A world with no boundaries, no wires, no speed bumps and no limits. A world where everything talks to each other and anything is possible. In the not so distant future this world will be a reality. It’s called 5G.
5G is almost here and we’ve been waiting patiently for its arrival. At the moment our mobile network towers run on 4G. The “G” stands for “generation”. We are in the 4th generation. Mobile wireless phone technology started with 1G in the 1990s, then progressed to 2G. This was a huge step and allowed text messaging between two mobile devices. Following that was 3G, which gave people the ability to make phone calls, send text messages and browse the internet in a basic manner. 4G came next and enhanced the experience. It allowed video, web, send text messages and phone calls. LTE which stands for “long term evolution” was added to 4G making it the quickest form of 4G available.
The step from up 4G to 5G is a big one as it opens the door to the next dimension. It will allow people browse the web and do everything they can do now but at an even quicker rate. But that’s not main attraction, 5G will enable thousands of internet-connected devices to talk to each other. It will create a web of interconnected devices all talking to themselves on their own. Imagine your fridge being able to talk to Amazon to order more milk because you’re empty. Or your car being able to talk to other cars behind and in-front so that you won’t crash. Smart devices is what they are called. They will be designed to capture and utilise every bit of data we share our everyday lives. These devices will interact with us and help us complete tasks. The end result is something called “IoT” which is short for Internet of Things. (Click below)
The Internet of Things refers to the entire web or network of smart devices that are all connected and communicate between each other on the back of 5G. The IoT will transform entire cities into Smart Cities. Cities that will use smart devices to increase operational efficiency, share information and improve both the quality of government services and welfare. They will support a productive, accessible and liveable city. It’s the cutting-edge 5G technology that allows this to occur. The download speeds of around 1GBps. To see what we mean by IoT click on the video below.
Who is building 5G?
You guessed it. Telstra are first carrier to be building a 5G network. If you remember back a few years ago, Telstra landed a deal with the Government to sell its ancient copper wire network in return for $20bn. Now it’s plainly obvious why the telco was more than happy to hand over its copper wire network. 5G of course. Telstra formally launched a 5G Innovation Centre on the Gold Coast to house tests of technology based on the next-generation wireless standard. It switched on the first 5G-enabled Wi-Fi hotspot in the world, allowing people in Gold Coast to enjoy 5g while Telstra evaluates the technology. Ping tests showed 5G latency at 6 milliseconds compared to 20 milliseconds for Telstra’s 4G network. This reduction in latency is a huge difference in gaming. Telstra was able to achieve speeds of 10 gigabits per second.
Telstra is now hard at work, upgrading its network and ploughing huge sum of money to upgrade towers. It plans to offer 5G in 2019. The telco has the biggest market share but will have to spend big to retain it as Optus are fast moving into the space as well.
What about the NBN?
You’re probably thinking, why do we need the NBN when we’ve got a brand spanking new 5G network which runs 200 times the speed? I mean the fastest NBN speed available to most Australians is 100Mbps while 5G could reach up to 20Gbps – 200 times faster. The reason is, both networks will actually complement each other, not so much compete against each other. 5G won’t replace NBN either. The majority of Australia will have no 5G mobile coverage and NBN will be the only connection available. Coverage of 5G is a concern. Telstra says that it can cover less than 5% of the total population straight away. To rollout 5G across the country is very expensive. In-fact for Europe, it will cost about €300bn-€500bn. 5G is based on smaller radio waves than 4G but can carry huge amounts of data. The waves don’t travel far so many small cells will be built, closer together. While Australia is not as populated it has the same land size and hence the same costs. It will however increase the number of wireless-only homes but it won’t be enough to replace the entire NBN fixed network. 5G at higher speeds will be less competitive than the NBN on price. As you can imagine, 5G will be super expensive and will have data caps in place. So you see, 5G isn’t quite the NBN killer as everyone predicts it is.
All things Telstra
At the moment Telstra is stuck in a sentiment hole and it’s facing headwinds from all angles. Rising competition in both broadband and mobile is shrinking margins and revenue. Part of the reason why Telstra’s share price is languishing below $3. We think all this downside is now well and truly factored into its share price. Expectations for Telstra are low at a time when Telstra is cost cutting, unveiling new unlimited plans, becoming more competitive and investing heavily in this 5G network. All positive things going forward. All Telstra needs to do is meet expectations. In a few years 5G will be fully functional (2019-2020) and Telstra will be back in box seat. So the race is on to roll out 5G for mobile users. At the moment it’s between Telstra and Optus. Smart Cities, IoT, driverless cars and smart home devices will rely on 5G because of its almost-instant speed ability, but again is still some time away. Telstra will start reaping the benefits from its 5G network after 2020. At the moment, Telstra is looking mighty cheap and attractive. If it can release a positive result come August, the stock will quickly re-rate.
Impact on us
5G will create a quantum shift in the way we conduct business, lifestyle and day to day living. It goes a lot deeper than just speed and bandwidth. Fast wireless technology in the big cities will transform the way we live and open the door to life-changing innovations. From driver-less cars to smart-cities and industrial automation, our world will become connected.