5G — the next generation of mobile networks — makes better use of the radio spectrum. While 5G is still in the early stages, industries will likely be transformed as the Massive Internet of Things (MIoT)1 and mission critical services (e.g., smart grid)2 are deployed via 5G networks.
The pathway to 5G3
3G and 4G technologies brought tenfold increases in speeds, transforming the functionality of mobile devices. 5G may very well bring a hundredfold increase.
The promise of 5G4
5G brings three new features to wireless technology: greater speed to move more data, a one millisecond (or less) response time from the network (latency) and the ability to connect more devices at the same time.
Identifying the Upside and Downside
Throughout history, technological advances have led to enormous changes, disrupting industries, companies and profits worldwide. At MFS®, we try to understand all aspects of creative disruption by asking these questions
- Which industries will be affected?
- How will it impact business models?
- Can it be monetized?
- Who will the winners and losers be?
- Over what time period will it play out?
We believe that skilled active managers* can capitalize on creative disruption by identifying the opportunities and avoiding the pitfalls. Doing this takes
- Deep analytical resources
- Conviction in our research
- Patience to let our thesis play out
*We believe skilled active managers are those who can demonstrate conviction through high active share and long holding periods, add value in volatile markets and collaborate on investment decision making.
In 2018, 5G made its debut at the Pyongyang Winter Olympics, and early deployments continue. As 5G networks are built out, we expect new uses will emerge — virtual and augmented reality (VR/AR), remote patient monitoring, industrial automation, and autonomous cars, to name a few.
Besides communications carriers and equipment manufacturers, 5G has the potential to disrupt and transform other industries through innovation. What remains to be seen is the pace of the infrastructure build-out, adoption of the technology and subsequent innovation. As an active manager with a long-term focus, we have our research teams working together to assess the opportunities and risks over the next 5, 10 and 15 years.
We believe that active management is the best way to serve our clients. Our investment process and resources are aligned with client needs and how we try to turn insight into advantage for our clients.
ENDNOTES
1 MIoT refers to the connection for a large number of devices and machines (potentially on the order of tens of billions) on a regular basis.
2 A smart grid is an electrical_ grid which includes a variety of operational and energy measures including smart meters, smart appliances, renewable energy resources, and energy efficient resources.
3 Source: GS Research. IoT = Internet of Things.
4 Sources – Nokia.
The information included above as well as individual companies and/or securities mentioned should not be construed as investment advice, a recommendation to buy or sell or an indication of trading intent on behalf of any MFS product.
The views expressed are those of the author(s) and are subject to change at any time. These views are for informational purposes only and should not be relied upon as a recommendation to purchase any security or as a solicitation or investment advice from the Advisor.
