Coming Soon: A 5G World

Unless your current mobile phone is flatlining, an upgrade could wait until next-generation wireless arrives. The 5G era is fast approaching.

5G SmartPhone

New year, new you – new smartphone? Not so fast.

If you didn’t get a new phone during the holidays, you may be tempted to treat yourself. But unless your old phone is truly on death’s doorstep, you should try to resist the urge to upgrade for now. We are fast approaching the 5G era, and if predictions are correct, you will want a phone capable of making the most of this new technology when it arrives.

When I bring up 5G, my friends often haven’t heard about it or know almost nothing about it. And my friends aren’t outliers; an August 2018 survey by Intel found that 58 percent of Americans had not heard of 5G or knew little about the changeover. While I am not a cellular network expert, I have watched with interest as reports about the game-changing nature of 5G begin to arrive. I feel a little as if I’m the person insisting in 1991 that this whole internet thing is really going to take off.

Without getting into the technical details, 5G is short for “fifth generation of cellular network technology.” It’s a collection of ground rules for defining a network, including the radio frequencies that network will use and the ways various pieces of hardware handle data. The basic idea is that 5G, once fully implemented, will allow for much faster mobile networks and shorter lags between a request for data and its delivery (in other words, lower latency).

Faster speeds are a standard cell phone network promise, but at its best, 5G should be orders of magnitude faster than current networks. For many people, their phone may soon offer a much faster connection than their home networks – a connection capable of downloading an entire movie in seconds, rather than minutes. The 5G changeover may also change how people get their internet altogether, for all their devices. Currently, many people use cellular data only when they are outside of Wi-Fi range; with 5G, it may make more sense for many users to simply pay for expanded data plans and rely on cellular networks more or less exclusively. With a sufficiently robust data plan and 5G-enabled laptops and smart devices, some customers may be able to drop cable or fiber optic-based home internet entirely.

The change to 5G is not only about phones and tablets. The new networks will also open up a variety of new and improved technologies, including self-driving cars, drones, industrial robots, virtual reality gaming systems and security cameras, to name just a few. Augmented reality may also become much more common. If the reduced latency is as good as promised, telemedicine techniques such as remote surgery may become practical on a widespread basis. Officials in both the U.S. and China have discussed 5G as a competitive edge for their respective economies, potentially allowing for the expansion of artificial intelligence in a variety of industrial and business settings.

No technology is perfect, of course. Skeptics of 5G have worried that the new network may suffer from greater reception issues because of the differences in network frequency, or that phones will become relatively massive to accommodate the antennas necessary to ensure consistent service. Even if companies can overcome these challenges, widespread 5G network coverage will not be instantaneous. Providers will need to outfit cell towers, modems and mobile devices to access the new 5G spectrum. AT&T has rolled out 5G in select urban markets, while Verizon introduced wireless home internet connections first, with smartphone user access to follow. Availability and quality are likely to be uneven nationwide for a while.

This brings me back to where I began. Between the fact that 5G may be poised to change how we use our phones and the fact that it is not yet widely available, it is not a good time to buy a new phone if you can avoid it. It probably isn’t a great time to sign a long-term contract with a home internet provider, either.

While 5G-friendly phones are slated to hit the market this year, they will cost a premium compared to equivalent 4G LTE devices. Yet 5G phones are likely to have, at least in the beginning, poorer battery life than their 4G counterparts. Depending on where you live, it may also be some time before 5G even comes to your service area. For most people, it will make more sense to wait to upgrade until manufacturers work out any kinks and you can consistently take advantage of the new networking capabilities. We saw a similar transition period between 3G and 4G LTE; the latter is now standard, but rushing to get a 4G LTE device offered limited benefits until the network itself was ready for widespread use. Early 4G phones were also bulky and had relatively poor battery life, problems that were solved later in their development.

If you are an iPhone devotee, you won’t even have the choice to buy a 5G phone in the network’s earliest days. Apple is not expected to jump into the initial 5G wave at all; analysts predict it will not offer a 5G-compliant iPhone until 2020. This means that current iPhones are likely to be obsolete within their service life. If you must get a new iPhone because your old phone has died, there is no sense investing in a top-of-the-line device. Consider a more economical older model to tide you over until 5G is an option.

Apple may have bigger worries than 5G in the short term. On Jan. 2, CEO Tim Cook issued Apple’s first profit warning in 16 years – that’s six years B.i. (before the iPhone). While Cook identified the culprit as the collapse of sales in China, and a drop in iPhone sales in particular, Apple has recently had to fight the perception that it keeps introducing new models of its flagship smartphone that are more expensive without offering substantially different features.

Apple has pivoted before – how many iPods have you seen in the wild lately? – though I don’t think the iPhone is going away anytime soon, as it currently represents about two-thirds of the company’s revenue. But there is also no compelling reason to snap up whatever phone Apple offers in 2019 when there will inevitably be a 5G-ready alternative in a year or two.

Technological advances, including the internet and the smartphone, have rapidly reshaped our world in ways few people could have fully understood in advance. I suspect that 5G is likely to reshape our lives yet again in the near future. If you can, wait to upgrade your phone until it does.

About Paul Jacobs 13 Articles

Affiliation: Palisades Hudson Financial Group

Paul Jacobs, CFP®, EA, joined Palisades Hudson as an associate in Scarsdale in 2002. In 2006 he became a client service manager and transferred to Fort Lauderdale. In 2008 Paul moved to Atlanta, where he is presently the client service manager in charge, to establish the firm’s office there.

As chief investment officer and chairman of the firm’s investment committee, Paul directs a team of portfolio managers and associates focused on finding the most efficient and cost-effective ways to implement client portfolio strategies. He oversees more than $1 billion in client assets, including all aspects of investment strategy, portfolio management, due diligence, and manager selection.

Paul formerly served as the firm’s Chief Compliance Officer, and he has had extensive experience in the firm’s investment management and tax compliance practices. His additional responsibilities include developing and monitoring client portfolios, reviewing tax strategies and returns for clients, and developing comprehensive personal financial plans. He also has worked on client projects involving charitable planning, bookkeeping, retirement planning, and estate planning and administration.

Paul graduated from New York University’s Stern School of Business with degrees in finance and accounting. He is a CERTIFIED FINANCIAL PLANNER® certificant, an Enrolled Agent and a member of the Financial Planning Association of Georgia.

Paul is the author or co-author of numerous Sentinel articles, including “Pay As You Go: Tax Rules Upon Expatriation” (June 2012), “Beware Mutual Funds Using Hedge Fund Strategies” (January 2012), “Is There A Bubble In The Bond Market?” (October 2010), “Should You Do A Roth IRA Conversion?” (February 2010), and “Private Equity In A Deleveraged World” (April 2009).

Visit: Palisades Hudson

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