Will Governments Privatise Your Connectivity?

In 1991, Finland launched a revolutionary network.

For years, mobiles were bricks with limited use. But thanks to 2G technology, the reach and usability of mobile phones drastically increased.

As before, you call someone from your mobile. As an added feature, you could also send someone an SMS, or a text.

Then by 2001, 3G first commercially launched in Japan. It was of course faster than 2G. It also gave mobile users the chance to jump online. I can still remember the thrills of using Google on my mobile for the first time.

Today if you look down at your smartphone, you’ll see a 4G symbol in the left hand corner. This fourth generation improves web access and introduces HD mobile TV and video conferencing.

For consumers like us, more features are always nice. But what really matter is the ability to access and send more data.

As long as we can do that, most of us will be very happy with each new generation. But there will be a point where we can send and access so much data, such a network will extend far beyond smartphones.

Such a network will connect the whole world and everything in it. China is leading the race to develop 5G. But the US won’t let them win without a fight…

Trump sweating in race against China

He looks confident on TV. But Donald Trump is scared of China.

He’s not scared of their tariff retaliation. He’s not scared of their growing economy either, which should surpass the US economy in the coming years.

He’s scared of China’s technological ability.

While the US has Silicon Valley, China has multiple tech hubs peppered throughout their cities. There’s one in Beijing, another one in Shanghai. All up, there are 17 national tech zones, in which the government fosters technological advancement.

And for the past couple of months, Chinese and American telecoms have been in a hotly contested race. Both are trying to rollout a 5G network first.

Most believe China has pulled ahead, which according to Bloomberg, has Trump concerned.

South China Morning Post (SCMP) wrote:

Huawei Technologies is forging closer commercial ties with big telecommunications operators across Europe and Asia, putting the Chinese company in prime position to lead the global race for next-generation 5G networks despite allegations by the United States that it poses a security threat.

But why does it matter who rolls out the technology first?

The battle for 5G

American telecoms have been touting 5G as the latest and greatest. It will be 100-times faster than 4G. Such speeds will make 4G seem like those days when mobiles were just bricks.

Bringing 5G to consumers first has huge financial rewards. Because consumers are generally loyal to their carrier, if one can offer 5G first, encouraging people to switch, they can potentially carve a huge share out of the market. 

But finances are the last thing on Trump’s mind. He’s far more concerned with a super-fast data highway being watched by spies.

Bloomberg writes:

The U.S. government is also trying to make it easier for American companies to compete with China. The Federal Communications Commission voted this month to ease environmental and historic reviews for companies installing some antennae for 5G service. Ajit Pai, the agency’s chairman, said the vote amounted to “concrete action that will help the United States lead the world in 5G.”

In addition, the FCC is moving to block some spending by carriers on gear from companies posing a national security threat — an initiative that could strengthen barriers confronting Chinese equipment makers eager to sell in the U.S.

There are even talks of Trump taking over the 5G roll out himself. But precedent would say government intervention would just slow down any kind of roll out rather than speed it up.

But SCMP explain, even a private 5G network is handy for US policy makers. Such a private network could be ‘designed to counter the threat of China spying on calls’.

In terms of technology, the US is worried that China might have the competitive edge [in 5G],’ He Weiwen said, a senior fellow at the Centre for China and Globalisation. ‘The fact the [telecommunications] industry development is supported by the government has also caused unease.

But whoever gets there first, as soon as 5G rolls out commercially, so many investment opportunities will open up.

How to get fat returns from super-fast 5G

I’m assuming 5G isn’t new for you. You’ve probably heard about it in the media multiple times.

But what is it and what will it do?

5G is simply the next generation of wireless technology.

While 2G, 3G and 4G focus on mobile radios, 5G covers an entire ecosystem of radios. Not only will this send data to and from your phone faster. The 5G net will be cast far wider.

Instead of just smartphones, 5G will open up opportunities for driverless cars, VR headsets, delivery drones, and billions of interconnected devices inside your home.

Instead of just smartphones, 5G will open up opportunities for driverless cars, VR headsets, delivery drones and billions of interconnected devices inside your home. 04-04-2018

Source: Bloomberg
[Click to enlarge]

But not everything is easier with 5G. For example, unlike 4G, 5G operates on a higher frequency. Not only can this not travel as far as 4G’s low-frequency, it has trouble getting around obstacles.

That’s why, as carriers build out the 5G infrastructure, they’ll need to build more antennas closer together. Wired predicts you’ll see mini-antennas basically everywhere.

Not only does this mean there’s an opportunity to invest in mobile carriers who are first to roll out 5G. The case also grows for investments into driverless cars, VR and a whole host of other connective technologies.

For all you know, we could be heading into a futuristic world much quicker than you think. That is, if the government doesn’t stunt growth and innovation by taking over the whole damn thing.

Your friend,

Harje Ronngard,
Editor, Money Morning

Money Morning is Australia’s most outspoken financial news service. Your Money Morning editorial team are not afraid to tell it like it is. From calling out politicians to taking on the housing industry, our aim is to cut through the hype and BS to help you make sense of the stories that make a difference to your wealth. Whether you agree with us or not, you’ll find our common-sense, thought provoking arguments well worth a read.

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