Opinion

Future Wealth: The Biggest Infrastructure Boom in History

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Posted: Sep 12, 2018 12:01 AM
The opinions expressed by columnists are their own and do not represent the views of Townhall.com.
Future Wealth: The Biggest Infrastructure Boom in History

We’re on the verge of one of the biggest infrastructure buildouts in history.

But it’s not bridges and tunnels being built…

Instead, what’s coming is a massive communications infrastructure project.

Its goal: to upgrade the current 4G (fourth generation) wireless network that connects your smartphones, laptops, and smart devices to the world wide web.

When it’s done, the fifth generation (5G) wireless network will deliver internet connection speeds 100 times faster than 4G.

This will turn a suite of science fiction-like technologies into a reality.

In fact, the full rollout of new tech such as self-driving cars, virtual reality, and remote robotic surgery hinges on the completion of this massive buildout.

And it’s not just new gadgets and faster connection speeds on the line…

Matter of National Security

President Trump says the 5G buildout is a matter of national security.

It’s the reason he signed an executive order blocking the merger of mobile chip giants Qualcomm and Broadcom earlier this year. The White House feared the merger would lead to reduced U.S. R&D spending on 5G equipment… and deliver the Chinese a competitive edge.

The president considers 5G so important, he even considered nationalizing large swathes of the 5G infrastructure.

The No. 1 Trend on Jeff’s Radar

To find out about the wealth-building opportunities 5G will make possible, we reached out to tech investor Jeff Brown.

Jeff is Inner Circle founder Bill Bonner’s go-to technology expert. He heads up our flagship tech stock advisory, The Near Future Report. He’s also a former Silicon Valley insider and an angel investor in tech startups.

Jeff has been tracking the rollout of 5G networks closely. It was the No. 1 idea he presented at our roundtable event in South Beach, Miami earlier this year.

As he reveals below, the 5G “arms race” is underway right now… and it’s going to send profits soaring for the select group of companies making 5G a reality.

Q&A With Jeff Brown

Chris Lowe: Let’s start with an important definition. What is 5G? And why is it so important?

Jeff Brown: When you connect to the internet on your computer, smartphone, or smart TV, a vast physical infrastructure makes that connection possible.

For instance, there’s a 500,000 mile-long network of fiber optic cables beneath the Atlantic and Pacific oceans. It carries most of the world’s internet traffic. These transoceanic cables connect to vast land-based fiber optic networks, which in turn connect to consumers’ homes and businesses.

When we are out and about, we use the wireless network infrastructure. Wherever possible, the cell phone towers connect to the land-based fiber optic networks in order to send and receive data as quickly as possible.

Over the years, the network has evolved. Companies and governments built new infrastructure to support the next generation of wireless connectivity – such as new network towers, fiber optic cables, and personal electronics that can operate over these networks.

Critically, each network generation is an improvement on the last.

We built out the 1G network in the 1980s. Compared to what’s possible today, it didn’t allow you to do much. You could only place voice calls – there was no layer for carrying other types of data. And you had to use one of those brick-sized cell phones Gordon Gekko yaps into in the movie Wall Street.

Then, in the 1990s, we got 2G. Now, you could send and receive emails and text messages.

Then in the early 2000s, 3G brought faster connection speeds. The quality wasn’t always the best. But for the first time, you could stream video and audio.

Then we got the network we use today – 4G. It went live at the start of this decade. And it gave us connection speeds fast enough to reliably support video streaming and GPS location services. Without 4G networks, watching a high-quality video stream on Netflix would have been impossible.

Now, we’re shifting to the fifth generation of wireless networks – 5G. It’s the biggest improvement of any wireless network upgrade to date… and it’s going to make some “sci-fi” technologies a reality.

Chris: How much better is 5G than what we’ve got today?

Jeff: 4G was a disappointment. The developers that built the network thought it would deliver average download speeds of 100 megabits per second (Mbps). But on average, we can download at speeds of only about 10 Mbps.

[Megabits per second, or Mbps, measures internet connection and download speeds. To stream high-definition video from Netflix, you need download speeds of at least 5 Mbps.]

At 10 Mbps, the U.S. has some of the slowest internet speeds in the world. We’re in 50th place, behind Romania (at 27 Mbps) and Finland (at 17 Mbps). Even Dracula and the reindeers have internet speeds faster than most Americans.

But if we look at 5G, the peak speed jumps to 10 gigabits per second (Gbps). One gigabit is 1,000 megabits. So at peak speed, 5G will be 1,000 times faster than the average 4G connection we have today.

Even if we just assume average 5G speeds would be 10% of their potential, we’re still looking at 1,000 Mbps. I know that’s a lot of math. Bottom line: Average 5G speeds will be 100 times faster than what we have today.

Chris: What does that mean for internet users?

