Introduction

On April 10, 2019, Canada’s largest wireless companies competed against each other at Canada’s 5G Spectrum Auction. Being the first 5G auction, the companies sought out to acquire spectrum licenses from the federal government which will enable 5G deployment in urban, suburban and rural communities. Collectively, wireless operators including Rogers, Telus, and Freedom mobile spent a total of $3.47 B to purchase the airwaves needed to power next-generation 5G networks.14

Investments into 5G technology are becoming an increasingly prevalent pattern as operators, equipment manufacturers, and device manufacturers alike attempt to capitalize on the expected mass adoption by consumers. But what exactly is 5G technology? How did it start, how does it work, and where will it take us?

History

In the 1980s, the first generation of wireless cellular technology emerged, and has been developing ever since. What is a generation, and how did we get to number five of them? The graphic below depicts the journey from 1G to the now developing 5G over the course of 40 years.5

SVF Timeline

Difference

You probably have a mobile device supported on a 4G network. What is the difference between 4G and 5G?

Wavelenghts Graph

In a sense, cell phones can be considered two-way radios. For example, when making a call, your voice is converted into an electrical signal that is transmitted to the nearest cell tower via radio waves, bounced through a network of cell towers, to finally reach the individual you are contacting. The same happens when you send other forms of data, such as photos and videos.

Since the 5G network has 5 - 50x shorter wavelengths than its predecessor, users are able to send more data in a shorter time period. Contrarily, since these higher frequency signals cannot travel as far, more infrastructure is needed to boost signals where 5G is offered.

Capabilities

You might be thinking, “My phone works pretty well. How much better can 5G get?” There are 3 main benefits to 5G technology: faster speeds, lower latency, and increased connectivity.

5G will lower latency.Latency is the response time between a user request and action being taken by a simple function, application, or machine. 5G’s capacity for reduced latency will decrease lag and improve streaming applications like online gaming, video calling, and interactive live sports.

5G will increase internet speed and connectivity.With 5G, downloading an HD movie takes seconds versus 6 minutes for 4G LTE.13 Furthermore, the greater capacity offered by 5G will allow support for more devices and more data-intensive tasks, such as “Internet of Things” devices in smart cities, autonomous vehicles, smart grid management, and remote healthcare. That is, these devices contain both sensors that collect data, and software to upload data to the cloud. The software would then able able to directly exchange data with other connected devices, and allow for analytics and insights to be generated from the data produced.11

Impact

Furthermore, 5G is anticipated to have a significant impact on our day-to-day lives in 3 ways:

5G will increase data traffic. 5G will create exponential growth in data traffic, allowing for the increasing adoption of HD music and video streaming and cloud-native applications. According to Cisco, a multinational IT and networking conglomerate, mobile data usage growth alone is expected to increase from 7 to 49 Exabytes (1 Exabyte = 1,048,576 TB) by 2021, representing a 47% CAGR from 2016 to 2021.6

5G will accelerate the internet of things. Currently, all four major US mobile operators are involved with smart city projects ranging from public transit, water management, and street lighting. Along with smart cities, projects related to smart homes and smart buildings are also being taken on, which will increase the demand for the 5G technology due to low latency.

5G will improve robotics surgery. 5G technology will allow doctors to use VR goggles to perform surgery remotely through instant haptic feedback. More recently, Ericsson, a Swedish telecommunications company, and King’s College in London showcased this application at the Mobile World Congress in Barcelona.8 This will redefine the way surgeries are conducted by allowing patients to access to the expertise of specialized surgeons in different parts of the world, making physical distance irrelevant.

5G will make self driving car faster and safer. Self-driving cars rely on the data generated by hundreds of sensors positioned throughout the vehicle. With existing 4G technology, handling, processing, and analysis of this data is not currently possible, due to the fact that these systems need to mimic the timing of human reflexes. 5G would ameliorate this issue due to its low latency and high speed in transferring large data.2

Visual Chart of 5G Pros and Cons

Concerns

5G has far reaching capabilities, and is slated to have a significant positive impact on consumers and companies alike. However, there are 2 main issues: political tensions, and potential health effects.

5G has sparked political tensions. In May 2019, President Trump banned US tech companies from using telecom equipment that posed a threat to national security. This led to the Commerce Department placing Huawei on a trade blacklist, causing sales of U.S.-made goods to Huawei to be restricted.9 Furthermore, telecom giants like Nokia and Ericsson may be forced to move production outside of China in order to continue providing equipment to the U.S. In fact, Google recently announced the movement of its Pixel smartphone production from China to Vietnam to avoid the looming concerns of US-China trade hostilities.10

5G has the potential for adverse health effects. Due to 5G networks’ use of higher frequency fields, medical professionals are concerned about the possibility of human tissue penetration.16 Depending on the exposure duration, frequency, and temperature increase, this could lead to heat stroke and burns. Similarly, the WHO IARC12, an agency conducting research into the causes of human cancer, the radiofrequency electromagnetic fields associated with 5G networks has been classified as a potential human carcinogen.3 However, the large majority of mainstream scientists continue to see no conclusive evidence of harm from cell phone radio waves. David Robert Grimes, a cancer researcher at the University of Oxford, suggests, "If phones are linked to cancer, we’d expect to see a marked uptick. Yet we do not."4

Conclusion

Although 5G will not replace 4G immediately due to headwinds including infrastructure requirements and health concerns, its adoption is expected to grow significantly over time. By 2025, 49% of North American mobile connections are expected to be running on 5G networks, a significant increase from 1% in 2019.1

SVF Statistics Graph

In conclusion, as a result of exponentially growing investments from telecom enterprises, 5G is an incredibly pervasive technology slated to transform Canadian’s way of living: from faster downloads, to IOT-connected households, to improved robotic surgery.

What is Student Venture Fund section?

The Student Venture Fund (“SVF”) at the University of Waterloo provides hands-on training in venture capital investing with guidance from industry experts and supervision by faculty members. Students have the opportunity to make investment recommendations by conducting financial and commercial due diligence on product-market fit, growth potential, and management team.

The SVF Technology Review is a thought leadership initiative allowing SVF members to share our insights on emerging technologies and facilitate cross-faculty discussions on entrepreneurship, technology, and finance.

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