Sometimes, headlines about the development of 5G networks can read like the beginning of a Tom Clancy thriller. Who will be the first to have wide-scale 5G rollouts: China or the US? The future of commerce could be at stake; national security could be threatened, if Chinese tech firms are helping their government implant listening devices across Europe and the US.

From an economic standpoint, countries and politicians are taking being the dominant developer of 5G networks more seriously. According to Deloitte, “First-adopter countries embracing 5G could sustain more than a decade of competitive advantage.” Why does that matter? Well, back in 2016, Accenture estimated that “telecom operators [in the US] are expected to invest approximately $275 billion in infrastructure, which could create up to 3 million jobs and boost GDP by $500 billion.” What if the US ends up lagging behind China or Japan or Germany—will those jobs end up going overseas? Unsurprisingly, politicians started to panic.

The purpose of this article, though, is to strip away the hype and think about what these new networks could mean for the data used by capital markets firms. While AT&T is already trying to hawk what it’s calling a 5G E service—even though it isn’t an actual 5G network, but more of a rebranded LTE network—we’re still a few years away from seeing the true power of 5G. So in many ways, this is more of a thought process: How might banks, asset managers and vendors take advantage of 5G? Answering that question requires taking a moment to understand what we’re really talking about.

By putting some context around 5G’s supercharged speed estimates, it’s possible to understand the hyperbole. According to AT&T—which, like Verizon, Sprint and T-Mobile, is one of the biggest US wireless carriers competing for smart-device network supremacy—says latency will be cut from 10 milliseconds for 4G networks to less than one millisecond for 5G networks. By 2021, data traffic will jump from 7.2 exabytes per month to 50 exabytes—or, to put it in perspective, 25 billion times the size of the 2010 CD-ROM edition of the Encyclopedia Britannica. Peak data rates will grow from one gigabyte per second to 20. Available spectrum will rise from three gigahertz to 30. And, importantly for capital markets firms, connection density will rocket from 100,000 connections per square kilometer to over 1 million connections per square kilometer. 

Data—Lots of It 

Even for some young adults, it’s hard to imagine that there was a time when you couldn’t pull up any game under the sun on your phone, or that you had to discreetly nail cables across the baseboards of entire houses in order to connect to the internet—let alone be on a call and the information superhighway at the same time. Video conferencing and touch-screen technology were the stuff of the USS Enterprise, not HP Enterprise. But, in 2007, touch-screen smartphones using this new standard hit the markets and proved—quite literally—life-changing. All of a sudden, information was truly at your fingertips, even if you were sitting on the commode, harnessing the full power of the web without having to rely on bespoke web access protocol sites. 

But even when 4G networks arrived in 2008, it was frustrating to have to wait a few minutes for this so-called smartphone to shoot a signal into the ether before finally telling us that yes, in fact, male honeybees die during mating—such trivia being the benefit of collating all human knowledge in digital repositories. Then, in 2011, 4G LTE networks came to fruition and a few years later were prevalent enough that the days of debating baseball statistics in a bar were dead, because seemingly everyone had mini-computers in their pockets to disprove erroneous claims.

It might sound like 5G is simply the next evolution of 4G, and it is, but it’s also so much more. While the hype surrounding 5G’s immediacy is out of control, 5G will indeed be a revolution for consumers, business and maybe even entire countries, but that revolution isn’t going to happen in 2019, or anytime in the next few years. This year will likely give birth to the first true, commercialized 5G networks, but like all babies, they will be small and unintelligent. 

Skeptics might say, “My phone will be faster—even a lot faster—but it’s already pretty fast.” And for anyone who lives in a place with LTE coverage—which is much of the US and the UK—that is correct: Mobile devices are already fast. Video streaming is fast. File sharing is fast. Data is easily accessible. But that’s missing the bigger picture. 

As mentioned before, connection density will increase from 100,000 connections per square kilometer to over 1 million. That’s important because there’s another technology revolution currently unfolding—the Internet of Things (IoT). Dan Littmann, principal at Deloitte, says people will not be constrained by network traffic or the amount of data they use because most of the devices that will be added to a 5G network are going to be machine-to-machine (M2M) and IoT devices. 

“There’s a limitation on LTE in terms of how many devices can connect to [the network] within a square kilometer; for all practical purposes, that limitation goes away with 5G,” he says. “In terms of allowing the number of devices onto the network in a rather concentrated area—which is necessary for productivity gains—that’s a problem that 5G solves. But it doesn’t have anything to do with faster speeds or lower latency [though 5G is faster and offers lower latency], it just has to do with aggregating those devices on the network.”

