5G Reception or Deception?

Jeremy Yeung's picture

When I was in San Francisco this month I noticed something peculiar about my iPhone – I was running on AT&T’s 5G network. This was a big surprise to me because I don’t have a 5G phone (Apple is expected to launch their first 5G phone next year). So what happened? Did I secretly access a hidden futuristic network only accessible to technology experts like me?

The answer is as disappointing as a dropped call. My research revealed that AT&T is branding their existing 4G network (LTE Advanced) as “5G Evolution.” So I wasn’t getting superfast speeds on a new network. Instead I was a victim of “5G Confusion” in a classic example of a misleading marketing push by the carrier. I am not the only person to be disappointed with this deceit1.

Now I would love to forget this experience and move on to a more interesting technology topic. However 2020 is expected to be the year of several new 5G deployments so I expect the hype and confusion to continue. Get ready for the wireless marketing wars as 5G deployment hits the U.S., China, Korea and Japan with contenders and pretenders all claiming to be operating the fastest wireless “5G” network in the world.

Will the real 5G please stand up?
5G is the next generation of wireless technology. It can operate at speeds that are multiple times faster than the speeds of existing wireless technology1. These speeds are enabled by using different frequencies of wireless spectrum. 5G works best in two main spectrum bands: 6GHz and below and a new band called millimeter wave (above the 24 GHz band)2. In fact, sub 6GHz has the capability to produce speeds of 500Mbps while millimeter wave can reach much faster speeds of over 1.5Gbps3. This spectrum will be auctioned off in the coming years based on timetables set by each region.

5G will likely be available in Canada in 2021. The ultimate timing of 5G in Canada will be decided by the federal government’s decision whether to let Huawei 5G technology be used in Canada and the timing of the 5G wireless spectrum auctions. We expect Canada to be a fast follower in the 5G wireless wars under the assumption Huawei will be permitted to deploy their 5G technology in Canada.

5G, unlike the existing 4G, will be very different in terms of performance and availability depending on the region deployed, how the carrier has configured the network, which spectrum is used and how the region is covered.

For example, in the United States, millimetre wave spectrum will be used and this is currently being tested by Verizon, a leading wireless carrier. This service is akin to using a targeted laser to send a wireless signal from the network to a user. While the current 4G networks can handle a Netflix stream, the networks are not capable of handling multi video streams as well as supporting a household of connected devices. Verizon is targeting 5G as a replacement for the wired service in your home.However, while millimetre wave offers the best speed, it requires the deployment of more small cell 5G base stations to achieve equivalent coverage. The wireless signal does not penetrate buildings as well as other frequencies so smaller antennas will need to be deployed to compensate.

6GHz frequencies behave differently – they are more like a wide flashlight in terms of coverage – and they are best suited for less dense areas. China is the rapid adopter of this frequency and as such is in the best position to be the first global region with the broadest 5G coverage across their country.

Regardless, given the timing of the wireless auctions and the wireless carriers 5G replacement cycle, it will likely take over five years to reach broad penetration of 5G services. Given the cost and the time to market, it is no surprise that carriers such as AT&T are resorting to marketing tricks to give the perception of a “speedy deployment” of this technology in the interim.

Leading edge or bleeding edge investment opportunities?

Naturally, technology investors want to know how they can invest in this upgrade cycle and profit from the spending that will occur. We have done extensive work meeting with many 5G-related companies across the globe to develop our investment framework.

Our conclusion is that investing in 5G is more complicated than simply buying the leading equipment vendors (shown below). We remind ourselves why they call this style of investing “bleeding edge” – you can easily get hurt.

A case in point occurred in May 2019 when the U.S. government banned U.S. companies from supplying Huawei critical technology for use in developing 5G base stations and smartphones. This move was intended to slow China’s development of 5G technology. Ironically, while this caused a short-term dip, our recent checks showed that Huawei’s 5G growth has risen higher as the Chinese government has increased its support for its domestic deployment of the technology in light of the U.S. ban.

Another example in 2019 involved the investors who gleefully pivoted to Nokia, a leading global telecom equipment provider expected to benefit from the Huawei ban. However, this trade became problematic recently when Nokia admitted that they will be late to market due to problems with a chip design. On the back of this, Nokia shares are down -32.8% between late-October and late-November 2019.

Ericsson looks interesting and they are expected to be a net share gainer in 5G but they have faced problems in the past. And don’t forget new competition – Samsung pops up as a new vendor with expertise in the millimetre wave frequencies, but this is niche in light of their other businesses.

So while opportunities exist, one must be selective as this subject is complex and uncertain.

Confusion will clear and evolution will appear

Challenges, delays and hype aside, we continue to be excited about the new opportunities that 5G can offer. 5G will be an attractive wireless foundation providing fast data at a significantly lower cost.

We are only now appreciating the historic impact of 4G, which goes beyond video and music to becoming a foundation layer for the sharing economy (Uber, Amazon, Waze, Alibaba, Tencent, Spotify etc.) that have transformed many industries.

5G will lead us to the Internet of Things (IoT) era – mass deployment of semiconductors and sensors that will connect to everything. From a consumer perspective our lives will be even more connected with smart cities, smart homes, autonomous driving vehicles, augmented and virtual reality. From a business perspective we will have smart factories, smart health care, surveillance using facial recognition that will deliver real time data using ultra low latency technology to improve productivity and safety.

The first country to deploy 5G will have an inherent advantage of providing their local entrepreneurs early access to data powered by a low-cost digital infrastructure. We can only imagine the innovation that will be spurred by the 5G networks.

We live in a data world and 5G will be the tipping point into the IoT era. Thematically, Signature will be investing in market share and content gainers that enable the 5G economy. Examples of our investments include 5G supply chain companies that have exposure to the semiconductor, hardware, software and innovative verticals. Defensively, we will be monitoring 5G’s impact on legacy industries that may be prone to being disrupted by 5G. While there will be 5G reception and deception globally, we believe our global sector specialist model at Signature will help us position to capitalize on the 5G transition globally.


Jeremy Yeung is the Vice-President, Portfolio Management and a Portfolio Manager at Signature. He does not have a material interest in the securities discussed herein; however, he is an investor in certain Signature funds which may hold these securities.

Sources: Bloomberg Finance L.P., Signature Global Asset Management

Ericsson, Nokia Boast 5G Wins Against Each Other, but Fail to Stop Huawei


  1. Study confirms AT&T’s fake 5G E network is no faster than Verizon, T-Mobile or Sprint 4G
  2. 4G operates at speeds of 100 megabits per second while 5G can operate at 10 gigabits per second. Source: How Fast Will 5G Really Be?
  3. This article provides a good overview of the wireless frequency bands used for 5G: Not All 5G Is Equal: Millimeter Wave, Low-Band, and Mid-Band Explained



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December 9, 2019.

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