Discussions about the telecom sector are incomplete these days with no reference to the fifth-generation (5G) wireless network. The general perception is that the technology, touted as the ultimate in wireless communication, could bring about a paradigm shift in the way information is exchanged.
With telecom majors like AT&T (T) and Verizon (VZ) busy sprucing up their network infrastructure to accommodate 5G, the hype often gets unrealistic. The perception that the new technology is the final solution to all network-related issues is too far-fetched. A more realistic view is that 5G is a clear step forward in improving the efficiency of telecommunication.
The question is whether investors should be as excited about the high-speed network as the companies do. There is no doubt the usually speed-hungry customers will be happy to switch to 5G, and that will translate into more revenues for the companies.
The question is whether investors should be as excited about the high-speed network as the companies do
But that does not offer operators assured returns on the heavy investment that goes into the network infrastructure, though the services will be priced high. As a result, the telecom firms might be forced to wait for 5-10 years before they are able to monetize their expensive 5G projects.
Verizon, which enjoys a clear lead in the race, announced the completion of 5G data connection for mobile devices this week, after launching the world’s first commercial 5G service last month covering four US cities. The company achieved this by using Motorola’s Moto Z3 smartphone to disseminate information over a new radio (NR) network. The service is expected to be available for commercial use by next year.
Having made significant progress in the area, AT&T claims to be well prepared to roll out its 5G network for mobile devices as early as next month. Though the company had launched the ‘5G evolution network’ last year, it happened to be an advanced version of the existing 4G network. What followed was full-fledged tests on the actual 5G technology, starting February 2018. AT&T is expected to come up with a complete launch that covers both fixed-line internet and mobile network.
The current scenario – where practically no 5G-enabled device is available for commercial use – will change rapidly once hardware makers pitch in with their devices. Once adoption of the new network technology picks the pace, chances are that telecom firms that delayed the 5G shift will be left out.
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