4G is already capable of handling IoT devices. As a result, so-called “smart cities” are, today, able to obtain data for traffic centers, pollution centers, parking meters and certain types of foot traffic. But where 4G falls short is when there’s a concentration of IoT devices that exceeds 100,000 devices per square kilometer, says Adrian Scrase, CTO at the European Telecommunications Standards Institute (Etsi), which is working on developing the standards for 5G networks in Europe. 

“Once you get to that stage of having massive IoT, you then have massive data [which is inherently noisy] but the value is the information you could extract from these massive datasets,” he says. “So you can convert technology into business and enterprise [solutions] by having the clever people who can find the value in information from the data you’ve collected.”

If you know anything about the alternative data space, then this is all sounding quite familiar. Capital-markets consultancy Opimas estimates that in 2018, the alternative data market—including data sources, IT infrastructure, system development, and human capital—exceeded $5 billion, and will climb to almost $8 billion by next year. 

And it’s important to take note of the reason for this: Namely, there’s so much more data available and relatively easily captured and disseminated. In 2013, IBM estimated that 2.5 quintillion bytes of data is created every day and that’s the number that’s still often cited even today in data growth estimates, but that initial estimate came well before the advent of IoT, wide-scale LTE adoption, and artificial intelligence (AI) and cloud use cases. IBM hasn’t updated that number but it is likely to be higher due to these tech advancements. 

Safer estimates predict that wide-scale 5G will happen in five years. Once it does, it will supercharge data growth. 

So what kind of new data will be created as a byproduct of 5G development? Or if not new, perhaps more accurate and clean data? Everything is speculation, but let’s consider location data, which hedge funds and alternative asset managers have been using for years to inform investment decisions. A mobile phone’s location sensor is largely dependent on GPS, which is a technology from the 1980s, says Wei Pan, cofounder and chief scientist at alternative data provider Thasos Group. The phone is looking around for a cell tower to connect to, or a Wi-Fi signal to estimate where the phone is currently located—that won’t be necessary anymore. 

Similarly, satellite imagery relies heavily on very big, expensive satellites taking pictures from space of the ground. But what if cameras closer to the ground could improve that process?

“With 5G you can imagine that signal will be achieved by deploying a lot of very small, low-flying drones, or even some fixed cameras from tall buildings. And those cameras take pictures of small regions at a very high frequency to make up this big image of the land,” says Pan, adding that this can create more real-time data, rather than relying on a satellite flyby. 

Now, take it a step further. You have a city saturated with cameras, monitoring traffic and people. This kind of surveillance isn’t easily done with 4G because of the load issues mentioned before. With 5G, privacy concerns aside, it’s not a problem. “You can have as many video cameras as you want and you collect data effortlessly,” Pan says.

Octavio Marenzi, Opimas’ CEO, agrees with Pan. Marenzi has been covering the alternative data space closely, and he says he believes 5G will lead to more accurate geolocation data, which could prove valuable to traders looking for an edge.

Mobile geolocation data typically comes from mobile app providers that resell the data. Sometimes the data is non-continuous because the mobile app is only able to track an individual when the application is open. Therefore, it might only locate the user a couple of times a day, or it’s running hundreds of times a day in the background, but that can overlap with other apps. 

Marenzi says 5G will provide more accurate geolocation data in real time, as the network mobile operator will, somewhat creepily, be able to literally follow an individual everywhere they go with great precision.

“What will change is that the mobile operators will have much, much better data about their customers and users,” he predicts. “Currently, a mobile network operator has to rely on cell towers to locate you and can only do that within about 100 meters, which is fine for certain applications. But if you really want to identify where someone is, if they are in a particular shop or something like that, or on a particular floor in a building, that breaks down—but with 5G you’ll be able to do that.”

It’s also easy to see how other industries will be able to offer more accurate data in larger quantities: for example, shipping and supply-chain management will be greatly impacted, as it will be vastly easier to track containers and analyze route efficiency; the transportation industry will be able better monitor public vehicles to direct traffic or alert people of delays; and farmers can better monitor crops or malfunctions to equipment and be more proactive. 

Additionally, software companies will have new avenues for delivering their goods and services. It’s still far too early to tell what new startups this will create, but much like how cloud and bring-your-own-device (BYOD) ideas helped to change the fundamental ways that work is conducted, 5G will open new, unforeseen avenues of development. 

