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Edition 2 - Article 2

5G A revolution is dawning

An industrial revolution which looms so large it could eclipse the three preceding it is in our doorstep. The cyber world is set to be woven into our lives and jobs with unprecedented form and speed – and it will be powered by 5G.

Welcome to the next revolution

Since legendary Apple founder Steve Jobs launched the first iPhone in 2007, the ubiquity of smart phones has triggered a huge change in how society operates. There has been an explosion of data over the internet. Video and streaming have become part of everyday life. Millions of apps have been developed from maps and flashlights to scanners, calculators and share-trading platforms. And that’s before gaming is considered.

People work differently, family dynamics have changed, the main lines of communication between groups of people is now via social media. Retail has altered forever, connectedness has had a massive impact on health (good and bad), advertising, media and manufacturing. In just 12 years, the introduction of smart phones1 has affected almost every facet of the economy.

It is about to happen all over again, but much more radically.

The 5G revolution is coming and it will transform the way technology is used in society, from buildings and objects through to mobile devices and even our bodies. Billions of people will be connected utilising unprecedented speed, processing power and storage capacity.

Fifth generation wireless networking architecture, or 5G, has the potential to, literally, revolutionise how we live, what we do, how we relate and how society operates.

The new technology is already being rolled out in many countries including China, Japan, South Korea, Australia, the United States and parts of Europe. Huge amounts of money are being spent on networks. Mobile operators are forecasted to invest around $US370 billion in new 5G networks between now and 2025. Around half of that money will be spent in China2 alone.

The enormous expense of the new network has already changed corporate behaviour. In Italy, Vodafone and Telecom Italia have decided to merge their network of towers to share 5G costs. The three main tower companies in China have done the same thing.

The introduction of the 5G network is akin to a fourth industrial revolution, after the previous steam, electricity and computing revolutions. But it will take time to deploy. Building the network needs technology and infrastructure to develop together.

For 5G to operate, it needs a critical mass of people and structures to be 5G enabled. For it to operate optimally, it needs everyone and everything to be 5G ready. Some economies and cities already have strategies and spending in place. Others will take decades to fully implement 5G technology.

Understanding 5G

The growth in the number of connected devices over the past decade has been astounding. Next year the number is expected to reach 50 billion according to Cisco, four times the number in 20103 . That’s six connected devices for every person in the world, based on World Bank projections4.

In short, the interconnected world has become very crowded. 5G technology addresses the two biggest challenges in the 4G network – congestion and latency – in three ways:

  1. 5G will use wider bandwidth channels of spectrum than previous technologies, effectively clearing the path for data transmission. 
  2. In a 5G world, latency is expected to decrease by 50 times, falling to one millisecond. 
  3. Each cell site using 5G technology will handle at least one million devices per square kilometre, compared to around 2,000 wireless devices under 4G. 


Until now, connected devices have operated in the 3KHz to 6GHz frequency spectrum. 5G utilises high frequency millimetre waves which are broadcasted between 30GHz and 300GHz. Currently those frequencies are utilised by satellite operators and radar systems. It’s akin to a freeway shifting from four lanes to dozens of lanes. Using these frequencies will allow huge amounts of data to be transmitted. Connected devices will operate as designed without the latency experienced under 4G. For example, 5G will enable a high definition video to be downloaded in seconds and enable HD television channels to be streamed without interruption.

How does 5G work?

5G uses new technology and communication techniques to deliver ultra-fast data across devices. There are several critical factors that, combined, allow for the delivery of 5G communications and the benefits that accrue from that.

Millimetre waves

Frequency refers to the number of waves generated in a set period of time and is measured in hertz (Hz). One hertz means one wave per second, while 1MHz (or megahertz) is one million waves per second, and 1GHz (or gigahertz) is one billion waves per second. Each wave carries data (or information).

