Is 5G A Myth, Miracle Or Meh?

5G, Strategies, Technology Trends

Last summer I went to my local Verizon store and “upgraded” to a new cell phone. I was encouraged to spend the extra money to be able to receive a 5G signal, touted as revolutionary technology. I sure didn’t want to miss out!

We’re bombarded with commercials from various carriers touting their terrific 5G coverage. Verizon had a Super Bowl commercial touting some incredible speeds.

Okie-dokie, I guess. I have yet to see any 5G signals pop up on my phone… anywhere.

Have I been ripped off? When, and if it comes to pass, how will it change my life?

For the last few months, Eddy Elfenbein’s Growth Stock Advisor has provided quite an education about 5G investment pitfalls and opportunities. I asked Eddy to help educate our readers about what 5G is all about.

DENNIS: Eddy, on behalf of our readers, thanks for your time. Let’s get right to it. In a nutshell, what is 5G?

EDDY: 5G stands for the fifth generation of wireless technology. This will be a vast improvement over the existing 4G technology. For most users, the most noticeable difference will be speed. 5G will be a lot faster.

The Consumer Technology Association gives a good example-how long it takes to download a two-hour movie. Under 3G, it took 26 hours. With 4G, it takes six minutes. But under 5G, it will take 3.6 seconds. That’s how much of an improvement we’re talking about.

DENNIS: Eddy, I need to share my research. I Googled, “How Fast is 5G” and several articles popped up. This UK guide provided a chart:

I saw “theoretical” and decided to do some independent research. Verizon touts 5G coverage in downtown Phoenix. My wife Jo and I spent over an hour riding around searching for a 5G signal. Nothing!

Frustrated, I drove 5 miles to the nearest Verizon store and asked, “Why no 5G signal?” The young man opened my phone and showed me my SIM card, which was clearly marked 4G. The technician should have replaced it when they sold me the phone.

With the updated card we headed back to find a 5G signal. Again, no luck.

We called the tech service number the technician gave us at the store. Chris from tech support came on the line. He pulled up the information. He was really good.

He started, “Mr. Miller you need to add $10/month for 5G coverage.” I responded, “Why didn’t the salesman who sold me the phone, or the technician who put in the 5G card tell me?” I felt sorry for Chris, he responded, “I don’t know, they should have”.

Chris, a true problem solver, stuck with us. Finally, an icon on top of my screen said, “5G UWB” (Ultra-Wide Band). The phone kept bouncing between 4G and 5G. We found a parking spot in a 5G area and ran a speed test. Jo took this photo:

I received a 1.240 Gig download speed, higher than the peak download speed in the article, but a long way from the theoretical 10-50 gigabyte speeds.

I pay Cox Cable around $100/month for a fiber optic line. My download speeds are in the 800-900 Mb range, which is fast. My 5G wireless phone signal was around 50% faster than my home cable speeds.

Eddy, most articles say 10+ gig speeds are possible. What should consumers realistically expect?

EDDY: Good question, and like many things, it depends. It’s important to view 5G not as an event, but as a process. Like any new technology, it will need to walk before it can run.

Unfortunately, some folks-and a few tech companies-have carelessly hyped things 100 gigs. Well, I’m a skeptic on that but I think you can certainly expect speeds of two gigabit/s to start. Make no mistake. That’s a big leap from what folks are using today.

Before long, I think 10 gig speeds are certainly realistic but it will probably be less in practice since most systems won’t be set up to provide the full capacity to one user.

DENNIS: Interesting you said two gigs. Chris, the tech said 2 gigs is what they were showing. The Verizon commercial popped up again recently. I froze the picture and the speed test they showed was just under two gigs, so that must be a realistic expectation. That is plenty fast, but a long way from the 50 gigs in the UK article. I’m sure there is a point where incremental improvements in speed have little value to the consumer.

In 1970, I was in a research lab in Corning, New York. They touted their hottest new invention called fiber optic cable. They talked about how this would revolutionize the world. It took 45 years for a fiber optic cable to come into my home.

I asked Chris if it would take 45 years for me to get 5G in my home. He said they are working on downtown areas, sports arenas, etc. They have no time table for further roll outs.

Eddy is this hype, hope or myth? What are you seeing? Will my cell phone be obsolete before I can receive a 5G signal when we drive across the country every summer?

EDDY: Ha. Yes, but that may say more about your cellphone than 5G. But seriously, it will take some time. There’s a lot of hope and a lot of hype. Ericsson, the Swedish telecom giant, expects 5G to have 2.6 billion subscriptions by 2025.

As far as driving across the country, that will take time. 5G is at several bands of higher frequencies so it has shorter range, meaning more antennas. I would expect long stretches of open highways to be the last places to get it. So 4G is cool for quite awhile

DENNIS: Why should I pay Cox $100/month if I can get 5G through my cell phone carrier? Maybe “cut the cable” can really happen once things get built out in the suburban areas.

Eddy do you see this happening?

EDDY: For most people, I think that’s exactly what will happen. It’s a pricing issue. Carriers often limit cord cutters to 3G speeds. Those rate caps are being lifted.

The other side of 5G is new capacity and lower cost per bit, so I expect aggressive pricing from carriers to take on cable. Today most people pay two carriers for internet, one at home and one on your phone. Prudent consumers would gladly eliminate one as long as they got good service.

Also, the tech from companies like Netflix and YouTube optimize for each stream. But as it becomes available, the cable people will have to respond by dropping prices or expanding service.

DENNIS: Verizon makes another $10/month. Competition among cell phone companies is fierce. Where do investors have the best chance to profit from the 5G revolution?

EDDY: That’s the $64 billion question! Application and software companies like VMWare (VMW) may be the biggest beneficiaries from 5G build out. On the hardware side, Xilinx (XLNX) is helping solve capacity, connectivity and performance challenges.

Qualcomm (QCOM) will also benefit from 5G deployment. The company is poised to provide 5G chipsets for Apple 5G phones for the next several years. Verizon (VZ) is a major holder of 5G spectrum in key population areas. As 5G takes hold, VZ can expect a huge increase in connected devices.

But my favorite 5G stock is more of a pick and shovel play that will make 5G a reality. Even with recent market turmoil the stock is up 50% for my readers and frankly Dennis, I see this as just the beginning of its growth.

We’re witnessing a revolution before our eyes.

DENNIS: Your “pick and shovel” remark reminds me of the California Gold Rush. A lot of money was made by Levi-Strauss.

EDDY: Good analogy, it is sure similar.

DENNIS: Thank you Eddy for bringing us up to speed on 5G. (pun intended)

EDDY: (Chuckle) My pleasure

Dennis here. It appears 5G is the real deal. A few years back I did a Skype television interview on WGN in Chicago. I had around 100 mb. speed in my home and the tv quality was mediocre. The 5G speeds would be much better quality.

Eddy helped put both the technology and timing expectations in a realistic perspective. Those who invest in 5G will probably be well rewarded, as long as they are patient. A lot of money can be made investing in anticipation of the event.

I’ve been reading Eddy’s research for a while now and have been very pleased not only with the success of his recommendations but also the thoroughness of his research. He educates, and I like the way he explains complicated ideas in easy to understand language.

He does the same with his newsletter, Growth Stock Advisor. He takes new, complex ideas and distills them to their core to help us take action. Eddy’s recently released further details on this 5G revolution that’s happening right now and gives his two top recommendations in the space. Be sure to check out his recent briefing. Click here.

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