The Transition to 5G
By Caroline Tall, portfolio manager of Fidelity® Select Communications Equipment Portfolio

The transition from the 4G to 5G wireless network standard has been a hot topic in investment circles lately. Make no mistake, when fully implemented, 5G should be a major upgrade over 4G, by providing improved connectivity with higher data-transfer rates and lower latency (delays).
In preparation for launching 5G networks, all the major wireless carriers have been ‘densifying’ their networks — that is, building them out so as to enable them to accommodate the considerably greater data traffic expected with 5G. In turn, this has driven robust demand for certain types of components, especially in wireless base stations.
With that said, we are likely years away from anything approaching full implementation of 5G. And, truth be told, some wireless carriers have been overly enthusiastic in their marketing for the limited versions of 5G that are currently available to customers. Moreover, some touted 5G applications — such as the ‘internet of things’ and autonomous driving — might be better suited to other communications technologies, or are still many years away from implementation.
I’m also hoping we’ll see a greater push in the U.S. to deploy another high-speed broadband option, fiber-optic cable, given its proven track record of success. Fiber to the home is relatively cheap and easy to upgrade to higher speeds once it is laid. Moreover, the speeds currently available with this technology are already dwarfing the top speeds projected for 5G.
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