The Future of 5G adoption


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What is 5G Technology

5G is the fifth  generation mobile network and is a new global wireless standard after 1G, 2G, 3G and 4G networks that is designed to virtually connect everyone and everything together including machines, objects, and devices.

5G wireless technology is meant to deliver higher data speeds, enhanced reliability, massive network capacity, increased availability and a more uniformed user experience.  This technology is anticipated to impact most industries including the healthcare, transportation, manufacturing and retail sectors.

In the future, 5G will likely provide substantial enterprise opportunity. The ‘Internet of Things’ which refers to a system of interrelated, internet-connected objects that are able to collect and transfer data over a wireless network without human intervention, is expected to benefit from 5G adoption. Machine to machine communication is now possible through the use of the network which limits the need for human intervention and stands to further automate many processes throughout various industries.

5G is fast becoming the network of choice due to its performance and reliability. In the future, enterprise use cases will become a primary driver for growth. This creates an opportunity for the enterprise market to expand through digitalization and high performance mobile connectivity for applications, including connected vehicles, real time automation and autonomous robotics.

Current Global 5G Adoption

The adoption of 5G reached one third of global smartphone volumes in Q4 2020. This growth was helped by new launches such as the 5G iPhone, which saw Apple achieve a 47% share of the 5G smartphone market. The United States and China have seen the largest increase in overall 5G uptake in Q4 2020 at 53% and 69% respectively.

The pandemic has also accelerated the shift in focus to advanced wireless solutions. Organizations are now focusing on newer technologies such as 5G in order to bolster their ability to address current and future disruptions as well as create new solutions. Major industries now view advanced wireless technologies as foundational to their efforts to implement innovative technologies at the heart of their digital transformation efforts, including big data analytics, artificial intelligence, internet of things, cloud and edge computing.

Cybersecurity risk to 5G networks

While the transition to 5G presents a wealth of opportunities and capabilities, it also introduces new vulnerabilities and threats. The future 5G systems architecture may introduce an increased attack surface for malicious actors to exploit due to the higher level of interconnectivity associated with the network. To mitigate these risks, the development of 5G policies and standards serve as the foundation for securing 5G’s future communications infrastructure. Through global telecommunication standards-setting bodies, such as the Internet Engineering Task Force, and the International Telecommunications Union, technical standards and security controls are being developed to help influence the design and architecture of new technologies.

The impact of 5G on various sectors

While the 5G network is anticipated to have an impact on most industries, there are certain sectors that can be transformed through the use of the technology. Early adoption may provide organizations with a significant competitive advantage and may be a driver for improved productivity, efficiency and customer satisfaction.

The healthcare industry which has been at the forefront of the global pandemic has now been encouraged to find new ways of providing patient care. Through the use of 5G technology, healthcare systems can improve the quality of care and patient experience. Instead of only reacting to patients’ conditions, 5G networks can give healthcare providers the ability to provide more personal and preventative care. Remote monitoring technology can now be accommodated for more patients through the use of 5G technology, with healthcare providers receiving the data they need in real time in order to treat and diagnose patients. Following the pandemic, the telemedicine market is anticipated to expand and would be enabled through use of the technology. 5G can enable mobile networks to handle telemedicine appointments, allowing patients to be treated sooner while having access to specialist doctors who may otherwise be inaccessible. It can also allow doctors and other staff members to collaborate more efficiently.

Another sector that is anticipated to be transformed is the automotive and autonomous vehicle sector, as 5G enables automakers to create smarter vehicles that are better able to handle a vast array of new data and, as a result, a range of road conditions. The technology will enable vehicles to access real time data, creating a more complete picture of the road for a safer drive. The 5G network will also offer new application options, advancing the development of autonomous cars. Not only would vehicles be able to make autonomous decisions in the future, they will also communicate and cooperate with each other. Additionally, as major auto manufacturers move towards electric vehicle production, the network will facilitate the infrastructure needed to support the deployment of electric vehicles, such as recharge stations.

With regard to the manufacturing industry, 5G networks offer manufacturers the chance to build smart factories that will allow for higher flexibility, lower cost, and shorter lead times for factory floor production, reconfiguration, layout changes, and alterations. The network will be able to transmit data much faster as the factory floor will not only be more automated and operationally efficient but also more data driven, utilizing the data gathered to complete tasks and make decisions. This will significantly improve productivity as well as reduce cost of operations in the long term.

The 5G network is also anticipated to impact the retail sector. The technology would provide a platform for retailers to engage with customers in new ways as well as drive operational efficiencies. 5G in retail will serve as an accelerator for numerous technologies for example augmented reality (AR), that will improve the in-store customer experience in terms of personalization and engagement with products. The technology will also facilitate improvements in inventory management, store operations and labor productivity. This is especially relevant today as the Covid-19 pandemic has affected supply chains, customer traffic patterns and customer engagement in stores.

Investing in 5G Growth and Adoption

The massive shift towards the 5G network serves as a substantial opportunity for those looking to invest in innovation. While the cost of 5G adaptation will have to be taken into consideration given current global economic conditions, there are potential growth opportunities for 5G-related stocks as well as the sectors that adopt the technology at a faster pace.

Additionally, while 5G-related investments do provide growth opportunity, it should be noted that the industry is still in a relatively transitory phase, the benefits of which may be seen in the medium to long term. Due to the novelty of the industry, having a diversified approach can provide investors with exposure to the rapidly evolving technology while at the same time maintaining exposure to other sectors.

 Source: Fitch Ratings
Source: Bloomberg


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