Kingsmill's Investment Miscellanea: Friday, July 2nd, 2021

Jul 02, 2021 | Joshua Kingsmill


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Key Takeaways:

  • Connectivity for home offices has changed in the last 18 months
  • 5G however, will really revolutionize so much of our communication and practices
  • While still in it’s infancy, we will look back in wonderment at how we lived in the current internet ear: just as we did when looking back at dial-up

This is the view from my summer-time office headquarters:

 

 

I show this photo, not just because I think it’s a pretty nice view (anyone who wants to share their current office set up, send away!), but to point out that one of the unintended but positive consequences of what has happened over the last 18 months, is that those of us who are able to work remotely have made drastic changes to their work environment.

 

But working “remotely” does have some challenges, mainly as many can contest when it comes to internet connections. Whether in the basement, or a condo, the internet connections aren’t the same.

 

So I have been reading about 5G: and what it means for connectivity going forward, and thought I’d share some thoughts. If there is one take-away, it’s that 5G will mean that the internet turns into an “appliance” 5G will be the technology that finally enables the Internet to ’fade into the background’ – nobody will care about what 5G is, but rather what it will deliver.

 

With the 5G marketing machine in full throttle (although not actually “live”): Rogers claims to have “Canada’s Largest & Most Reliable 5G Network”, Bell claims to have “Canada’s Fastest 5G Network”, and Telus highlights a recent award claiming it has “the fastest network in the world” (note it does not specifically say “fastest 5G network in the world”). Marketing aside, here is a brief overview of what 5G will mean:

 

Canadian telecom operators expect to deploy both mobile 5G and fixed wireless 5G architecture. It is this combination of traditional fibre wire connections, and the wireless part that will change everything. This is done with “small cell deployments”:

 

 

 

Currently, BCE and TELUS operate under a national 4G LTE network sharing agreement and expect to use a similar agreement to deploy a national mobile 5G network. Both incumbents have aggressively built out their fibre-to-the-home (FTTH) networks to support their wireline business, but this infrastructure will also be used for mobile and fixed wireless 5G. Telus recently announced that it will be pulling forward $1.5bn in capex spend in 2021/2022, with the majority of that spend going towards its FTTH expansion (substantial completion of the FTTH build by end of 2022) and copper-to-FTTH customer migration. Rogers has previously indicated a preference to deploy its own national mobile 5G network without entering into network sharing arrangements with other regional operators. These are all massive investments.

 

Roger's offer to purchase Shaw is part of this changing landscape. If completed, the merger would instantly provide Rogers with the additional fibre/fixed telecom infrastructure in Western Canada required to develop a wholly-owned, national 5G network.

 

I’m not going to delve into all the technical aspects of this 5G, but we will no doubt look back in 5-10 years at the current internet and wireless landscape, much as we laugh at the dial-up era for internet: AOL anyone?

 

I really do believe that this will drive the mass adoption of artificial intelligence (AI) and virtual reality (VR). Transportation for instance, will become far less reliant on actual human drivers. While the 5G story is in its very early stages , in the longer term, it is similar to the incumbents as when cell phones meant less landlines, or the when the internet meant less cable: sure providers had to pivot, but it is going to be impossible to displace them. The incumbents will continue to innovate, data usage will continue to soar, and for all us: less dropped calls and connections.

 

What a “busy” time this summer is for all of us: as more and more of us complete vaccinations, things continue to open up, travel plans emerge, there is barely time keep up. It’s nice to go out again, enjoy friends and family with far less restrictions. Not sure how massive the Canada Day and July 4rth fireworks are going to be, but on top of this, I will spend some time watching Wimbledon. Djokovic is a no-brainer to be holding up the men’s trophy, and I’m going with Coco Vandeweghe to be holding the Venus Rosewater Dish a week Sunday (LINK).