Since the launch of the First Generation of mobile networks, connected devices have been operating in the 3KHz to 6GHz frequency spectrum, which is now very congested. A critical underpinning of 5G is the use of high frequency millimetre waves which are broadcasted at frequencies between 30GHz and 300GHz. These high frequencies allow a significant amount of data to be broadcasted with very low latency (or delay).

The trade-off is the range and potential for interference from obstacles. High frequency doesn’t work as well when it is blocked by building walls, or nature including humidity and rain. That’s why people talk about line-of-sight paths for 5G.

Massive MIMO

Massive Multiple-Input Multiple-Output (MIMO) technology enables multiple signals to be transmitted and received over the same radio channel. Massive MIMO systems can have 100 antennas, compared to the two to four on standard MIMO networks. The main advantage of massive MIMO is a significant increase in the capacity of a wireless network without using additional spectrum. Like millimetre waves, there’s a trade-off. Massive MIMO systems are more susceptible to interference. Technologies such as ‘beamforming’ have been developed to minimise interference.


Most radio devices send out a signal in multiple directions at once. This isn’t particularly useful in the 5G ecosystem, because the use of millimetre waves and massive MIMO creates potential for much greater interference. Beamforming is a technology that identifies the most efficient route to transmit data from a radio base system, while also reducing interference. Beamforming technology focuses a signal in a concentrated beam that points in the direction of the user. The technology is a key pillar of the 5G ecosystem.

Small cells

Small cells have been around for many years. They are low powered mobile radio access nodes with a short range of up to a few kilometres designed to handle a few simultaneous calls or sessions. So why are small cells so important in 5G? Because they are small. They can be put almost anywhere with relatively little effort. Small cells can be attached to traffic lights, in office ceilings or atop buildings. They will play a significant role in expanding the mobile network coverage through reducing interference and ensuring millimetre waves are travelling an acceptable range. Small cells are critical to delivering high speed, low latency data.

Full duplex

Among the biggest constraints in radio frequency technology to date has been that a transceiver is not able to transmit and receive signals at the same time using the same radio frequency. The signals interfere with each other. It means using double the frequency spectrum – half for transmitting and half for receiving - or taking turns transmitting and then receiving. Full duplex technology can solve this conundrum by allowing signals to travel around each other. Its adoption would double the frequency band and increase the wireless capacity by a factor of two.

How 5G will change the world

The Internet of Things is a phrase first coined by British technologist, Kevin Ashton, at a Proctor & Gamble conference in 1999. It refers to a network of physical devices, vehicles, buildings and objects that are embedded with electronics, software, sensors and network connectivity to enable the collection and transmission of data. For the past two decades it has been an aspiration, but the roll-out of the 5G network will allow for the Internet of Things to come into fruition, creating a very different society.

Smart cities

Urbanisation is a seemingly inevitable by-product of progress. According to leading management consultancy BCG, by 2030 more than 5 billion people will live in cities. By that year, roughly one-sixth of the world’s population will live in 41 very large cities of more than 10 million people5 .
The strains this will put on cities is enormous and unprecedented. Technology, and particularly the introduction of 5G, will help redeploy resources more effectively and create a healthier urban environment. It is already happening. Municipalities including Vienna, London, Chicago and Singapore have long-term strategies and are spending billions of dollars to become “smart cities”6 . What they need is a fully functioning 5G network to drive the concept of a smart city.

What these cities have, which all municipalities will eventually need, are governments and large businesses working together to create the 5G network. Such a large infrastructure roll-out needs both government and private enterprise support. The pay-off will be enormous – higher quality and standard of living for the citizens who live and work in a smart city.

There will also be large costs. Get ready for decades of debate around the use of data and privacy, neophobia, real estate changes and stakeholder engagement challenges. It’s why governments need to lead the way to grasp the long-term opportunities from the 5G network. While the challenges are significant, there are successful case studies of smart cities. Johns Creek, Georgia in the United States, population 85,000, has worked with Amazon to allow Alexa, the company’s virtual digital assistant, to answer more than 200 questions regarding city operations and services.


