The dominant mobile communication technology in the U.S., fourth-generation Long Term Evolution (4G LTE), first appeared in December 2010 when Verizon Communications (VZ) rolled out a commercial network to customers in several dozen cities. Mobile operators and telecommunication equipment companies around the world are hard at work developing the technologies and hardware systems required to bring the fifth-generation (5G) of mobile networking to market.
- The expansion of 5G mobile networks has begun in the U.S., although it might take several years before it’s widespread.
- A number of companies are looking to capitalize on the planned expansion.
- The companies best positioned to take advantage of the 5G growth include Ericsson, Nokia, and Qualcomm.
Notably, 5G promises vast improvements in speed, responsiveness, and scale to support all kinds of bandwidth-hungry applications and technologies. Mobile operators expect to deliver 5G mobile download speeds in the gigabits-per-second range, around 50 times faster than existing 4G LTE technology.
Aside from raw speed, perhaps the most transformative feature of 5G technology is its ability to accommodate the tens of billions of connected devices, smart objects, and embedded sensors expected to come online in the coming years as the Internet of Things (IoT) becomes a reality.
Mobile operators, equipment companies, and industry analysts agree that the first mobile 5G networks are expected no earlier than 2019, with a commercial roll-out in 2020 or later. While the wide-scale deployment of mobile 5G is a few years away, a number of companies are vigorously engaged in the development and testing of 5G equipment to participate in the eventual build-out of 5G networks around the world.
1. Ericsson (ERIC)
Telefonaktiebolaget LM Ericsson (ERIC) is a Swedish telecommunication equipment and services company with a market capitalization of $25 billion. The company operates at the forefront of 5G hardware development, participating in field trials and research programs with mobile operators around the world, including Verizon, AT&T (T), China Mobile (CHL), and South Korea’s SK Telecom Company Ltd. (SKM), among many others.
Ericsson’s 5G radio prototype, which provides 5G wireless network access, has been widely deployed for real-world testing in the U.S., South Korea, Japan, and Sweden. These prototypes incorporate a bundle of cutting-edge technologies, including new antenna and receiver technology, to bring the promise of 5G to reality. Ericsson’s development of 5G technology also informs ongoing advancements in its 4G LTE equipment business.
2. Nokia (NOK)
Nokia Corporation (NOK) is a Finnish telecommunications equipment and data networking company with a market capitalization of $18.5 billion. Like Ericsson, Nokia has entered advanced testing phases on new 5G radio access products for eventual deployment by mobile operators around the world. It has ongoing collaborative research and testing programs with Verizon, China Mobile, SK Telecom, Japan’s NTT Docomo Inc. (DCM), and Deutsche Telekom AG (DTEGY), among others.
Nokia expects a full 5G rollout in the following years. In early 2016, Nokia acquired a 91.8% ownership stake in Alcatel Lucent S.A. (ALU.PA), a French telecommunications equipment company with its own advanced 5G development program. Nokia could use the acquisition in its 5G development plans.
3. Qualcomm (QCOM)
Qualcomm Inc. (QCOM) develops and commercializes wireless communication technologies, including the 3G CDMA standard and the 4G LTE standard. In addition to licensing intellectual property associated with these technologies, the company also develops and produces software and integrated circuits (chipsets), which are used in wireless network equipment and mobile devices.
In the near term, Qualcomm is pursuing a parallel development strategy covering 4G, 5G, and Wi-Fi technology to support multimode mobile devices that can jump between networks seamlessly as 5G network capabilities are phased in over time. The company is closely involved with the development of 5G industry standards and has produced technological innovations in millimeter wave technology, antenna technology and other technical areas of 5G development. Qualcomm is based in California and has a market capitalization of $81 billion.