Jeff: First, it means faster download speeds. You will be able to download a movie in seconds and play online virtual reality games on your smartphone.

But there’s another reason why this is so essential…

Have you ever been on your smartphone and the call drops unexpectedly? Or maybe a website won’t load, no matter how many times you hit refresh.

This happens when the 4G wireless networks get congested. There are so many people trying to access data through the existing networks at once that the infrastructure gets packed up. It’s like a traffic jam at rush hour.

And the problem will only get worse, because the amount of data we are using is skyrocketing.

In the third quarter of 2016, we sent roughly seven exabytes of data per month. An exabyte is 100,000 times all the printed material in the Library of Congress. All the words ever spoken by human beings can be contained in five exabytes. It’s hard to get your head around.

But a year later, we sent nearly 12 exabytes of data – a month. That’s an annual growth rate of about 70%. And data traffic is expected to double in the next 18 months.

There’s no way the already overloaded 4G infrastructure will be able to handle this level of data transmission. 5G will clear this congestion on our wireless networks.

Chris: What sorts of new applications will be made possible by 5G?

Jeff: A big one is self-driving cars. Google (Waymo) and Tesla already have self-driving cars on the road. When I lived in Silicon Valley, I saw these cars on the road every day.

But they still need some intervention from a human driver from time to time. And right now, that sort of defeats the purpose of self-driving cars.

5G will change that…

Just consider what the U.S. military can already do. It can fly drones halfway around the world using satellite technology. It communicates with these drones through super-fast satellite connections. These allow real-time network connection with next-to-no delay.

The same thing could happen with self-driving cars hooked up over a 5G network. A human operator could oversee a fleet of self-driving cars, taxis, or semis, all from behind a desk somewhere.

These cars can mostly drive themselves. But a human operator would be able to take remote control if the vehicle encounters a tricky situation such as entering or exiting a busy freeway or entering a packed parking lot.

This kind of remote control isn’t possible today on our 4G networks. The “latency” – or delay – from the command to the response is about 100 milliseconds (0.1 seconds).

That may not seem like much. But when it comes to something as serious as the remote control of a car or a truck, the connection has to be near instantaneous.

With 5G, latency drops to 1 millisecond (0.001 seconds). It’s virtually nonexistent. That makes the remote control of self-driving vehicles possible.

Chris: Can you give me some real-world examples?

Jeff: Sure. Starsky Robotics is building a fleet of self-driving semi-trucks. It’s currently testing them in Florida. These trucks are able to drive themselves on a familiar setting, such as a freeway.

But a human operator will still be able to take over to manually back a truck into a loading dock or to help it exit a freeway.

Chris: Are there other examples of new tech that you’re excited about that will go mainstream once we get 5G networks up and running?

Jeff: With 5G data transfer speeds, hologram projectors, remote robotic surgery, and virtual reality will also be possible.

You’ll be able to “sit in” on a meeting by way of a holographic projection, even if you’re thousands of miles away.

A surgeon in New York will be able to operate on a patient in Sierra Leone, Africa with a robotic arm over a 5G connection.

And augmented and virtual reality visors – headsets that display information and data on the lenses – will give you real-time data on objects you’re looking at. So let’s say you glance at a restaurant as you pass by it on the street. You could choose to pull up more data on your visor, such as the menu or the opening hours.

The applications are endless. 5G is a game changer because of all the technological innovations it will give birth to. 5G will be responsible for $12 trillion of new goods and services by 2035. That’s about 60% of America’s total GDP in 2017.

Chris: Washington believes the 5G buildout is a matter of national security. Why?

Jeff: It’s not only a matter of national security, it’s a matter of economic growth. Countries that lead the way in deploying these networks will have a competitive economic advantage over other countries.

In the U.S. alone, roughly three million jobs and $500 billion in GDP growth will be created from this massive trend. Technology companies in the countries where these networks are first built out will be the first to develop the hardware and software enabling these 5G wireless services.

Then, as those companies sell their technology, services, and 5G expertise around the world, the economic benefit will continue to attribute to those leading countries.

Over the last few years, Chinese wireless technology companies Huawei and ZTE were found to have copied foreign technology to build the foundation of their products, which are sold around the world.

For context, Huawei supplies the infrastructure and support for more than half of the 537 4G networks around the world. Huawei was also found to have been using its technology to spy on U.S. network traffic. This led to both Huawei and ZTE being banned from the U.S. market, and several other western markets, over the same concerns.

The U.S. government sees it as an imperative for economic benefit that U.S. wireless networks are built out quickly and built of U.S. and European technology to ensure that the country’s networks are less likely to fall victim to foreign espionage.

Chris: What’s the U.S. doing about this?

Jeff: In March, the Trump administration blocked Broadcom, a Singapore-based technology company, from buying rival U.S. chipmaker Qualcomm.

