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Brave new world of 5G investing

Investors should be aware of the technological opportunities and disruptions that 5G can bring.

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5G is a key enabler of the Fourth Industrial Revolution and this trend is only going to accelerate in the years to come.

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James Cheo

5G WILL be a game changer for people, companies and countries in the same way that electricity was for the industrial revolution. Investors who haven't considered what it means for their portfolio, had better do so quick because it's just around the corner.

Leapfrogging or simply maintaining market share requires being on the front foot. Already, the world's leading companies have their research and development teams in full swing to understand and harness the opportunities and threats this will bring to their industries and business.

It was just a decade ago we transited from 3G to 4G, which allowed us to access high quality Internet content on our mobile devices.

What makes 5G attractive is simple: it's fast. It will be 10 to 15 times faster than broadband and potentially more than 50 times faster than 4G. Imagine downloading a movie in seconds. It could also mean an end to running out of space on your mobile devices, as more data can be stored in the cloud.

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However, 5G goes beyond speed and capacity. The game-changer is 5G's ability to eradicate latency or "lags". Currently, 4G network takes about 40 milliseconds, but 5G can reduce that to just a single millisecond. That's faster than a blink of an eye.

Here are just some of the areas where it will affect our lives, and your investment decisions:

5G KEY ENABLER OF FOURTH INDUSTRIAL REVOLUTION

The advent of electricity 200 years ago was the starting gun for the industrial revolution, and expectations are no less for 5G.

The First Industrial Revolution was powered by the steam engine while mass production and machines drove the Second Industrial Revolution. The Third Industrial Revolution was about personal computers and the internet. The Fourth Industrial Revolution builds on the earlier industrial revolutions - combining machines with rising computing power.

5G is not an incremental upgrade, but a platform for innovation creating exponential productivity gains across a wide range of industries. 5G is the catalyst in the fourth industrial revolution that will enable the "Internet of Things" - setting the stage for machines and sensors to communicate over the cloud.

While 4G was about the consumer experience, 5G is really about accelerating commercial productivity gains to the extent that it will enable paradigm shifts for countries' economies. The instant responsiveness of 5G technology will be the key enabler of the Fourth Industrial Revolution.

SELF-DRIVING CARS TO BECOME A REALITY

5G will allow autonomous vehicles to become a reality. With no latency, all autonomous cars and traffic infrastructure can be connected on the cloud and communicate with each other instantaneously.

For example, a self-driving car can see traffic conditions miles away due to the data it gets from other vehicles from the cloud. With instant data, autonomous cars would detect another vehicle's intention to change lanes, adjusting its own speed to compensate. In an ideal world, a fully connected world of autonomous driving would reduce, and possibly eliminate traffic accidents in the future.

Imagine with autonomous driving, there is no longer a need to park a car. A self-driving car will become an asset, as opposed to a liability - picking up passengers and earning income for you while you're not using it.

Ride sharing could become an efficient and cost effective mode of transportation. With predictive and forecasting ability of autonomous driving, traffic jams would be a relic of the past.

Autonomous driving spurs massive data and infrastructure growth. Connected cars need to generate a significant increase usage of data. This presents significant opportunities in areas such as data management, cloud computing, and next-gen 5G low latency-high bandwidth communication.

SPRINGBOARD FOR SMART FACTORIES

For the factories of the future, 5G will connect machines, processes, robots and people to create a more flexible and responsive production capabilities. Currently, more than 90 per cent of factories' connectivity is on wired connections which are reliable, but lack the flexibility to meet the fast-changing consumer needs.

5G will be the springboard that gives the smart factory a leap forward from more traditional automation to a fully connected and flexible system - one that can use a constant stream of data from connected production processes to learn and adapt to new demands from their consumers.

Take, for example, Nokia's factory in Oulu, Finland. A complex set of sensors track items at each stage they are assembled. If something goes wrong, technicians can more quickly identify the issue before it hits the finish line. Supplies can be automatically replenished by fully autonomous and independent robots whizzing around. This in turn reduces factory downtime and speeds up production.

The true power of the smart factory is a flexible system that can self-optimise performance across a broader network, self-adapt to and learn from new conditions in real time, and autonomously run entire production processes.

CONNECTED HEALTHCARE

Globally, the healthcare system is under enormous pressure as the world's population becomes older. The geographical distribution of healthcare services is skewed; and, typically the places that need the most healthcare services are under-served.

5G can address some of these issues, such as enabling skilled surgeons to do complex surgeries in a different location from their patients. Operating such delicate surgical equipment requires precise and real-time response that 5G can offer.

5G can, in part, allow efficient use of limited resources to improve access to healthcare services to people regardless of their geographical location.

AN ACCELERATING TREND

5G is a key enabler of the Fourth Industrial Revolution and this trend is only going to accelerate in the years to come.

Investors have to be aware of the technological opportunities and disruptions that 5G can bring. Businesses that do not adapt their strategies to 5G will be disadvantaged to companies that do.

As early as this year or the next, telcos in many countries will start to offer some 5G services while major brands will announce their new 5G-enabled smart devices which is going to encourage consumers to upgrade their mobile devices.

5G is also about investment in technological hardware and software (cloud computing and storage, data management, telecom infrastructure and towers). Crucially, 5G is about what it can enable with the mega trend of industrial revolution 4.0 - self-driving cars, smart factories and connected healthcare.

We're on the cusp of a technological revolution and investors who are not alert to the groundswell could miss out on a generational opportunity.

  • The writer is Chief Market Strategist, Southeast Asia, HSBC Private Banking