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The next revolution for mobile communications

Arik Star

Ellerston Capital

I so clearly remember my first mobile phone.  All I could do was talk on it, but I was mobile and thought that phone was the greatest device ever.  Since then, advancements in wireless technology have been extraordinary and changed the way we communicate, work and live our lives. We recently returned from a two week trip to the US where many of the companies we interacted with referenced 5G and its potential positive impact on their business.


The first commercial analog mobile network, 1G, was rolled out in the USA in 1983, enabling mobile phones the size of a brick that could only make and receive phone calls.  Then in 1991 came 2G technology, which was a digital network that added better security and text messaging through SMS.  Ten years later in 2001 3G networks rolled out providing a revolution in technological advancement in terms of mobile email, internet, GPS and multimedia messaging.  It is during the 3G era that two of the most iconic devices of our time were launched;  the Blackberry 6210 in 2003, which provided wireless email, phone and SMS, and the iPhone and Apps, in 2007, which launched the smartphone era.  Shortly after the introduction of the iPhone came the roll out of 4G in 2009, with network speeds up to ten times faster than 3G, ushering in the video and data era.


4G - An App led revolution for the Consumer

With the smartphone and IOS/Android providing the platform, the leap in 4G technology enabled the mobile ecosystem to flourish. As consumers, we have benefitted greatly from the launch of new App-based technology: mobile-centric services Uber, Spotify,  WhatsApp, Instagram, Snapchat and Twitter have become embedded in our daily lives, while  Netflix, Facebook and YouTube have all experienced explosive mobile growth allowing us to be entertained and connected wherever we go. Back in 2009, few people would have appreciated how much progress, change, disruption and wealth creation 4G would enable. 


5G – A Device led revolution for Industry

So, all eyes are now on 5G networks, currently in the testing phase and likely to be rolled out commercially at some point in the next few years. 5G is all about connectedness, and the technology it needs to even launch successfully is significantly more complex than its predecessor. It relies on a network capable of handling massive amounts of real time data being transmitted from billions of connected devices and sensors.  And when it does launch, expectations for its impact are speeds up to ten times greater than 4G and significantly shorter delay before transfer of data (lower “latency”).


Source: Gemalto NV



Higher speed and lower latency may be the catalysts for explosive growth in the use of connected devices and “the Internet of Things”, about which so much has been written in recent years. The potential applications are vast:  Autonomous driving and connected vehicles – cars that can communicate with smart traffic signs, surrounding objects, other vehicles and emergency services.  Smart Home – appliances that are connected and can be accessed from remote locations.  Industrial equipment – remote monitoring of equipment, predictive maintenance, safety, process tracking and energy management.  Healthcare and mission critical devices and services.  Security and surveillance. 


These are just some of the areas already being discussed widely.  The potential is tremendous and there is every likelihood that 5G could be the basis of a technological revolution for industry much like 4G was for the consumer. 


Keysight Technologies – Leader in Network Test and Electronic Measurement

Keysight is an early stage beneficiary of the 5G network rollout and a company we are invested in.  While in the US we met with management of Keysight at their offices in Santa Rosa, California.  In a world with growing internet and cloud reliance, the acceptance for latency and network failure is ever diminishing, particularly for infrastructure that will need to enable (on scale) streaming platforms, smart factories as well as connected cars and robotic surgeons!


While the timing of a 5G rollout is still to be determined and difficult to predict, the adoption of higher frequency range spectrum which in turn requires higher cell density is a complex proposition. As a result we have seen many network operators increase their development programs and lab testing relating to both 5G and associated applications well ahead of any actual deployment. The testing of network upgrades as well as the connected devices themselves is ‘mission-critical’. Keysight are the US market leader in the network test and measurement industry and in particular 5G, a result of early and timely investments in the space.


What does Keysight Technologies do?  


About Ellerston Global Investments (ASX:EGI)

Ellerston Global Investments (ASX:EGI) is a concentrated global mid/small cap portfolio based on high conviction best ideas which is benchmark independent. Providing true diversification to investor’s global equity portfolios. Find out more.


Arik Star
Arik Star
Portfolio Manager
Ellerston Capital

Arik is Co-Portfolio Manager for Ellerston Global. He has over 25 years financial markets experience, previously working for Consolidated Press Holdings, Thorney Holdings and Kira Capital. Arik has a Bachelor of Banking and Finance degree.

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