad market impacts, including the possibility of opening up new revenue streams for wireless carriers and replacing the traditional macro base stations with the faster and cheaper small cells. Based on major public announcements by global telecom operators, the market for 5G is still growing, with current revenue of approximately $2 billion, but this number is expected to reach $150 billion by 2025, growing by 75 times.

Read the CIO report, Longer-Term Investments—Enabling technologies, to learn more about 5G and other technological change makers.

Is your portfolio prepared for the impacts of transformational technologies? Together we can find an answer. Connect with your UBS Financial Advisor or find one.

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