Breaking News
Investing Pro 0
New Year’s SALE: Up to 40% OFF InvestingPro+ CLAIM OFFER

5G Mobile Promises To Connect And Speed Up Everything

By Michael CollinsMarket OverviewMar 26, 2019 12:46
5G Mobile Promises To Connect And Speed Up Everything
By Michael Collins   |  Mar 26, 2019 12:46
Saved. See Saved Items.
This article has already been saved in your Saved Items
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio

In Bulgaria, the country’s mobile or wireless phone operator Mobitel exhibited fifth generation or 5G technology during a virtual reality demonstration. Russian telecom Megafon and Qualcomm (NASDAQ:QCOM) tested 5G in Moscow while Vodafone (LON:VOD) hosted Ireland’s first live 5G test. In France, Nokia (HE:NOKIA) completed a 5G call on the 3.5 gigahertz band.[1] In the US, Verizon (NYSE:VZ) now offers 5G internet for homes in a few locations.[2] In Australia, Telstra (AX:TLS) switched on 5G for the first time at sites in Melbourne and Sydney to give access to 3.6 gigahertz spectrum in all major cities[3] and connected a customer with a commercial 5G device on 5G technology for the first time.[4] These are just some of the trials completed or underway in recent months as the world prepares for a transformative leap in mobile.

5G’s promises include vast improvements in data speeds at lower cost, much faster response times (known as ‘lower latency’ in industry jargon), greater connection density and lower battery consumption on devices. These benefits will arrive as beam forming and dynamic spectrum allocation, software-defined networking and the deployment of wide bands of higher-frequency radio spectrum, among other technological advancements, turn existing 4G networks into 5G networks over the next decade.

5G is expected to transform daily life because it will enable key developing technologies such as the internet of things (when everything is linked), driverless cars, smart factories, connected utilities, voice-triggered devices, remote surgery, artificial intelligence, and augmented and virtual reality (even if these advances have other challenges to surmount).[5]

But the vital nature of 5G, the mass connectivity it will foster, and the potential for 5G-enabled applications to shift data processing from the ‘core’ to the less-secure ‘edge’ of networks are colliding with two forces that may slow 5G’s adoption, boost its cost and make it more politically disruptive than earlier versions of mobile connectivity.

The first issue hampering 5G’s deployment is that it magnifies the risks posed by the insecure nature of the internet. If everyone and everything will connect to the internet, 5G networks must be made far more secure than the worldwide web has proven to be so far.

The second challenge is that 5G is tangled up in the rivalry between China and the US. This reflects the role 5G will play in determining the next generation of giant technology companies (as 4G helped elevate Alphabet (NASDAQ:GOOGL) (NASDAQ:GOOG), Apple (NASDAQ:AAPL) and Facebook (NASDAQ:FB)) plus the importance nations attach to having guaranteed access to leading telecom equipment. The latter is the biggest cause of tension because China’s Huawei Technologies has surpassed Western peers Ericsson (ZA:ERNT) and Nokia (NYSE:NOK) to become the world’s leading telecom-equipment maker over the past decade. That some regard Huawei as an instrument of the Communist Party makes it (and other Chinese companies) unwelcome in the US and some allied countries including Australia. While the deployment of 5G will be slower, more troubled and less economical than it should be, these hurdles will hopefully lead to more secure 5G networks in time.

To be sure, even in the best of circumstances, the infrastructure required means 5G will take much time and money to be broadly deployed. Another hurdle is that the rate of 5G uptake will depend on how quickly people buy the new, more costly 5G phones capable of receiving 5G signals and the new spectrum bands in which it is deployed.[6] The lack of security on the internet came at its birth and will be hard to overcome. The differences between the US and China are ideological, political and commercial; the new wireless technology is not the central issue in the Beijing-Washington rift.

5G thus has much to navigate for its benefits to fully materialise. But technological advancements usually hold sway in the end. The benefits of 5G are there to be widely shared in time if networks can be secured.

