These are the stocks to watch as 5G comes closer to rolling out in Australia

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The introduction of fifth generation (5G) wireless data technology will impact a range of tech stocks — especially those providing Internet of Things services, says former Telstra chief technology officer Hugh S. Bradlow.

Every 10 years, for the past 40 years, the telecommunications industry has launched a new generation of cellular mobile technology.

The first generation (1G) in about 1980 was analog cellular telephony. 2G came in 1990 and heralded digital cellular telephony with the addition of messaging (SMS). 3G arrived in about 2000 and brought the mobile Internet by offering (in addition to telephony and messaging) a high-speed packet data channel.

In 2010, 4G upped the speed and lowered the latency of the packet data channel which spurred mobile video offerings as well as over-the-top services such as Messenger and Whatsapp.

2020 is anticipated to bring 5G — but what is it?

Answering that simple question is quite complicated.

We can look at it from two perspectives: new applications you are trying to address or new technologies you are aiming to introduce.

5G will drive adotion of Internet of Things

From an application perspective, the “new, new thing” is the Internet of Things (IoT).

Consider a scenario where you want all cars to report their activities to the city’s traffic control systems as well as constantly communicate with each other.

That is a huge amount of signalling and 5G is intended to address this type of problem, as well as provide very high network speeds for applications such as ultra HD video.

From a technology perspective, each new generation of technology has involved a technology change in the radio network (or “air interface”).

This is expected to be the case for 5G as well because, due to the ever increasing demand for data, there is a desperate need to lower the cost-per-bit delivered.

However, the international standards bodies which decide such matters are dominated by a small number of significant players – in this instance Qualcomm, Huawei, Ericsson and Nokia.

They all have their own vested interests and so it is extremely challenging for a new player to radically change the direction of the technology.

In the case of 5G, a Silicon Valley startup called Cohere Technologies has a much more efficient solution for the air interface than the prevailing technology but are struggling to get the standards bodies to accept it.

At the moment there are various compromises being worked through in the standards bodies which I suspect will end up with a not particularly satisfying solution.

Another way of lowering the cost-per-bit is to increase the bandwidth of the radio channels but that requires spectrum.

Today mobile networks operate between 700MHz and 2600MHz because you can’t rely on line-of-sight communications for a moving user. Lower frequencies have better propagation characteristics and are thus preferred.

Crowded airwaves

However, these airwaves are becoming pretty crowded, so the industry is looking at higher frequencies where bandwidth is more plentiful. The big change in this regard for 5G is the use of millimetre wave frequencies (at around 60GHz). There is plenty of bandwidth at these frequencies but you need line-of-sight between the user and the antenna, something that is very hard to achieve in a mobile environment.

All this complexity and uncertainty has not stopped carriers around the world from competing with each other to make 5G rollout claims. For example, Spain’s Telefonica recently announced they will deploy 5G in Segovia and Talavera de la Reina this year, while Japan’s NTT Docomo in Japan state they will deploy 5G in 2020 for the Tokyo Olympics.

The problem with this frenzy of marketing claims is that no one – least of all customers – has a clue what what they are talking about.

The carriers’ marketing departments trumpet Gbps speeds, 1-5ms latencies, and 100 times more connected devices on the network which are the headline goals of 5G. But the point is that not all 5G deployments will achieve these outcomes.

None of the announcements indicates what speeds will be achieved on their actual rollout, which devices (mobiles, hotspots, etc) will work with the deployment, whether mobile as well as fixed services are supported, or the frequencies in which they will deploy the service (sub-6GHz or millimetre wave).

So for example, the Gbps speed claims would be based on millimetre wave systems which probably will only work on fixed wireless deployments and not for mobile users. Just to add to the confusion, some carriers are rushing to rebrand the evolution of 4G as 5G, just as they did with 3G to 4G.

The short message is be prepared for lots of confusing hype before we actually see useful 5G services sometime next decade.

Which other kinds of sectors could benefit from 5G?

Here are a few:

Junior telcos such as Amaysim (ASX:AYS), Spirit Telecom (ASX:ST1) and prepaid provider TPC Consolidated (ASX:TPC).

Enice (ASX:ENC) has its eye on China, providing infrastructure to the nation’s largest three telcos that may lead the charge for 5G while United Networks (ASX:UNL) focuses on a white-label solution for global business roaming.

Aptly named 5G Networks (ASX:5GN) listed in November and is building its own fast wireless broadband network and cloud computing service.

Hugh S. Bradlow (@hughbradlow) is President of the Australian Academy of Technology and Engineering. He is also a independent Non-Executive Director of Silicon Quantum Computing.

He was previously Chief Technology Officer and Head of Innovation at Telstra, responsible for the R&D of new technologies and their introduction into Telstra’s business.

This article first appeared at Stockhead, Australia’s leading news source for emerging ASX-listed companies. Read the original here. Follow Stockhead on Facebook or Twitter.

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