Opportunities in the 5G Buildout Miral Kim-E September 2019 Opportunities in the 5G Buildout Frontier Global Partners INTRODUCTION The fundamental demand for advanced telecommuni- With each new advance in microprocessor and cations is embedded in our DNA. People want and memory chip technology, the PC industry saw rapid need to communicate. Whether by prehistoric cave development in hardware and software. When the in- drawings, messenger pigeons in the Middle Ages, or ternet became commercially available as the “World radio waves since 1896, the drive to improve the Wide Web” in 1990, the PC and telecom industries speed, breadth and affordability of communications has became inexorably linked. The internet became a spawned countless industries and defined generations. must-have telecommunications service (remember those dial-up modems?) and the personal computer Our focus is on the latest iteration of the evolution: was the only way to get it. It also marked the begin- 5G or the Fifth Generation of mobile telephony. ning of the shift from voice communications on the telecom network to data communications. To truly understand where telecommunications are going, especially in the 5G era, one has to understand These PC technologies helped mobile phones evolve computing. When the internet added cheap, world- from that first 2-lb Motorola handheld to the pow- wide communications to the power of programming erful smartphones of today. Like PCs, the use of and data analysis on a personal computer, a new era mobile phones has shifted from its original intent as was born. When that power was transferred to mo- a tool for voice communication to a tool for data bile phones, new industries were born. The concepts communication. Ericsson reported that mobile data of “mobile” and “personal” are really the same. Mobile traffic surpassed voice traffic on a global basis in -De phones and personal computers are now functionally cember 2009.2 Ericsson also reports that in 2018Q4, indistinguishable from each other. global mobile subscription penetration reached 104% or 7.9 billion mobile subscriptions, with 5.9 In retrospect, it’s interesting that mobile telephones billion mobile broadband subscriptions and monthly and personal computers became available at about the mobile data traffic grew 88% YoY, the highest rate same time. Telephony and computers have both been since 2013Q2.3 with us for a long time. The first (landline) phone call was made by Alexander Graham Bell in 1876 and the In this report, we seek to understand the business first programmable computer was invented by Kon- opportunities presented by the rollout of 5G in rad Zuse in 1938. But, the first true mobile phone coming years. We first discuss the fundamental tech- handset, i.e., one that didn’t have to be connected to nology of mobile telephony, then review the various a car, was a 2-lb device showcased on April 3, 1973 by “generations” of mobile cellular communications Motorola. And, the first true personal computer, i.e., a leading up to 5G. We examine how 5G differs from stand-alone computer that was affordable to the aver- 4G. We review the infrastructure work that needs to age consumer, was the Altair 8800 developed by MITS be done around the world to upgrade mobile com- in 1974. The Altair 8800 is the machine that inspired munications from 4G to 5G. Finally, we review the Bill Gates and Paul Allen to launch Microsoft in 1975. various uses that 5G will enable in the near future, (Wikipedia has nice, short histories of mobile phones its anticipated uses in the more distant future and a and personal computers.1) preliminary investment strategy. 1 Opportunities in the 5G Buildout Frontier Global Partners CONTENTS Introduction 1 Virtual reality and health 21 Augmented and virtual reality, e-com- 21 Overview 3 merce and advertising How mobile phones work 3 Health, wearable tech and medical 23 The five generations of mobile telephony 4 technology How 5G differs from 4G 6 5G and Wi-Fi 7 The internet of things (IoT) 24 A quick word about safety 7 IoT components 25 Sensors 25 Infrastructure 8 Network 27 Network construction 8 Computation 27 Towers 9 Cloud platform 27 Rural access 10 IoT device itself 28 China’s role in 5G 11 Home appliances 28 Network equipment 12 Autonomous cars 28 Cloud platforms 13 Robots 29 Data storage 14 Stationary robots 30 Security 14 Moving robots 30 Collaborative robots 32 Smartphones 15 Human-like robots 32 Smartphone components 16 Displays 16 Summary 33 Digital camera sensors 16 MEMS devices 16 Appendix A: A quick 37 Microphones 17 overview of artifical Antennas 17 intelligence, “AI” Silicon chips 17 Batteries 18 Endnotes 39 Smartphone software 18 Smartphone apps 19 Gaming apps 19 Non-gaming apps 20 2 Opportunities in the 5G Buildout Frontier Global Partners OVERVIEW How mobile phones work Mobile telecommunications require one-to-one two-way communication