Insecure edge

In the history of wireless technology, the 1G network and the brick-like mobiles that appeared in the early 1980s were analogue-based. The 2G networks that became prevalent in the 1990s enabled voice calls and texts over sleeker mobiles were the first digital networks. In 2001, the world’s first 3G network (in Japan) connected phones to the internet. The 4G wireless world arrived in 2008 and enabled download speeds that support the countless uses of smartphones today. 5G broadly describes improvements to existing networks that will allow for fast, mass and instant wireless connections.

Defined in technical terms, 5G is a standard for how wireless networks work, which radio frequencies are used and how devices interact with radio signals and data. 3GPP, the world body that governs cellular or wireless standards, is releasing (in concert with telecoms) 5G specifications guidelines that allow companies to make parts for networks. In December 2017, for instance, 3GPP issued standards for non-standalone 5G ‘new radio’.[7]

5G is only possible because of key advances. The most relevant is the ability of wireless carriers to slice their 5G networks to deliver different performance characteristics for different applications. This means, for instance, that a driverless-car connection will prioritise latency to ensure safety, a sensor will give preference to low battery consumption, and large file downloads will prioritise speed. Another key advance is the development that divides a channel into numerous parts so it can cope with the expected proliferation of connected devices.

Network structures will change too. Until now, networks have operated on a ‘core’ and an ‘edge’ basis. The core handles the sensitive data and is the most protected. The edge is where the users hover with devices that interact with the core network. The edge is considered insecure compared with the core.

A characteristic of 5G is the low latency of the wireless signal. However, to take full advantage of this and enable new applications such as driverless cars it is necessary to perform data processing and other tasks such as authentication at the edge of a network rather than in data centres within the core network. Over time, as networks ‘decentralise’, the movement of some data processing to the edge of network is expected to blur the distinction between the core and the edge of networks.

Many experts warn that carriers will be challenged to secure customers on the edge. Network integrity and availability are at risk, as is data security. “The new architecture provides a way to circumvent traditional security controls by exploiting equipment in the edge of the network,” the Australian government warns. “No combination of technical security controls (has been found) that sufficiently mitigates the risks.”[8] Thus some people worry that an insecure 5G network could allow hackers or foreign governments to impact important services, turn driverless cars into weapons, spy on high profile individuals, or conduct corporate espionage or sabotage.

The US administration of Barack Obama in 2016 decided the best way to handle such threats was to make cybersecurity a priority of 5G, the first time Washington deemed security to be so crucial when creating a network.[9] The Federal Communications Commission was duly ordered to ensure that the 5G network in the US was designed to withstand cyberattacks.[10]

President Donald Trump, however, within days of taking office in 2017, forced the commission to issue an order that “sets aside and rescinds” Obama’s directive prioritising security.[11] That decision re-aired concerns about security. The industry was shocked in early 2018 to learn that some people on the US peak security body, the National Security Council, were considering nationalising parts of the 5G network to ensure its security,[12] a suggestion that was immediately scotched.

The security of the US network is still at an impasse. If 5G networks are as insecure as many experts warn, they might fail to fulfil their promise.[13]

Deepening the rift

On February 5 this year, Trump gave the annual State of the Union address to the House of Representatives that is newly under the control of Democrats who are intent on blocking his agenda, investigating his administration and engineering his defeat if he contests the next presidential election. Yet at one point House Leader Nancy Pelosi and most of her fellow Democrats joined in a standing ovation with Republicans to applaud Trump. What could unite such a polarised chamber? Trump’s statement that: “We are now making it clear to China that after years of targeting our industries and stealing our intellectual property, the theft of American jobs and wealth has come to an end.”[14]

Opposing China appears one of the few political issues du jour in the US that unites politicians from both parties, the intelligence agencies, the foreign-policy establishment, business and voters. An assessment is forming that Beijing is a rival for global power that possesses an ideology and world view that clash with the traditions, norms, thinking and outlook prevalent across western liberal democracies.