Significantly, smart cities can have huge benefits to the environment. BCG forecasts that digital solutions could generate reductions of up to 30 per cent in carbon dioxide emissions, and energy and water consumption7 . Individuals will know exactly how much power they use, the best time to access it and how to minimise carbon outputs. Buildings and cities can operate to minimise loads on electricity grids and optimise green power.


If a vehicle is connected to other vehicles on the road, to traffic lights, to roadwork and accident notifications, even to pedestrians, the potential of 5G is enormous. Long distance trucks could drive in convoy at times of the day when traffic is light. Fleets of cars could travel very close to each other at identical speed during rush hour, with traffic lights changing depending on the exact number of vehicles on the road. Road safety should improve, traffic flows should become more efficient, transportation costs should decrease as should pollution. The potential is enormous and 5G is the key enabler. Self-driving vehicles demand very low latency to effectively communicate. Even milliseconds of latency could result in fatal collisions.


The roll-out of 5G will significantly improve the quality of people’s health and healthcare. 5G technology will enable real-time monitoring of an individual’s health and will allow humans and machines to interact in real time. There is the potential to perform complex medical procedures by a surgeon on the other wide of the world.


A fully interconnected world has the ability to democratise all forms of education. Students living in poorer cities would have the opportunity to ‘attend’ universities on the other side of the world. Higher learning, and particularly universities, remain locked into real estate. How institutions have interacted with students has been based on location. But in a 5G world, location becomes much less relevant. Like e-commerce has disrupted retailing, a 5G network would disrupt education. The opportunity to attend university will increase significantly. Students from all corners of the world will be able to benefit from quality education. Of course, it remains to be seen whether universities will be open to new models of operation, or if new players will enter the landscape and pose a challenge to the towering incumbents.


Smart cities, enabled by a 5G network, are all about interconnectivity of multiple devices to improve the flow of people and traffic, to minimise pollution and maximise productivity and hopefully increase quality of life. The data flowing from a building will be a critical piece of the 5G data network – how many people are inside, what air conditioning is needed and what power output is demanded. Buildings will need to change if they are to generate the data necessary to allow a 5G network to operate. New buildings are incorporating the potential for the 5G network, but anything built more than five years ago will need retrofitting, and that could be a slow process.

Virtual and augmented reality

Virtual reality (VR) or augmented reality (AR) apps run best with little to no latency. They need a 5G world. Investment bank Goldman Sachs forecasts that the global VR and AR market will be worth US$80 billion by 20258. E-commerce could ultimately become the largest exponent of VR and AR applications.

VR allows innovative e-commerce platforms to completely personalise the shopping experience, targeting very personal tastes and values of the customer, which would be hard to replicate in the physical world unless you had a personal buyer. AR will change the home shopping experience. Items will instantly appear in situ, via a mobile device. Clothing, shoes and other accessories can be projected onto various parts of a person, making it easier to make purchasing decisions remotely.


Video streaming accounts for a very large share of internet traffic. 5G will be beneficial for gamers and streamers. In a 5G world, a high-definition video will be downloaded in seconds and HD television will be streamed without interruptions. Lower latency enables the live streaming of events, as well as augmented and virtual reality.

Data centres

If there are 50 billion smart connected devices by 2020, as forecasted by Cisco, all collecting, analysing and sharing data, there will an explosion in the need for data storage. In fact, over 175 zettabytes (one zettabyte is around one trillion gigabytes) of data is expected by 2025, meaning data centres will play a vital role in the management of information.

“From autonomous cars to intelligent personal assistants, data is the lifeblood of a rapidly-growing digital existence, opening up opportunities previously unimagined by business,” says Dave Reinsel9, Senior Vice President of International Data Corporation. “Storage in particular will continue to grow in importance, as it provides the foundation from which so many of these emerging technologies will be served.”

The data journey for organisations is just beginning. Collecting, storing, analysing and utilising data will drive the growth of data storage over the next decade.