from one mobile device to another mobile device or to a conventional land- line phone.4 This is accomplished through the use of “cells”, i.e., the geographic space surrounding a “base station”, which is the collection of antennas, hard- ware and software that facilitates this two-way con- nection between a mobile device (phone, computer, etc.) in the cell to the telecommunications network. The cells are physically situated such that a mobile device will stay connected to the network seamlessly as it moves from cell to cell. So, the communication path is from the sending mobile device, to an antenna situated in the nearest base station, to the network, to an antenna in the base station closest to the receiving mobile device, and then to the receiving mobile device. To allow for the largest possible cell size, antennas are installed in high places to provide for the strongest possible signals over the cell. These places are commonly atop individual stand-alone towers, in bell towers, atop telephone/utility poles, or the tops of tall buildings. Base stations are connected to each other and to the primary network via cables. When cable connections between towers are not practical, such as in rural areas, line-of-sight microwave radio transmission is used. Mobile providers will usually place their anten- nas together on the same tower. 3 Opportunities in the 5G Buildout Frontier Global Partners The five generations of mobile telephony As mentioned above, the PC and mobile phone indus- phones to act as computers. Early mobile phones tries are linked by history and by consumer use. were called “bricks” and handled only voice calls due to limitations of both the phone and the network. Early personal computers were large, complex ma- Text messaging became possible with phones that chines with simple text-based screens that catered had simple multi-line text screens in a move to em- primarily to technology enthusiasts and academia. PCs ulate email. “Smartphones” moved yet closer to the became much more mainstream with the advent of PC experience by adding larger screens, GUIs and the graphical user interface (“GUI”), such as Microsoft the ability to handle larger quantities of data, such Windows and the Apple computer, which created a as pictures and video. Tablets lie at the intersection more intuitive, visual way to use the computer’s appli- of smartphones and computers and were designed cations. In turn, applications quickly came to market to to be the single device for those who need a phone take advantage of the GUI, such as spreadsheets, word and a laptop, but don’t want to carry both. But tablets processors and games. As microprocessor, memory, have not caught on with consumers, and sales have battery and screen technologies advanced, the PC in- declined steadily for many years. However, phones dustry became more mobile, introducing laptop and with larger screens have proven popular. Smart- tablet computers. The first portable computer was phones with foldable screens have recently launched, made by Osborne Computers in 1981 and the first effectively doubling the size of current phone screens. laptop by Grid Systems in 1982. The sale of laptops first exceeded that of desktops in 2005.5 This indicates The need for faster, more reliable mobile communi- consumers’ desire not only for mobility, but of the ne- cations networks has been driven by consumer de- cessity of computers in everyday life. mand for more and more data, as opposed to voice calls. The generations of mobile communications are “The first portable computer was summarized below. In general, technical specifications made by Osborne Computers in and standards for each generation of mobile tech- 1981 and the first laptop by Grid nology are set worldwide by the International Tele- communications Union (ITU, www.itu.int) a United Systems in 1982.” Nations specialized agency. While mobile service pro- viders have largely abided by these standards, varia- The evolution of mobile phones from big and clunky tions of the standard (most commonly, speeds that to small and sleek echoes that of the PC. Over time, are not quite as high as the standard dictates) are the technological advances for PCs were applied often launched early in order to have bragging rights to the mobile phone market which allowed smart as first to market. 4 Opportunities in the 5G Buildout Frontier Global Partners The Generations of Wireless Technology 1G 1979 Analog (i.e., limited capacity and quality) signals; first came to the US in 1983. Japan Nordic countries 2G 1991 Digital signals; in 1993, IBM introduced Simon Personal Communicator, the first Finland smartphone – a touchscreen personal digital assistant with telephony features. Text messaging offered by some providers. First access to the mobile web in 1996 in Finland. First mobile-specific web service, i-mode, offered by NTT DoCoMo in 1999.