Singapore, while its own country, is heavily controlled by Chinese Singaporeans. The concern was that Broadcom would force Qualcomm to cut back on its research and development into the 5G network. This would let Chinese company Huawei fill the void.

It’s why the Committee on Foreign Investment in the United States (CFIUS) – a Deep State agency that oversees foreign investments in American companies – recommended blocking the merger.

And in April, Washington banned the sale of American semiconductors to Chinese smartphone maker ZTE. It wants to launch a 5G-compatible smartphone by late this year or early next year. By banning ZTE from using U.S.-made microchips, the U.S. feds hope to slow them down.

We’ve even seen leaked documents out of the White House that suggested the Trump administration has considered nationalizing the 5G network. In other words, seizing control of these networks from AT&T, Verizon, and other service providers, and putting them in the hands of the government.

Chris: Would the U.S. government go that far?

Jeff: My hunch is this was a warning… a way to light a fire under the U.S. companies involved in the 5G buildout. The feds were saying, “Get out there and build these 5G networks quickly. Or we’ll do it for you.”

This was a very smart move by the current administration. And it worked. Verizon and AT&T – along with T-Mobile and Sprint, which are in the process of merging – are already building out these 5G networks.

The hope is to have the U.S. regain leadership in wireless network deployments, which will stimulate even stronger leadership in wireless network technology.

If the U.S. fails, the government fears America would be dependent on Chinese technology to make use of 5G. That gives China an enormous amount of leverage over the U.S.

Verizon is building out its 5G network in Sacramento, California. It says it will have 5G infrastructure built out in five or six other American cities before the end of the year.

AT&T is building out its 5G network in Waco, Texas. It also has a long list of cities it aims to have a presence in by the end of the year. One of them will likely be Atlanta.

And T-Mobile – the third-largest mobile communications provider in the U.S. – says it will be launching in 30 cities before 2018 is done.

The 5G infrastructure boom isn’t some distant event. It’s happening right now.

Chris: What’s the profit angle here?

Jeff: The 5G buildout is one of the tech trends I’m most excited about. Let me explain…

These buildouts happen in predictable phases. First, the physical infrastructure is put up. In this case, we’re talking about cell towers. For 4G, it took about 200,000 cell towers to build out a nationwide network.

A 5G network buildout will require around 1,000,000 cell towers – that’s a 5x increase in network towers. There will be a 5G tower on nearly every street corner. Most will be disguised as light poles.

Next, companies produce new digital devices that run on the new network. For 4G, that meant smartphones.

For 5G, we’ll see a complete replacement of all existing smartphones. And we’ll see 5G wireless devices in cars, trucks, semi-trailers, trains, as well as a completely new generation of wireless broadband devices. This will be the first-time wireless network operators will be able to offer high-speed broadband services to consumers that are as fast as what they are receiving from their local CATV providers.

Finally, companies and developers make applications that can be used on top of these networks. For 4G, these included Uber and Netflix.

In the world of 5G, we’ll be experiencing an explosion of new applications around augmented reality, virtual reality, autonomous vehicles, holographic telepresence, and so much more.

Right now, we’re still in the first phase – the buildout of the physical infrastructure.

Spending on the 4G wireless infrastructure hit about $200 billion a year at its peak.


The best bet right now is to look at the companies that will handle the physical infrastructure. American Towers is a good example…

The company puts up cell towers. It was instrumental in the 4G buildout that started in 2011. And it’s also going to be heavily involved in erecting and maintaining the towers used in the 5G buildout.

As this story unfolds, look to companies responsible for producing the components that go into 5G-compatible smartphones, then to companies building applications like virtual reality and self-driving vehicles on top of the 5G networks.

For now, physical infrastructure is the best option. Betting on companies that were instrumental to the 4G buildout, such as American Towers, is an easy way to gain exposure.

What to Do

Chris here – As Jeff said, there’s a lot riding on the 5G wireless buildout.

This isn’t a prediction. It’s a trend already in motion – the best kind for investors.

American Towers (AMT) climbed 180% from 2011, when the 4G buildout kicked off, to today.

If Jeff’s investment case is correct, it will continue to profit as 5G transforms America’s wireless networks.

Until next week.

Jeff Brown

Editor, The Near Future Report

Official Wealth Creation Expert to Townhall Media

P.S. Jeff Brown has a knack for getting it right. He predicted the rise of autonomous driving technology. He predicted the iPhone X would use facial recognition. He was ahead of the curve on genetic editing, IPO formation, and blockchain technology. He picked chipmaker Nvidia—which became the #1 performing stock on the S&P 500. Now he’s announcing his next TOP PICK for 2018.

CLICK HERE to watch Official Wealth Creation Expert to Townhall Media Reveal His #1 Pick for 2018