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Home Pre-IPO & Startups

The Race for 5G Dominance: How Phone Companies Are Investing Billions to Stay Ahead

Elaine Mendonça by Elaine Mendonça
March 13, 2023
in Pre-IPO & Startups
Reading Time: 3 mins read
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5G Dominance
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Since its launch, 5G technology has become a hot topic worldwide. The wireless technology’s purpose will extend beyond what 4G – and other previous generations – could provide.

For instance, expectations are that 5G will deliver speeds of up to 20 Gbps, which means it will be up to 50 times faster and more effective than its previous counterparts. Whereas faster speeds and low latency are the main benefits of using 5G, it brings one challenge to phone companies. It was expensive.

Building the infrastructure needed to ensure that the technology is effective costs billions. That’s why phone companies are investing a lot of funds to build 5G infrastructure before it becomes widespread in the coming years.

Nonetheless, how – exactly – are they able to achieve this?

Let’s find out.

1. Collaborating with equipment manufacturers

5G technology has never been in use ever before in history. That means phone companies must develop the equipment needed to run this technology. From fiber cables, cell towers, and chipsets to power amplifiers, the costs can go higher to the tune of even trillions, depending on various factors.

For phone companies to succeed, they’ll have to set aside some of the revenue and funds for this cause, which could take several years before they can start bringing in profits.

Hence, it’s the reason these companies are collaborating with manufacturers that build the equipment needed to ensure that the project doesn’t stall as the development process proceeds. In return, the phone companies will offer ownership stakes and royalties.

Other companies partner with the governments to lower the required infrastructure cost.

2. Pursuing a parallel development strategy

Although 5G is available in certain cities worldwide, it’s yet to become widespread. Experts predict that it may become widespread – fully – by 2035. Yes, enjoying this technology’s benefits might take a long time.

Should this mean companies phase out 4G technology and the previous generations? Definitely, no, and it’s not the case here.

Phone companies – including service providers such as AnonymSMS – are adopting a similar development strategy, whereby they are developing smartphones that can jump from 5G to 4G and Wi-Fi technology. That way, they can cater to the needs of different customers.

3. Encouraging businesses to adopt 5G technology

5G technology4G was an excellent solution for businesses around the world. However, as many organizations and enterprises continued to use technology, 4G became limited. It couldn’t deliver the appropriate speeds and stability to handle critical business components.

5G changes everything. Businesses can now become more effective since the cellular network offers high speeds and can handle more devices – up to a million.

And this is what phone companies leverage when encouraging businesses to adopt the technology. When most businesses hear of the benefits, they’ll want to invest in it – as the downtime is low compared to 4G.

4. Luring customers to buy 5G-enabled smartphones

Of late, many phone companies are encouraging phone users to buy 5G-enabled smartphones. In the ads, these companies will state the benefits of the technology to users; however, keep in mind that 5G is yet to be fully available in many regions across the world.

Some companies are making it even easier for people to buy these 5G-enabled smartphones. They will discount buyers who want to trade their 4G-enabled phones for new devices.

According to various experts, we’ll continue seeing these ads because phone companies are using the revenue collected from the sales to buy the equipment needed for the 5G infrastructure.

5. Dealing with security concerns that 5G brings

A significant concern around deploying 5G is security – obviously. Many cybersecurity experts say that the technology will make life easy for cybercriminals. They’ll conduct criminal activities, especially since getting information will be easy.

So this places a considerable concern on phone companies because they have to deal with this before 5G becomes prevalent. As a result, many of these companies hire staff to help deal with this problem before it becomes challenging to counter.

Conclusion

There you have it. 5G will become integral to individuals and businesses in the coming years. Hence, it makes phone companies make the necessary adjustments and invest a lot of money to ensure competitiveness in the market.

Tags: 5G Dominance5G technology
Elaine Mendonça

Elaine Mendonça

Over the last nine years, Elaine has managed investment portfolio using fundamental analysis and value investing, emphasizing long-term time horizons.

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The Best Stocks, its managers, its employees, affiliates and assigns (collectively “The Company”) do not make any guarantee or warranty about the advice provided on this website or what is otherwise advertised above.

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