Given the upcoming tsunami of data, our mobile communication infrastructure has to evolve towards 5G. For operators of this infrastructure, which consists of very tangible antenna towers, data centers and fiber, this upgrade will significantly improve their return prospects.
A lot has been written about the digitization of our world and the impact on the way we communicate. Our total data consumption has increased a stunning 4,000-fold over the last decade - and we are still expecting substantial growth to come. A widely quoted study from Cisco estimates a dazzling average growth rate of 25% per year in total internet traffic until 2020. For mobile data traffic the numbers are even more staggering: Cisco works with a predicted compounded annual growth rate (CAGR) of 50%+ between 2015 and 2020.
Our hunger for data is pretty much insatiable. Newer applications such as video content streaming, augmented reality or connected cars, use massive amounts of data. The underlying network infrastructure, which makes all this data traffic possible, is crucially important to enable pretty much everything that we do online. An extensive number of components have to seamlessly work together for us not to take notice: antenna towers; hyper-efficient data centers and last but not least lots and lots of underground fiber or copper miles that connect everything; including our continents through massive subsea cables.
This global communications infrastructure has been built over the course of decades at a cost that approaches USD 2 trillion. And clearly, for our infrastructure to keep up with many of the envisioned future applications, we need further investments. How much that is going to be is not clear yet. Just a few hints: Qualcomm calls it the 1000x challenge (…!), Europe has called for EUR 600-700 billion of investments just to catch up with the US and Asia, while Accenture estimates the US needs to spend USD 275 billion to make the 5th generation of mobile networks a reality.
Our digital infrastructure needs to evolve in response to huge amounts of mobile data and especially the multitude of new applications with very diverging requirements. In order to prevent our digital networks from looking like L.A. at rush hour - congested and standing still - an upgrade to 5G is needed. To deliver on the many promises this fifth generation of mobile communication is supposed to bring, we think our infrastructure needs to evolve and redesign by:
For this to work most efficiently, we expect an increasing trend towards outsourcing of the three main components of the digital infrastructure. This means that we expect telecom operators to increasingly farm out radio antenna towers, data centers and fiber routes to independent third-party owners. As the economics of network sharing will become greater, more carriers can be convinced to divest or use joint venture structures for infrastructure assets. Consolidation activity will pick up to share the capital spending burden for the 5G roll-out. Just as with traditional real estate, owning real assets in mobile infrastructure will be increasingly done by specialized investment vehicles.
In the past, content was created and stored centrally and then consumed at the outer edges of a network. We would browse a webpage or download a Netflix video from a remote data center onto our mobile devices. This is changing. Ever more users are uploading YouTube videos and are keeping each other updated with short videos on Facebook or Snapchat rather than with text. Connected cars will generate massive amounts of data through their sensors and cameras.
This more decentralized distribution of content will lead to a development at the edge of the network. Urban or micro data centers will emerge, as much will move closer to the end user. The outer layers of the network will become more intelligent rather than relying on the core network.
Operators of infrastructure assets can benefit in many ways. Tower companies will enjoy significant leverage of their existing infrastructure assets. At the base of the towers, they might have the right locations for micro data centers. Similarly, interconnection data centers will benefit from their location closer to the edge. Lastly, fiber network operators – the linking pin of everything – will become ever more important. There are beneficiaries in other sectors as well; think of telecom communication equipment manufacturers, data networking companies, or antenna, chip and sensor manufacturers.
Dit document is niet beschikbaar voor gebruikers uit landen waar het aanbieden van buitenlandse financiële diensten niet is toegestaan, zoals ‘US persons’.
Uw gegevens worden niet aan derden verstrekt. Deze informatie is uitsluitend bedoeld voor professionele beleggers. Alle aanvragen worden gecontroleerd.