Back in 2018, T-Mobile (TMUS), Verizon (VZ) and AT&T (T) started announcing the transition from 4G to 5G. Today, all three networks lay claim to having nationwide coverage (TMUS, VZ, T). And component manufacturers like Qualcomm (QCOM) and Broadcom (AVGO) have been busy, not just with developing and manufacturing all the chips and signal processors necessary to transition from 4G to 5G but also with working on the next iteration of connectivity, which is known as 6G.
Similarly, WiFi has been going through its own development cycle with WiFi-5 already giving way to WiFi-6 and with WiFi-7 on the horizon. In this article, let’s talk a bit about what the current technology means for what we like to call the Virtuous Circle of Digital Infrastructure and Connectivity, and preview what kinds of capabilities we can look forward to in the next generation of broadband.
Virtuous Circle
The Virtuous Circle comes about when, given a certain amount of bandwidth and throughput speed, developers create new ways to wring as much utility out of that infrastructure as possible. As developers continue to provide new applications and generate increasing amounts of data, they will bump up against the limitations of the current network. This in turn will prompt infrastructure providers to further optimize and expand global network capabilities, which will provide more room for developers. And the cycle repeats itself again and again. It is our strong belief that this process will continue until everyone on the planet takes the position that we, collectively, have enough digital bandwidth and speed. In short, not any time soon, if ever.
6G? I Thought 5G Was The Future
When providers first started talking about 5G, it seemed like it was the answer to all our 4G problems. Because 5G operates on a much higher frequency band than 4G, it provides a huge improvement in the amount and speed of data transmission. Higher frequencies mean shorter wavelengths (measured peak to trough), which translates to a physically smaller antenna. This also means that signals can be better directed, using significantly less electricity to broadcast as Nokia (NOK) found in a study. It is estimated that the ability to hold more antennae means base stations will be able to support 1,000 more devices per meter as compared to 4G. The most noticeable improvement is network speed, with 5G coming in at 20X the transfer rates of 4G.
5G opened a new world of connectivity for consumer devices and streaming services. Think about all the “smart” things that are now available to consumers from thermostats to refrigerators to video doorbells, not to mention the development work being done on augmented and virtual reality, and of course, autonomous vehicles.
A 20X jump in speed has ushered in what many have described as a golden era of the internet, allowing developers like Apple (AAPL) to bring to market new functionalities like mobile hotel, car key replication and heart monitors that are sensitive enough to act as FDA approved electrocardiogram (EKG) monitors and recognize when a user is experiencing atrial fibrillation, sending that telemetry to the wearer’s primary care physician. It has also allowed futurists the opportunity to start thinking about things like a fully functional Web 3.0, increasing the level of connectivity across devices and platforms, and of course, the metaverse, whatever that ends up actually being.
If 5G can facilitate all of this, what does 6G think it can bring to party? For starters, how about a 50X increase in network speed over 5G and bringing network latency down from anywhere between 12 and 5 milliseconds (thousandths of a second) to 0.1 milliseconds, or 100 microseconds (millionth of a second). Essentially, while 5G allows developers to test and theorize, 6G provides an infrastructure that lets them run wild. Researchers at Samsung (SSNGY) released a paper last year that talked about how 5G has enabled humans to bring the kind of functionality we want from our digital infrastructure, including the ability to interact with each other in real-time, stream 4K movies, and of course, lose ourselves in video game fantasies.
What is interesting to us is that Samsung sees 6G as the infrastructure that will enable massive leaps in communication between machines. A clear example of this for us is the continued development and deployment of autonomous vehicles, which up until now, have been making decisions based on taking input from various sensors and brute force solving probabilities to determine what to do next. Imagine if instead of your car trying to figure out what other vehicles were doing, those vehicles simply told your car what they were doing and the two of them could have a conversation about how to best navigate each other.
Aside from autonomous vehicles, 6G will bring the kind of bandwidth needed to support fully realistic augmented and virtual reality environments. One thing to note is that while 5G represents a departure from existing 4G infrastructure hardware, implementing 6G is something that will be more software based. This isn’t to say that there won’t be hardware updates and upgrades needed but not as much as there have been for the switch from 4G to 5G.
6G has been on the planning table for a few years now and there are expectations of seeing an operational network in South Korea by 2028. We can’t wait for this to start. Our autonomous car fantasy event is when a stoplight turns green and every single car waiting at the light starts to move at the same time! It will be glorious.
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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Chris Versace
Christopher (Chris) Versace is the Chief Investment Officer and thematic strategist at Tematica Research. The proprietary thematic investing framework that he’s developed over the last decade leverages changing economic, demographic, psychographic and technology landscapes to identify pronounced, multi-year structural changes. This framework sits at the heart of Tematica’s investment themes and indices and builds on his more than 25 years analyzing industries, companies and their business models as well as financial statements. Versace is the co-author of “Cocktail Investing: Distilling Everyday Noise into Clear Investing Signals” and hosts the Thematic Signals podcast. He is also an Assistant Professor at NJCU School of Business, where he developed the NJCU New Jersey 50 Index.
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Mark Abssy
Mark Abssy is Head of Indexing at Tematica Research focused on index and Exchange Traded Product development. He has product development and management experience with Indexes, ETFs, ETNs, Mutual Funds and listed derivatives. In his 25 year career he has held product development and management positions at NYSE|ICE, ISE ETF Ventures, Morgan Stanley, Fidelity Investments and Loomis Sayles. He received a BSBA from Northeastern University with a focus in Finance and International Business.
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Lenore Elle Hawkins
Lenore Elle Hawkins has, for over a decade, served as a founding partner of Calit Advisors, a boutique advisory firm specializing in mergers and acquisitions, private capital raise, and corporate finance with offices in Italy, Ireland, and California. She has previously served as the Chief Macro Strategist for Tematica Research, which primarily develops indices for Exchange Traded Products, co-authored the book Cocktail Investing, and is a regular guest on a variety of national and international investing-oriented television programs. She holds a degree in Mathematics and Economics from Claremont McKenna College, an MBA in Finance from the Anderson School at UCLA and is a member of the Mont Pelerin Society.
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