Investors, Players Await 5G Wireless Move From Trial To Turnkey
Building the next-generation of 5G wireless networks could transform the U.S. economy and provide upside for a wide range of companies, but Wall Street has said it's still too early for investors to dive into this nascent technology.
And when it comes to the build-out of these high-speed data lines, industry officials offer insight that agrees with industry analysts.
"We are seeing some real early deployments in 5G, maybe a little bit ahead of what we had expected," Xilinx Chief Executive Victor Peng said on the chipmaker's most recent earnings call in July. "We still believe that the bulk of this will happen around the 2020 time frame, but there are going to be some deployments earlier than that."
Xilinx is one of numerous potential 5G wireless stock plays. The companies gearing up for this shift are all over the technology map, ranging from wireless service provider Verizon Communications to network gear makers Ericsson, Nokia and Samsung.
It doesn't stop there. There's also cell-tower operator Crown Castle. Analysts also point to chipmakers Analog Devices, Qualcomm and Integrated Device Technology — along with Xilinx — as potential players.
Finally, there are companies like Keysight Technologies, a maker of testing gear for 5G networks. Keysight saw its shares jump Aug. 21 when it said fiscal third-quarter earnings and revenue topped estimates, thanks in part to 5G demand.
These networks should whisk video at faster speeds to smartphones and mobile devices. In addition, they could advance mobile gaming, and perhaps even augmented reality technology.
The business case for building out 5G networks ties in with other services. The big question is whether they will live up to the hype of transforming the U.S. economy.
According to pundits, self-driving cars and drones will be big users. They're also expected to play roles in manufacturing, retailing, remote medicine and smart cities. Some of those scenarios could take years to play out though.
As it stands, Verizon is testing 5G networks in four cities. There it will deliver high-speed internet services to residential homes, mainly in apartment buildings. Verizon's residential broadband services could challenge Comcast and other cable TV companies.
Crown Castle plans to build out "small-cell" radio antennas for 5G services in urban areas. The small-cell antennas — hung on utility poles or building rooftops — will require fiber-optic connections. They'll link to local hubs, which in turn link to cloud-computing infrastructure.
Some analysts that follow network gear makers are cautious on build-outs. One reason is that local governments must approve small cell deployment.
"Our conversations with carriers and public policy folks suggest the largest impediment to 5G deployment lies in the ability to get small cells deployed in a morass of local politics and economics," Raymond James analyst Tavis McCourt said in a note to clients.
The Federal Communications Commission in November is expected to auction off high-frequency spectrum for 5G services.
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