5G’s handicap is that it is caught in this confrontation due to the fact that Chinese companies are world leaders in 5G, especially Huawei, which in 2018 earned US$110 billion in revenue from activities in more than 170 countries.

Huawei, which has helped build wireless networks around the world, was founded in 1987 by former Red Army officer Ren Zhengfei. While Huawei was privately founded, the company has often described itself as a “collective” to help it navigate China’s one-party political system where government patronage is essential for survival let alone success. Richard McGregor, for instance, recounts in The Party, the secret world of China’s communist rulers that in 1996 Vice Premier Zhu Rongji ordered four state banks to support Huawei when it lacked money.[15]

Such is the business environment in a country where the National Intelligence Law of 2017, which forces Chinese companies to help Chinese intelligence, appeared to formalise, and certainly publicised to the west, how companies and everything else are subject to the will of the Communist Party.

Governments in the west are thus worried that wireless networks could be vulnerable to Chinese spying or sabotage if built and operated with the help of software written by Chinese companies. Huawei has been under the scrutiny of western intelligence officials since it gained an international profile from the late 2000s – the UK in 2010 even set up a body to monitor the company.[16]

Events have fuelled their concern. In 2018, for example, Poland arrested a Huawei executive for spying. In 2017, a US court fined the company for stealing technology from T-Mobile. Other charges against Huawei (and other Chinese companies such as ZTE (HK:0763)) by the US and its allies are outstanding. The most inflammatory for relations is that Meng Wanzhou, Huawei’s CFO and the daughter of the company’s founder, was arrested in Canada in December 2018 on a US request that she face charges regarding the incident with T-Mobile and breaching US sanctions against Iran.[17]

To counter the threat from Chinese tech companies, Washington has banned government use of Chinese telecom components,[18] is considering banning Chinese companies from selling equipment to telecom networks and is encouraging other countries and companies to do likewise. In 2018, Australia banned on security grounds the use of equipment from companies “subject to extrajudicial directions from a foreign government” – as Canberra put it to avoid using the word China[19] – for ‘radio access’ in still-to-be-built 5G networks. New Zealand has done the same. Germany has set up a body like the UK’s whereby its countersurveillance agents monitor Huawei. Companies such as BT (formerly British Telecom) are removing Huawei technology from core 4G networks,[20] vetting Huawei source code and halting the purchase of Huawei equipment for core networks.[21]

Huawei repeatedly denies it is an agent of the Chinese government.[22] Many claim the concerns about Chinese companies being Beijing’s pawns are “overblown”.[23] Companies the world over do their government’s bidding at times. The UK body monitoring the company has never found any malicious links[24] and UK intelligence says it’s possible to mitigate the risks from using Huawei equipment in 5G networks.[25] Berlin appears willing to let Huawei help build Germany’s 5G infrastructure.[26]

Whatever the truth, the rivalry between China and the west has consequences for the 5G rollout in the west. The 5G industry in the west will be deprived of Huawei’s innovations and low equipment prices. Instead, rivals such as Ericsson from Sweden and Finland’s Nokia will build more of the west’s 5G networks, which could result in less advanced and more costly networks. GSMA, the wireless industry’s trade group, says shunning Chinese equipment could delay 5G deployment across Europe “for years” and warns the measures could “jeopardise the function of existing 4G networks upon which 5G is intended to be built”.[27]

It could thus take a while before all the 5G trials underway around the world lead to the widespread deployment of the next great leap in mobile in a secure way.

By Michael Collins, Investment Specialist

Originally published by Magellan

[1] To see the list for Europe, go to: The 5G Infrastructure Public Partnership, a joint initiative of the European Commission and the European information and communication technology industry. ‘European 5G trials.’

[2] Verizon. ‘Ultra-fast internet, without the cable.’

