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Business Commentary Why 5G is the biggest thing in mobile since the App Store

Ray Sharma is the founder and CEO of Extreme Venture Partners.

This is an adapted excerpt from the book Government Digital, to be published by Dundurn Press in the fall.

When U.S. telecoms T-Mobile and Sprint announced Sunday that they had agreed to merge in a US$26-billion deal, they argued that only the combined company would have what it takes to build the next generation of wireless networks: 5G.

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In Canada, the Big Three carriers – Bell, Rogers and Telus – have been conducting tests and announcing partnerships with network providers to prepare for the 5G future, expected to start rolling out in the next couple of years.

What do all these announcements mean for you? I’ve been working with and investing in mobile technology companies for more than 20 years, and I believe 5G is the biggest thing in mobile since the App Store, which launched in mid-2008. 5G is so vastly superior that it promises to revolutionize the software application experience on a vast and broad basis.

The buzzwords of the year – the internet of things, autonomous vehicles, artificial intelligence – are all relying on a dramatic network evolution in order to support a new generation of application software. The headlines about 5G will focus on the massive increase in download speeds. It promises to be 100 times faster than 4G and 25,000 times faster than 3G. Mobile users will be able to experience gigabit-per-second download speeds, and it will be awesome.

But the biggest benefit of 5G is its massive reduction in latency. This reduction is so profound, it will require a redesign of virtually all application software. Y2K was a warm-up for 5G.

More than 27 million Canadians are mobile users – 21 million of them using smartphones such as the iPhone. These smartphones are portable supercomputers that allow us to communicate, work and entertain ourselves anywhere and at any time. In fact, the A11 Bionic chip that powers the iPhone X can perform a stunning 600 billion operations per second.

With millions of apps available for download, 46 per cent of respondents in a Pew Research study said they could not live without their smartphone. This mass-market addiction comes at a cost. Users who could get by with a 500MB data plan five years ago now find themselves upgrading to multigigabyte plans. With video and interactive elements such as augmented and virtual reality, data usage is growing faster than most expectations.

According to networking hardware company Cisco, mobile data traffic grew 62 per cent year over year to reach 7.2 exabytes per month by the end of 2016. To put that in perspective, one exabyte is a billion gigabytes – the equivalent of 250 million DVDs. To support this massive growth, telecommunications operators must continuously improve their networks to ensure capacity, speed, reliability and availability across the country. That’s why every eight to 10 years, these operators make a generational upgrade to their networks, often with profound implications for the devices and applications that then reach consumers.

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It is this kind of generational shift that enabled the creation of BlackBerry, in the early 2000s, and the app economy we see today. In fact, Apple and BlackBerry deserve much of the credit for creating the foundations of the smartphone economy.

The industrial era of applications will present a new set of challenges. Networks will need to support hyperdense user numbers. For example, Toronto will need to be able to support as many as one billion network-connected devices. And because we are starting to connect everything from parking meters in cities to soil sensors in farms, we will need to be extremely conscious of battery life.

Our thesis at Extreme Venture Partners is that many of the revolutionary technologies dominating headlines today, including artificial intelligence and the internet of things, will be dependent on 5G to reach their true potential and scale. The result will be an explosion of connected devices.

Metcalfe’s law states that the value of a telecommunications network is the square of the number of connected users. Two connected computers comprise one network connection. But connect four computers and the number of network connections jumps from one to six.

Approximately five years ago, the internet hit 12 billion network connections, and it was clear the network was slowing. The growth was predominantly driven by smartphone additions. With the advent of the internet of things and now 5G, we are seeing a dramatic increase in the number of network connections. These might be relatively dumb sensors, but the numbers are dramatic, with many predicting 50 billion network connections within the next several years.

As the number of users grows, the value of the network grows exponentially. With 5G we are likely to see an explosion in data consumption. And with billions of new internet of things connections, combined with existing scalable technologies such as cloud computing, we are likely to see a parallel burst of data.

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This will unleash innovation across all industries, all built on the core attributes of 5G, and the result will be a new user experience.

What does all this mean for the public sector? Alex Benay, the chief information officer of the Government of Canada, says governments need to design services for future, not current, technologies. “Too often we hear about how ‘legacy systems’ are ruling how governments design solutions or services for citizens. Governments not investing in tech such as 5G networks, artificial intelligence and big data are simply not serving their citizens’ needs.”

The combined impact of the new generation of devices, network equipment and applications will easily exceed hundreds of billions of dollars in economic value – and change the way we interact with software. 5G is a technological revolution worthy of the hype.

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