And by coupling this data with AI and machine-learning techniques, it will allow companies to better improve their services, adds Deloitte’s Littmann. “The ability to find patterns in that information is absolutely out there. The more devices operating on the network the more information you’re gathering on processes and the more lessons from an AI standpoint that you can feed back in to continue to improve those processes,” he says.

[Read More: As 5G networks come to fruition, Anthony says that people, companies and governments will need to be aware of the privacy and security concerns raised by this new wave of technology. Click here to read more.]

A Lesson Learned

There’s another big reason why 5G will be significantly different than 4G: design. 

Etsi’s Scrase says that when 3G and then 4G were first designed, “we started by first trying to guess who would be the end beneficiaries and we tried to design the system around our perception of who the end user would be. And in most cases, we got it completely wrong,” he says. 

A good example, he says, is with the development of LTE. He says they spent a lot of time trying to determine who would be the end beneficiary, but two years after they finished the system design, a new category of user came forward saying they wanted to use the network, but they had different needs that the original design couldn’t support. 

“So we had to retro-fix a lot of these ideas into the 4G design we already put to market because it was cumbersome, expensive and funky, to say the least,” he says. “With 5G, we’ve made no presumption at all as to who will actually use the system.”

By designing the system this way, it’s flexible to address changes in the market or users’ needs.

“The main premise that lies behind that is this concept of network slicing and virtualization,” he says. “This means that the same physical hardware deployed by an operator, can at the same time deliver, say, a mobile broadband-specific slice to an end consumer who wants to download a video, and at the same time can deliver a very different performance. So you have a completely different set of end parameters being delivered by the same physical hardware by this concept of network slicing.”

An aforementioned example considered moving away from satellites, but with 5G, satellites can improve, too. Previous generations of networks didn’t have an integrated satellite component, Scrase says. While there was satellite use, it was very clunky and not integrated into the system’s design. 

With 5G, they will have an integrated satellite component. As a result, when it comes to shipping, it will be easier to track assets and follow, in real-time, a container’s journey from Sydney to San Francisco, where it’s loaded onto a truck and sent to Chicago.

“If you want to follow and know where that container is at any one time, asset tracking by satellite is a very, very good use case,” Scrase says. “It’s cheap, it’s easy, and you’ll always know where the containers are.”

Of Time and Countries

While the hype of 5G truly arriving in 2019 is overblown (technically there were small experimental instances of 5G released in 2018, but they were not commercialized) we’re still years away from knowing what the full power of 5G will bear. But that doesn’t mean we shouldn’t expect great strides to be made in the near-term. 

Chip maker Qualcomm will commercialize its 5G New Radio (NR) global standard this year. Huawei is expected to release its 5G chip in the second half of this year. Samsung rolled out a 5G modem last year, as has Intel. ZTE, Ericsson and Nokia are also aiming to challenge the likes of Qualcomm, the dominant player in the space. Taiwan’s MediaTek is also making inroads on Qualcomm. Huawei is further planning on rolling out a 5G phone this year, as are Lenovo, LG, Samsung, Honor, HTC, Xiaomi and Oppo, among others. And the big four wireless carriers—AT&T, Sprint, T-Mobile and Verizon—will be aggressive in their marketing. To say that the space is competitive is like saying that Ernest Hemingway only drank occasionally—it’s a bit of an understatement. 

Still, people will need to curb their enthusiasm for 5G in 2019. Etsi’s Scrase says that while 2019 and 2020 might yield some big developments, it might take until 2025 to “see some of the benefits that we expect to see from the technology.” Opimas’s Marenzi agrees that it will take some time to see major advantages when comparing LTE to 5G, but also hedges his bet. “Sometimes new technologies appear and it’s very hard to predict how they’re going to unfold and what’s going to happen.”

Thasos’ Pan notes that it took almost six years for the telecom industry to fully deploy 4G. “For 5G, the deployment is much more difficult, because in 5G the idea is to not have a single large antenna for cell phones; the idea is to install many, many small, micro cell towers. It’s actually the labor part of the deployment that’s going to be more intensive, more work. So I expect, the deployment of 5G infrastructure itself is going to take several years. I really think that before 2025, we won’t see much.”

So if 5G is still a ways away, why start thinking about it now? This industry is going to move fast—even if over a long spectrum, relatively speaking. And while it’s a hype game right now, 5G will prove revolutionary—this isn’t just a faster version of 4G. Now is the time to start planning and understanding how this technology will both affect your company and to see if there’s a way to monetize this revolution or move into new lines of business. Deloitte said that first-adopter countries could sustain more than a decade of competitive advantage—that could be true for individual companies, too.