5G Wireless Network Race Set to Begin in 2018

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Forget 4G LTE (Long-Term Evolution); the stage is set for 5G wireless race in the U.S. telecom space. With the U.S. telecom industry continuously evolving, companies in the league are fighting it out to stay abreast of competition. Among them, two behemoths, Verizon Communications Inc. VZ and AT&T Inc. T are leading the race.

Verizon, which was the first to deploy 4G LTE network nationwide six years ago, plans to launch next-generation 5G wireless residential broadband services in three to five U.S. markets in 2018. The company announced a contract with Samsung to start commercial 5G fixed-wireless services. Samsung will provide Verizon with commercial 5G home routers, 5G radio access units comprising a compact radio base station and virtualized RAN elements, as well as 5G radio frequency planning services.

Also, AT&T is planning to offer standard-based mobile 5G services to consumers in various U.S. markets by late 2018. AT&T's standard will be based on implementable 5G New radio (NR) specification of 3rd Generation Partnership Project (3GPP). This basically supports a 'non-standalone' 5G standard that uses LTE to control 5G data connections. Since AT&T supports non-standalone and standalone options for the 5G standard, the new timeline will accelerate availability of hardware.

However, a full phased 5G wireless network will be offered only in 2020. By that time, other national telecom operators, such as T-Mobile US Inc. TMUS and Sprint Corp. S may join the 5G race. Additionally, United States Cellular Corp. USM is also preparing to deploy 5G wireless network.

AT&T carries a Zacks Rank #4 (Sell). However, Verizon, T-Mobile US, Sprint and United States Cellular carry a Zacks Rank #3 (Hold) each. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Large carriers are focusing on building a fiber and wireless infrastructure in a bid to deliver mobile video efficiently. Accumulation of dark fiber will bolster their cell network density consequently giving a boost to its mobile backhaul network. The densification of cell network will help the company install and build its upcoming 5G network.

Advantage of 5G

Latency period of 5G data delivery will be in single milliseconds. Further, 5G technology is designed to be more power efficient than any other standard wireless network available these days. Therefore, 5G-enabled mobile devices are likely to last a lot longer than their 3G or 4G counterparts.

According to a study commissioned by Qualcomm, 5G wireless technology could result in real global economic growth by $3 trillion cumulatively between 2020 and 2035. Per a report by Strategy Analytics, global 5G smartphone shipments are set to rise from 2 million units in 2019 to 1.5 billion in 2025, reflecting an average annual growth rate of 250%.The 5G category will be the fastest-growing sector of the global smartphone industry for the next decade, said the report.

Additionally, superfast 5G mobile networks will be of utmost necessity in managing the exponential growth of internet-connected devices, popularly known as Internet of Things (IoT). The U.S. telecom industry has lately emerged as an intensely contested space where success thrives largely on technical superiority, quality of services and scalability. Thus, in order to stay ahead of competitors, existing players need to be constantly on their toes to introduce innovative products.

According to a recent report by research firm International Data Corp. (IDC), worldwide spending on IoT is slated to grow 14.6% year over year to $772.5 billion in 2018. Moreover, the IoT space will witness a compound annual growth rate (CAGR) of 14.4% to reach nearly $1.1 trillion in 2021.

Bottom Line

In 2018, we expect 5G wireless network to be a game changer in the telecom space with a full-fledged deployment in 2020.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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