Why on earth do we need 5G?

“Hey guess what? They’re rolling out 5G in the US”.

Her reply was: “What’s that?”

The truth I didn’t really know. I was just repeating the headlines from the news. It’s to do with the internet on my smartphone because I have this thing called 4G. If I was to guess, 5G is faster than 4G.

After a bit of searching on Google I found that it’s actually supposed to be 100 times faster than 4G.

The BBC had this nice little chart, which explains what this means. Apparently, it would only take 3.6 seconds to download a movie. That sounds like the speed of Ferrari so I guess that’s good.

But then again, why on earth do I need this.

I can do everything I want to do already on my smartphone. I can watch YouTube videos and listen to Spotify. In fact, the 4G internet on my smartphone is faster than my broadband at home.

But, it’s not about me.

5G is a lot more important than me and my smartphone.

This is a game-changing technology that will serve mankind. What 5G provides is the infrastructure for the internet of things. Or as the geeks call it “IOT”. I’m not going to call it that!

What’s the internet of things?

Basically, everything is going to have access to the internet from your fridge to your car. The rational here is that the data collected and received will help improve our lives, whether it’s a fridge ordering more milk from the supermarket or our cars driving us autonomously to work.

Here, it’s not just speed that matters. It’s also the reliability of the internet connection and its capacity to handle billions of connected devices across short distances that makes it work. This is something that 4G infrastructure can’t do.

The thing is I don’t really fancy my fridge accessing the internet. It can order milk for me when it runs out, but I don’t want it to be used to hack into NASA by a foreign government agency.

This is the issue with 5G.

If this massive network isn’t secure, it poses a huge national security threat.

This is exactly what US politicians are worried about with Chinese firm Huawei. The company has made significant advances in 5G tech thanks to the support provided by the Chinese government. In fact, some industry commentators are saying that it’s left rival US firms behind. Meanwhile, there are concerns that Huawei’s technology has technical deficiencies that leave it ripe for hackers to exploit.

The US government is paranoid that the proliferation of Huawei’s technology in the US will give Chinese intelligence services an unprecedented ability to collect data to their advantage.

Control over American 5G infrastructure could also give China a massive first-strike cyber warfare advantage. This is why the recent arrest of Huawei CFO Meng Wanzhou in Canada seemed politically motivated. It was a clear attempt at tarnishing Huawei reputation.

Yet politics aside, this is where the investment opportunity lies.

5G will be hugely disruptive to the way we live our lives. Once the security issues are resolved, it could completely transform the way our global economy is structured.

It’s not just the mobile handset makers like Apple, Samsung, Huawei and LG that will benefit. There will be billions of devices and sensors connected to the internet, which will transform many different industries and sectors.

It’s going to provide incredible AI-driven analysis and make industrial automation and autonomous driving a reality. Companies like Cisco (NASDAQ:CSCO) and Nokia Bell Labs who provide data analytics and consultancy services, will benefit considerably.

Other companies like Crown Castle International (NYSE:CCI) and American Tower (NYSE: AMT) in the US could also benefit a lot. These companies build and lease out income-producing telecom towers, which require low maintenance. They’ve already benefitted from the explosion in data usage in the US from 4G. However, this will pale in comparison to the exponential explosion in data usage from connected devices and sensors in the 5G market.

So why do we need 5G anyway?

We’re entering the information age.

If we don’t build 5G infrastructure today, progress with exciting trends like Industrial Revolution 4.0 (hate this term), smart grids and autonomous vehicle transport might technologically stall.

You may not personally need 5G on your smartphone today. But, in the long term your investment portfolio might benefit from this trend because it’s going to transform the way our global economy works.

That’s why we need 5G.