Logistics and supply chain

E-commerce has had enormous growth in recent years, and by 2024, thanks in part to the roll out of the 5G network, over 8 billion people will be online. That equates to 4.2 billion new digital consumers versus a total population of around 7.6 billion people10.

The 5G network will much better enable virtual shopping. E-commerce is already surging in major economies, led by the United Kingdom, China and the United States. The more people shop online, the better the logistics process in fulfilling orders needs to be. A 5G platform will allow companies to vastly improve their delivery logistics and supply chain management.

Supply chains will need to be fully transparent and trackable. Predictive analytics will provide a competitive advantage to some retailers. Consumer expectations about shipping times will encourage companies to use advanced robotics and automation. All facets will be better enabled by a 5G network.

Industrial real estate

Already, successful retailers understand that customers want convenience, immediacy and product variety. The roll-out of 5G will accelerate the ability of retailers to meet customers’ demands. Real estate will be a factor in meeting that demand because it allows retailers to execute their strategy.
Retailers emphasise time-to-market and proximity to consumers. In fact, proximity to the customer and efficiency via modern facilities are the most important drivers of industrial real estate. Technology changes and the introduction of 5G networks will sharply improve supply chain efficiencies. This will provide savings, and profit margin, to retailers, brands, consumers and industrial real estate owners.

Words of warning

No industrial revolution occurs without some social upheaval. There will be a myriad of challenges that society, led by governments, need to face. They range from how 5G technology affects capitalism, through to personal identification and security, to cost.

In previous revolutions, human input into change was much greater than is anticipated in the 5G expansion. The roll-out of assembly lines in car factories didn’t only produce more vehicles, it also produced more jobs. The 5G revolution is based on how technology can be deployed effectively. Will that mean that corporate profits benefit more from 5G than wages?

The roll-out of the 5G network is hugely expensive. If governments don’t play a role in managing the transition from 4G to 5G, companies will demand high prices to get a return on their investments. Any transition could become much less egalitarian.

In a 5G world where everyone is connected, security becomes much more of an issue. The network itself will provide some solutions. For example, blockchain technology – which can underpin financial services and smart legal contracts - will be much better enabled in a 5G network.

There is also an unknown, and partly intangible, personal cost of technology. How do people relate to each other? What do they do with their idle time? The 5G network will change the way we operate as human beings. And finally: are people ready for another revolution?

The final say

The next industrial revolution is coming soon. The roll-out of 5G technology will enable a low-latency interconnectedness between humans and objects that will change how we live, how we work, how we relate and our impact on the earth.

Some cities and countries are already spending tens of billions of dollars to roll out the network. As that occurs there will be enormous opportunities from creating smart cities and advancing health and education outcomes through to reinventing real estate, entertainment and transportation.

The complete impact of a functioning 5G network is impossible to forecast, a bit like trying to predict in 2007 how smart phones would change the world. All that is known is that in a decade from now, society will have changed.

Nirvana, however, only happens when all societies can access and share in a 5G world. That’s when the revolution truly transforms the fabric of working, socialising and living.

Important Notes

While every care has been taken in the preparation of these articles, AMP Capital Investors Limited (ABN 59 001 777 591, AFSL 232497) makes no representation or warranty as to the accuracy or completeness of any statement in them including, without limitation, any forecasts. Past performance is not a reliable indicator of future performance. Performance goals are merely goals. There is no guarantee that the strategy will achieve that level of performance. The information in this document contains statements that are the author’s beliefs and/or opinions. Any beliefs and/or opinions shared are as at the date shown and are subject to change without notice. These articles have been prepared for the purpose of providing general information, without taking account of any particular investor’s objectives, financial situation or needs. They should not be construed as investment advice or investment recommendations. An investor should, before making any investment decisions, consider the appropriateness of the information in this document, and seek professional advice, having regard to the investor’s objectives, financial situation and needs. This document is solely for the use of the party to whom it is provided and must not be provided to any other person or entity without the express written consent of AMP Capital.

Edition 2 - Article 3

On the ground

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