[3] Telstra. Channa Seneviratne. Executive, network engineering. ‘We’ve enabled 5G in all major Australian cities.’ 18 December 2018.

[4] Telstra. Channa Seneviratne. Executive, network engineering. ‘We’ve launched our first 5G customer connection.’ 11 December 2018.

[5] See World Economic Forum. “How 5G will change the world.’ 15 January 2018.

[6] See Krisham Sharma. ‘Why you should not buy a 5G phone in 2019.’ The Sydney Morning Herald. 6 February 2019.

[7] 3GPP. First 5G NR specs approved. 22 December 2017. ‘Industry support for 3GPP NR announcement.‘ 22 December 2017.

[8] Australian Ministers for Communications and the Arts. ‘Government provides 5G security guidance to Australian carriers.’ 23 August 2018.

[9] Tom Wheeler, 31st chairman of the Federal Communications Commission (serving from 2013 to 2017). The Brookings Institution. ‘Building a secure 5G network without nationalisation.’ 29 January 2018.

[10] See Federal Communications Commission, Technological Advisory Council. Report ‘5G Cybersecurity Subcommittee. September 12, 2016. Editor: Tom McGarry.

[11] ‘Order. In the matter of fifth generation wireless network and device security. By the Acting Chief, Public Safety & Homeland Security Bureau.’ 3 February 2017.

[12] Axios. ‘Axios Sneak Peak. 1 big scoop: Trump team mulls federal takeover of 5G.’ 28 January 2018.

[13] Tom Wheeler, 31st chairman of the Federal Communications Commission (serving from 2013 to 2017). ‘If 5G is so important, why isn’t it secure?” The New York Times. 21 January 2019.

[14] To view this part of the President Donald Trump’s State of the Union address, see Bloomberg News. ‘Trump says trade deal with China must include structural change.’ 6 February 2019.

[15] Richard McGregor. The Party, the secret world of China’s communist rulers. Penguin Books. 2010. Page 204

[16] In 2010, the UK government set up the Huawei Cyber Security Evaluation Centre (and its Oversight Board in 2014) to monitor the company and perceived risks from its involvement in critical infrastructure. See the centre’s 2018 annual report at:

[17] See The New York Times. ‘Huawei and top executive face criminal charges in the US.’ 28 January 2019.

[18] See The Verge. ‘Trump signs bill banning government use of Huawei and ZTE tech.’ 13 August 2018.

[19] Australian Ministers for Communications and the Arts. Op cit.

[20] See BT to cut Huawei out of the mobile mix. 5 December 2018.

[21] See Financial Times. ‘Vodafone suspends installation of Huawei kit in European networks.’ 26 January 2019.

[22] See BBC interview with Huawei founder Ren Zhengfei on 19 February 2019. ‘The US cannot crush us, says Huawei founder.’

[23] Gu Bin. ‘Western fears of party influence on Chinese companies are overblown.’ Financial Times. 19 February 2019.

[24] Robert Hannigan. Director of GCHQ, the UK’s code-breaking agency, from 2014 to 2017 and senior fellow at the Belfer Centre, Harvard. ‘Blanket bans on Chinese tech companies like Huawei make no sense.’ 12 February 2019.

[25] Financial Times. ‘UK says Huawei is manageable risk to 5G.’ 18 February 2019.

[26] Dow Jones Services published in The Australian. ‘Germany may allow Huawei to participate in 5G network. 20 February 2019.

[27] GSMA. ‘GSMA calls on Europe to safeguard network security and competition in the supply of telecommunications infrastructure.’ 14 February 2019.

5G Mobile Promises To Connect And Speed Up Everything

Related Articles

Chris Becker
27.01.23 Macro Morning By Chris Becker - Jan 27, 2023

Wall Street was able to follow through on its recent surge on the back of strong GDP data with European shares also lifting as Euro stopped climbing higher. The USD remains under...

5G Mobile Promises To Connect And Speed Up Everything

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email