Happy New Year 2022 to all my readers at Breezy Briefings!
It could be about four years ago, if I recollect correctly, that I wrote a detailed thematic report on 5G highlighting how it will improve our productivity. I believe it is an appropriate time to revisit the 5G theme.
In most of the developed countries, 5G is already rolled out but we are yet to see the impact of this monumental change in day-to-day applications. India is one major country that is still waiting for its rollout. It is believed it will happen soon. It will be a massive shift in India - for the better - as telecom companies will benefit the most. They will happily raise prices and the consumers will (hopefully) gladly pay as well. India has the cheapest data providers in the world and the public is used to using copious amounts of data. Most of this data has been useless as connectivity issues have been killing the generosity of the data providers. All that will change under 5G and it is estimated to be 100 times better (i.e. faster) than what it used to be.
The 5G rollout was in three phases. Phase 1 - infrastructure phase: building network towers and laying fiber optic cables. This period started in 2017 and it’s still going on still in many countries including India.
Phase 2 - device phase: it is when the network begins to go online. We started to see a surge in the usage of smartphones and other internet devices. There were delays in this space due to the pandemic. For eg: Apple 12 which supports 5G was delayed by two months since its scheduled delivery timeline.
Phase 3 is the service phase. This is when we will see applications running on these networks that would not have been possible on 4G. There may be isolated usage of this somewhere but this has yet to become ubiquitous.
While we are well into phases one and two, 2022 will be the year that I reckon will gather full steam. The proof is already there as there have been higher sales of 5G devices in the Q3 than 4G devices. While we will still continue to use 4G, 5G will stand out as the dominant wireless technology and the industry will continue to pave way for the faster 5G network technology.
Very similar things happened when the industry transitioned from 3G to 4G. 4G actually went live in the 2009 to 2010 period. It doesn’t happen overnight. The real applications of 4G started to play out only in 2015-2016. That’s when 4G devices started to outpace 3G devices.
The best use case started to emerge with Facebook (now known as Meta). You might be surprised to know that more than 80% of Facebook users access the platform via a mobile device now. It was just impossible to watch a video or scroll photos through a 3G network. You just didn’t have the bandwidth. Even riding-hailing companies like Uber and Lyft became prominent thanks to 4G networks.
What sort of applications or services can we expect in 5G? It was an eye-opener for me when I attended the Blockchain World Summit in Abu Dhabi, 2 weeks ago. Come 2022, we are going to witness an explosion of augmented reality (AR) applications running over 5G networks. Amazon already has a useful AR feature that lets you visualize furniture in your living room and even try out dresses virtually.
Very soon, our smartphones will give way to augmented reality glasses. It could be the next electronic consumer craze. The current glasses when worn make you look as if you are from another planet but soon that will change to look smaller, lighter and trendy like a normal pair of glasses. I’m sure Apple is already at the forefront of this technology. Everything that we do through a smartphone will eventually be done through a pair of glasses.
Mobile data traffic is almost 8 times higher in the last five years but when the 5G rollout happens fully the multiples will be much higher. This is the power of exponential growth. We progress linearly at first. Then it hits an inflection point. And later it takes off like a rocket - exponentially.
The beauty about 5G is it has tremendous capacity and nearly zero latency. There will be a tremendous proliferation of heavy-duty social media applications, video streaming, gaming and many applications in the medical/healthcare space.
Companies like Tanla and Subex stand to benefit a lot too. We should expect them to come up with many new and convenient user applications too.
So, there we go. Thanks for reading Breezy Briefings. If you enjoyed this, I'd really appreciate it if you could take a second and tell a friend. Honestly. It makes such a big difference.
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Abraham George is a seasoned investment manager with more than 40 years of experience in trading & investment and multi-billion dollar portfolio management spanning diverse environments like banks (HSBC, ADCB), sovereign wealth fund (ADIA), a royal family office and a hedge fund. Currently, he is setting up a hedge fund where foreign citizens can invest in Indian growth stocks like Tanla operating in hyper-growth markets like CPaaS.