Sometimes, headlines about the development of 5G networks can read like the beginning of a Tom Clancy thriller. Who will be the first to have wide-scale 5G rollouts: China or the US? The future of commerce could be at stake; national security could be threatened, if Chinese tech firms are helping their government implant listening devices across Europe and the US.
From an economic standpoint, countries and politicians are taking being the dominant developer of 5G networks more seriously. According to Deloitte, “First-adopter countries embracing 5G could sustain more than a decade of competitive advantage.” Why does that matter? Well, back in 2016, Accenture estimated that “telecom operators [in the US] are expected to invest approximately $275 billion in infrastructure, which could create up to 3 million jobs and boost GDP by $500 billion.” What if the US ends up lagging behind China or Japan or Germany—will those jobs end up going overseas? Unsurprisingly, politicians started to panic.
The purpose of this article, though, is to strip away the hype and think about what these new networks could mean for the data used by capital markets firms. While AT&T is already trying to hawk what it’s calling a 5G E service—even though it isn’t an actual 5G network, but more of a rebranded LTE network—we’re still a few years away from seeing the true power of 5G. So in many ways, this is more of a thought process: How might banks, asset managers and vendors take advantage of 5G? Answering that question requires taking a moment to understand what we’re really talking about.
So what kind of new data will be created as a byproduct of 5G development? Or if not new, perhaps more accurate and clean data? Everything is speculation, but let’s consider location data, which hedge funds and alternative asset managers have been using for years to inform investment decisions. A mobile phone’s location sensor is largely dependent on GPS, which is a technology from the 1980s, says Wei Pan, cofounder and chief scientist at alternative data provider Thasos Group. The phone is looking around for a cell tower to connect to, or a Wi-Fi signal to estimate where the phone is currently located—that won’t be necessary anymore.
Similarly, satellite imagery relies heavily on very big, expensive satellites taking pictures from space of the ground. But what if cameras closer to the ground could improve that process?
“With 5G you can imagine that signal will be achieved by deploying a lot of very small, low-flying drones, or even some fixed cameras from tall buildings. And those cameras take pictures of small regions at a very high frequency to make up this big image of the land,” says Pan, adding that this can create more real-time data, rather than relying on a satellite flyby.
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