Harding Loevner’s Jafar Rizvi and Clarke Moody take a look ahead to the transition from 4G to 5G, writing that consumers have the most to gain from the transition–but a number of industries should benefit too, from media companies to connected device makers.
Rizvi and Moody write that the move to 5G will allow wireless technology to surpass three technical thresholds:
1) wireless internet speeds will surpass cable broadband and potentially also fiber optic cable; 2) the “internet of things” will have mass industrial applications for the first time; and 3) communication lag will fall to one millisecond—faster than the speed at which humans perceive touch response as instantaneous—giving rise to new, “tactile internet” applications such as remote surgery.
With these barriers broken, they believe 5G will have a larger and broader economic impact that previous shifts between wireless generations.
What will this mean for media companies? Well, they believe that networks like CBS (CBS), ‘over the top’ content creators like Amazon (AMZN) and Netflix (NFLX), video game makers like Microsoft (MSFT), and social media like Facebook (FB), could all see new or substituted revenue streams as content and advertising moves to wireless networks. But it won’t be all good news, as the transition will also bring more global competition, substitution risk from other content categories, and higher cost to secure talent.
They expect that the Internet of Things (IoT) hardware and software makers, like Apple (AAPL), Garmin (GRMN), General Electric (GE), IBM (IBM), and Google (GOOGL), among others, will also benefit from higher demand growth–although will also face stiffer competition.
Cable TV companies like Comcast (CMCSA) and telecom companies like Verizon (VZ) and AT&T (T) will see higher pricing power, potential new services, and possibly weakening regulatory requirements. However, they warn cable companies will face possible obsolescence as wireless video speeds surpass wired video speeds, while telecom companies will have to spend huge amounts of money to build out their networks.