COVID-19 Bolsters The Need For Investment In 5G

Andrew Weinberg, Founder, Managing Partner & CEO of Brightstar Capital Partners contributes to

Investment In 5G
5G infrastructure offers a huge opportunity post-COVID-19 QUALTEK LLC

The devastating COVID-19 pandemic is accelerating digital transformation of the ways we interact and do business. As Microsoft MSFT +4% CEO Satya Nadella recently noted, “We’ve seen two years’ worth of digital transformation in two months.”

A lasting consequence will be that more goods and services will be delivered electronically, more work and learning will be done remotely, and entities from businesses, to governments, to non-profit organizations will have to prioritize the adoption of digital technology.

5G technology will be an essential enabler of this transformation. The use cases it underpins in healthcare, manufacturing, mobility and retailing could add 3.5-5.5% to global GDP created in those domains over the next decade – a crucial contribution to the economic recovery following our current crisis with its unprecedented stimulus measures that stretch public-sector balance sheets.

Full disclosure, I’ve been involved in the wireless industry for nearly two decades and two of our portfolio companies are involved in the sector. This has given me insight into the importance of building out 5G across the U.S., and doing it right.

An opportunity for the U.S.

While much is made of China’s five-year commitment of $184 billion in 5G infrastructure, in truth there is no one country “winning the race.” Rather, a cluster of pioneering countries has emerged, including not only China and the U.S., but also South Korea, Australia, Qatar, Switzerland, Finland, Spain and The United Arab Emirates. Given the size of its market and the dynamic ecosystem of its private sector, the U.S. is well positioned to play a leading role in harnessing the power of 5G. But make no mistake, the public and private sectors need to focus and work together in order to take advantage of the opportunity.

The middle-market opportunity

As little as 15 years ago, a small company would face significant hurdles in setting up its technology systems. Servers needed to be bought or leased, software installed and security designed. Today, a combination of cloud computing and Software-as-a-Service (SaaS) has largely removed those hurdles, allowing smaller and younger companies to compete with incumbents.

5G will do the same again for the physical world. It will combine a quantum leap in bandwidth and resilience with Internet-of-Things (IoT) devices, of which over 40 billion are forecast to be connected by 2025. The opportunity will grow exponentially – over 75% per year just in 5G infrastructure over the next six years – and create immense value for startups and mid-market companies.

Imagine a regional water company using 5G and IoT to continuously monitor its pipelines, identifying and repairing the smallest leaks before they become an issue. Or an industrial equipment company remotely keeping an eye on its fleet, running diagnostics while the equipment is in use – and dispatching a team for pre-emptive maintenance in the evening.

A manufacturing company using augmented reality to give step-by-step instructions to workers on the shop floor, allowing them to undertake advanced tasks without waiting for specialist engineers or incurring costly machine downtime. 5G can make all of these dreams become reality, helping increase efficiency and reducing waste – in environmental, societal and economic terms.

What it will take

A few simple steps will be necessary for the U.S. to establish a leadership role in harnessing the benefits of 5G, which needs to be an important element of any federal infrastructure plan. I serve on the board of CTIA, the U.S. wireless industry association, where we work closely with the public sector to ensure such plans efficiently enable the roll-out of this crucial infrastructure by:

  • Harmonizing and coordinating state and local government rules and permitting processes
  • Allocating resource to training programs that ensure a supply of skilled labor
  • Fostering public-private partnerships to accelerate 5G innovation and development

I’d also add that necessary investments, from both the public and private sectors, need to be made with a patient mindset. If we have learned one thing from the transformational introduction of the internet, it is that bubbles and bursts should be avoided where at all possible. 5G will transform industries for decades, if not centuries. The next quarter will give only very limited guidance.

If we bring these steps together and make 5G a priority in the post COVID-19 world, I have no doubt that the U.S. will emerge as a global leader in the next wave of transformative technology. We’ve consistently risen to the challenge in the past, and we must do it again.