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The Highs and Lows of Groundbreaking 5G Tech

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The 5G rollout is underway and picking up speed.

It promises to increase mobile data speed far beyond that of 4G. This will bring a fundamental change in our lives and potentially open the door to endless opportunities. From faster connectivity speed to ultra-low latency and tremendous bandwidth, the new technology has the power to advance society. It will transform industries and enhance users’ daily experiences. 

Do you remember the dream of 2010? E-health, connected vehicles, traffic systems, and advanced mobile gaming? All of those futuristic services are moving within reach with 5G.

But it’s not plain sailing, as cutting-edge tech inevitably raises new challenges. Let’s take a look at recent developments and possible ways they could affect 5G stock prices. 

The New Tech and the US Airport Puzzle

In December 2021 AT&T and Verizon decided to postpone the expansion of their 5G services. The reason behind this sudden move turned was the US airlines flagging a possible delay in thousands of flights. This was due to the new technology’s effect on US planes.

The FAA warned about possible interference with several different systems. Airlines for America expressed concern about the operation of altimeters. The concern was that the new technology could affect a pilot’s ability to land safely in inclement weather. It could slow down the plane while landing, which could result in the plane veering off the runway.

With that, AT&T and Verizon had to delay 5G rollout twice. A temporary compromise followed that placed a two-mile buffer zone around airports. However, that’s not a practical solution for the long term, since significant populations live and work in that area.

Yet the 5G Rollout Continues

In 2021, there was significant progress in the spread of 5G tech. In fact, by the end of 2022 industry watchers expect its reach to double.

By late November 2021, 170 mobile companies had launched commercial 5G networks around the world, reaching 7% of the world’s population. The maps below show the US and Europe both possess widely distributed 5G networks. 

Image source: https://www.speedtest.net/ookla-5g-map
Image source: https://www.speedtest.net/ookla-5g-map

In the US, telecommunication companies are ready for the 5G rollout this year. Once AT&T launches 5G+ in 8 metropolitan cities, they expect to extend it to 40 cities. They will then be covering approximately 75 million customers as the year rolls around. That’s a huge chunk of the population with access to 5G network services. On top of all that, the US market is likely to gain a boost with the arrival of 5G entrant Dish, which says its commercial 5G service will go live early in 2022.

But the biggest 5G rollout winner so far in 2022 is Verizon.

Verizon Capitalizing on 5G Adoption Gains

2021 turned out to be a poor year for Verizon, with share prices declining. But the chance of progress in 2022 with a 5G rollout is very much in the cards. As noted by Livy Investment Research, “Stepping into the New Year, Verizon has been on a steady reversal of said losses by capitalizing on the growing 5G momentum.”

With its service of 5G Ultra Wideband on the high-band mmWave spectrum, for ultra-high-speed connections which are ten times faster than 4G LTE, Verizon has what it takes in terms of 5G services. Its 5G Ultra Wideband rollout is on track to meet its goal of covering over 100 million customers in more than 1,700 US cities by the end of the first quarter of 2022.

The progress of 5G nationwide is fairly strong. This is especially true if we take a look at the number of US cities that already have the service. More than 2,700 cities in the US have taken their leap into this new technology.

Verizon has been rapidly gaining market share by attracting switches to its unlimited 5G subscription plans. In recent quarters, the company has reported strong results.

Since the launch of the 5G Nationwide network back in 2020, Verizon has converted more than a quarter of its consumer phone base to 5G-enabled devices. Moreover, 70% of them are already compatible with the C-Band spectrum.

5G Stocks Rollout Exposes 5G Stocks to Buy

If 2022 ends up becoming the year of widescale 5G adoption, it will directly affect the 5G stocks in the market.

Market watchers expect all types of 5G stocks, including 5G network stocks, semiconductor chip stocks, and 5G infrastructure stocks, to benefit. So while there may be hiccups and challenges on the way, there is still room for confidence in the future of this technology and its entire ecosystem of components, companies, suppliers, manufacturers, consumers and use-cases surrounding it.

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The possible applications of 5G technologies are only in the exploration stages. The possibility of returns is uncertain and may not be realized in the near future.

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The Defiance Next Gen Connectivity ETF is the first ETF to emphasize securities whose products and services are predominantly tied to the development of 5G networking and communication technologies. The fund does this by tracking The BlueStar 5G Communications Index. The Fund attempts to invest all, or substantially all, of its assets in the component securities that make up the Index.

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