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A Primer on 5G

Wilshire Phoenix a primer on 5g

Authored by Wade Guenther and Bill Herrmann

The 5th generation of cellular network technology (5G) will enable consumers to download data at significant speeds, shorten delays, and reduce buffering times. 5G uses high-frequency millimeter waves, allowing faster access from a connected device to a wireless network. These small, high-frequency wavelengths make it easier for large bandwidth, transmitting data sometimes over 10 gigabytes per second.

5G download speeds will be a stark contrast for those in the early-2000’s that downloaded music from services such as LimeWire or Napster and patiently waited, as it often took quite long (in some cases, hours) to download a single media file.

Over time, each new generation of wireless technology has improved in terms of download speeds and connectivity.

Wireless Communication Timeline

1979 –  The first commercially automated cellular network (1G) was launched in Japan by Nippon Telegraph and Telephone, initially in Tokyo’s metropolitan area.

1992 –  2G used spectrum more efficiently to serve more people and deliver more applications and data, such as text messages.

2001 – 3G improved communications by supporting even more diverse applications, including mobile internet access and streaming audio and video.

2010 – 4G delivered even faster speeds and further improved experiences for consumers that used data-intensive applications such as mobile gaming and video calls.

2019 – 5G delivers lower latency, increased speed and is expected to handle the exponential growth in demand for capacity, connectivity, and capability.

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The Internet of Things (IoT)

One concept that will accelerate under 5G is the IoT, which is the extension of Internet connectivity to physical devices.

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5G will change how consumers interface with their phones and how they interact with nearly all their devices (personal belongings will soon become devices). Some believe that the IoT is going to connect 75 billion devices by 2025 (1).

When will 5G impact our lives?

Mass rollout of 5G will require significant infrastructure build. Carriers like Verizon and AT&T currently have 5G capabilities in cities such as Atlanta and Chicago, but the technology has not been utilized by many, especially those living in rural areas. However, many experts believe that the material impact 5G has on society will be years later. The World Economic Forum previously cited a report that stated how 5G technology would produce $12 trillion of new goods and services by 2035 (2).

Wilshire’s Companies to Watch

Skyworks Solutions (Nasdaq: SWKS) is in a unique position by offering a portfolio of products that address the innovative requirements for 5G infrastructure, such as small cell amplifiers and high-isolation switches.

Equinix (Nasdaq: EQIX) is a data center real estate investment trust (REIT). The company’s purpose is to build or buy data centers with debt or equity. The firm has 200+ data centers across five continents that leverage a vendor-neutral colocation and interconnection platform. The company makes it easier for mobile users and mobile carriers to access rich networks and cloud ecosystems that support 5G.

Qualcomm (Nasdaq: QCOM) produces a variety of semi-conductors to handle 5G capabilities for phone providers like Samsung and Xiaomi. Qualcomm is also actively pushing to establish 5G standards and innovation in spectrum licensing and chipset design for mobile and IoT.

Ondas Networks (Nasdaq: ONDS) provides wireless connectivity solutions for private industrial internet applications, typically located at the network edge. Their platform provides broadband solutions to private mission-critical industries, i.e., railroads and utilities that have historically functioned on narrow-band networks.

Depending on one’s risk appetite, and because of this nascent technology, it may be better to look at thematic ETF as a pick-ax to 5G exposure instead of ‘stock picking.’ Our favorite is from Defiance ETFs and is listed on NYSE Arca under the ticker $FIVG. The popular ETF has returned over 37% during the last year, provides extensive exposure to 5G’s most prominent players, has a low fee, and is highly liquid.

In closing, from smart care to augmented reality/virtual reality functions; from manufacturing to the automotive industry to medicine and healthcare, the impact of 5G could be felt across many spheres, including enhanced mobile broadband and mission-critical services (3). Widespread 5G connectivity has the potential to make information universally accessible, foster a digitalized sharing economy, transform diverse industries, and enhance people’s quality of life.

¹ https://www.statista.com/statistics/471264/iot-number-of-connected-devices-worldwide/
² https://www.weforum.org/agenda/2018/01/the-world-is-about-to-become-even-more-interconnected-here-s-how/
³ https://www.defianceetfs.com/fivg