Saturday, August 17, 2019

The Jetsons Have Arrived

Ask The CFP® Practitioner



“The best way to predict the future is to create it.”

~ Abraham Lincoln


Question: Would you explain what makes 5G Technology so different and what changes we might see as it advances?

Answer: The term 5G stands for the 5th Generation of technology used for data transmission on cellular networks. Online internet access has come a long way with 5G now propelling us further into the future. The internet was launched in 1969, the same year we landed on the moon, and became available to the public in 1991. Dial-up modems were the way to access the world-wide-web on my laptop that was as big and bulky as Grandma’s 1960 Singer sewing machine.

Connectivity improved over the years bringing us the ability to download movies very slowly with video buffering as a way of life. As the demand for information transfer increased, technology improved. By December 1995 there were 16 million internet users representing only 0.40% of the world population. By June 30, 2019 there were 4,422 million internet users or 57.30% of the population according to the firm Internet World Stats.

Internet speed and bandwidth constantly needs to improve to meet the increasing worldwide demand. The new 5G will be four times faster than existing 4G. For this expansion there will be record numbers of data centers, more wireless towers and fiber optic networks to be built. This infrastructure will grow providing service to Cloud computing, e-Commerce, Social Media, Smart Homes and even entire factories now known as the Internet of Things (IoT). Gartner, Inc., a global research firm, expects that there will be 75 Billion IoT devices connected to 5G by 2025.

Research from Cisco, Forbes and American Tower shows the following:

  • Internet demand doubled in the three years since 2016.
  • Video content represents 82% of all internet use.
  • Virtual reality bandwidth will likely increase by a factor or 61 between 2015 and 2020.
  • The average individual around the world has on average three connected devices.
  • It would take five million years to view all the video content transmitted in just the past thirty days.

There will be infrastructure upgrades and new equipment needs for the faster and more powerful 5G data flow. The industry expects to build 20,000 new cell towers next year. New data centers will cost roughly $20 Billion and there is a need for an additional 300 million watts of electricity to support the new 5G technology.

The total investment required between now and 2025 to support the growing demand brought about by 5G advancements is estimated to be $325 Billion. Infrastructure construction will likely impact the economy, but how will 5G change our lives?

The Internet of Things or IoT includes cloud computing, streaming, artificial intelligence or AI, virtual reality, augmented reality, e-Commerce and autonomous vehicles to be able to advance and improve with system support from 5G for these concepts.

Splicing is something that 5G technology supports. Wireless connections can be spliced and support several systems at once. It wouldn’t be a good idea to have a self-driving car use a spliced or split connection which could dilute data delivery, but something less critical like smart-home appliances or gaming devices could easily share data connections.

Society has become increasingly dependent on immediate access to the internet from our phones, cars, offices and homes. Next day delivery by Amazon and other warehouse distribution providers isn’t unusual and next day delivery is too long to wait. It was only a few years ago when 3-4 day delivery was the norm.

Expenses to provide 5G communication, Cloud service and data services will initially be substantial. These costs will likely be absorbed by the companies benefiting from the advancements and some increases may be passed along to the consumer and end-users. Cushman and Wakefield, commercial real estate brokers assume e-Commerce annual sales growth of 15%. They expect a need for approximately three times as much warehouse square footage as was used for comparable bricks and mortar retail space due to the need for immediate delivery and the supporting logistics required to execute e-Commerce.

The internet has truly expanded the global economy. Cisco predicts that by 2022 there will by more than 412 million 5G connections operating at speeds four times as fast as the 4G we use today. Carriers will be forced to provide connectivity to 5G and 4G as we evolve from the old to the new. Is 5G a game changer? Yes. Stay focused and invest accordingly.

The data and information contained herein was obtained from sources considered to be reliable, but accuracy and completeness are not guaranteed. Mention of specific companies’ names, information or any opinions expressed do not constitute a solicitation for the purchase or sale of any security referred to herein. Investors should discuss the risks inherent in bonds with their Financial Advisor. Risks include, but are not limited to, changes in interest rates, liquidity, credit quality, volatility, and duration. Past performance is no assurance of future results.

Information contained in this report was received from sources believed to be reliable, but accuracy is not guaranteed. All investments contain risk, including loss of principal. Views are as of May 15, 2019 and subject to change based on market conditions and other factors “Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.”

This article provided by Darcie Guerin, CFP®, Vice President, Investments & Branch Manager of Raymond James & Associates, Inc. Member New York Stock Exchange/SIPC 606 Bald Eagle Dr. Suite 401, Marco Island, FL 34145. She may be reached at 239-389-1041, email darcie.guerin@raymondjames.com. Website: www.raymondjames.com/Darcie.

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