This article originally appeared on Forbes by Miriam Tuerk.
One of the hottest topics at Mobile World Congress this week is 5G networks. The benefits are being widely touted by network providers: faster download speeds on cellular networks, and support for new technologies such as self-driving cars. The size and number of the “small cells” which power 5G also means that they will be placed anywhere in streets and buildings. It is going to be the biggest shift in telecommunications since the invention of the cellphone.
Most of the major U.S. networks have already announced plans for 5G networks, including Verizon, AT&T, T-Mobile and Sprint. Service and infrastructure providers like American Tower (which announced its Q4 2018 earnings today) are rolling out new 5G infrastructure to support this. American Tower’s new “Smart Pole,” an attractive street-level smart pole, will extend its service footprint from 57,000 telecom towers, to hundreds of thousands of Smart Poles that will support tomorrow’s 5G networks.
The potential disruption for this technology goes far beyond being able to watch movies on your iPhone. 5G is what will really kick the Smart City infrastructure into high gear, which will revolutionize America, driving new service and industries. For investors, this is a huge opportunity over the next 5 – 10 years.
Realizing The Potential Of 5G Networks
Telecom companies face the constant need to invest in new infrastructure, while staying competitive on cellphone costs for customers. To truly realize the potential of 5G networks, telecom operators must find cost-effective ways to roll out 5G that won’t increase the end-cost to the consumer.
While 5G small cells are wireless, one cable remains: the power cable. That cable is very expensive. Long distances in rural areas and concrete in urban areas increase the cost of connecting to the electric grid. To achieve maximum benefit, 5G networks need to cut that last cord and be wirelessly powered. Otherwise, the 5G rollout will be too costly and slow. Construction disruption will impact our cities. Remote and rural areas will still be surfing on slow speeds and will fall even further behind in the digital revolution.
By powering 5G telecom infrastructure using wireless power, such as solar-driven systems that are reliably managed via remote cloud-based controls, these poles can be installed in more locations and at a much lower cost. There is no need for major construction or involvement of the power company. This lower cost makes it more economically viable for telecom providers to install 5G in both rural and urban areas. This not only provides a greater market share for networks and telecom providers, but improves connectivity for remote communities.
How 5G Can Reinvigorate Rural America
One of the biggest societal challenges currently facing America is the rural-urban divide. While urban centers on the West and East coasts have flourished over the past decades, living standards in more rural areas have fallen.
According to the Federal Reserve, 83% of 25 – 54 year olds in urban areas were employed at the end of 2018, whereas in rural areas it was lower than 80%. Many of the manufacturing jobs that rural America used to rely on are already on the way out, or are likely to be made obsolete by artificial intelligence over the next decade.
Connectivity across the entire country, along important transportation corridors, across farmland, and other key business centers, will deliver the promise of revitalizing these dying communities.
5G wireless will give businesses and individuals greater access into the digital economy, thereby providing new opportunities in industries where there are a growing number of jobs. By removing this infrastructure barrier, small and medium-sized businesses may choose to relocate away from larger urban centers, to where they can find real estate and hire a workforce at a lower capital cost to the business.
5G will also improve services in these communities by driving the adoption of Smart City infrastructure. Rural street lamps, which are often uneconomical for local governments to maintain, will be powered by solar and monitored via 5G wireless networks for outages – which will ensure that they stay switched on. Security cameras will help to prevent crimes in rural areas where police resourcing is often limited, for instance, the dumping of hazardous waste, theft of crops or timber, and poaching.
Wireless 5G will also change the way our cities and towns look. Drive down any street today, and you see telecom wires hanging from wooden poles carrying cable TV and internet services into homes. They blot the landscape and are difficult and costly to maintain. It only takes a storm for a few trees to fall down, and a whole community can be without power or Internet for days. With 5G, these wires will be replaced by simple, discrete poles, each placed 100 – 200 meters apart.
Growth In New Industries
5G presents a huge business opportunity in the telecoms market. The companies set to benefit most from this revolution are the telecom infrastructure companies, or cell tower REITs, which own cell towers and rent space on them to the network providers like AT&T or Verizon. Crown Castle International and American Tower currently own 40 – 60,000 tower sites each in the U.S. The latter has already formed an alliance with Phillips Lighting to create its Smart Pole; an LED street lights embedded with 4G, which will eventually become 5G.
At the same time, the delivery of Smart City infrastructure presents new revenue opportunities. New market entrants are looking at ways to monetize the sidewalk. Cities will also look to monetize smart infrastructure and services as a way to offset their operating costs.
As every big change creates disruption, so too can they present threats to incumbents. Today’s telecoms giants may not retain their market share. Technology upstarts are already looking at ways to disrupt the telecoms market, for instance, BRCK, an African startup backed by Steve Case is offering free public Wi-Fi in Kenya. At the same time, with the cost and size of the infrastructure for telecom reduced through wireless, network companies and internet providers might forego renting space from a cell tower REIT and start to build their own, independent 5G networks.
If these 5G networks are powered by off-grid solar, then solar manufacturers will see an increase in demand. The energy demand for most IoT devices today is low enough that they can be reliably powered by solar. For instance, today a security camera only requires 7W of power, compared to perhaps 200W back in the analog days. Remote control of these devices through 5G networks means that they can be managed to reduce power consumption, preserving energy. This will make Smart City infrastructure more reliable than traditional infrastructure.
What is clear is that management of these devices will be critical to the reliability of the network. With tens of thousands of devices, there needs to be a way to monitor and manage wireless 5G infrastructure. This presents an opportunity for Software-as-a-Service cloud-computing companies like Microsoft Azure to provide automated, AI-driven management services to not only manage the 5G networks, but the millions of IoT devices that this technology will provide a foundation for.
20 years ago, no one could have imagined the impact that cell phones would have on our daily lives, businesses and economy. Today, they are once again major drivers of change. I think that the next major disruptive opportunity will come from 5G in changing the way we connect and power our communities.