Data provision has claimed its place as an essential service and, with the advent of 5G, the explosive growth in the sector is poised to continue.
Although 4G revolutionised communications, 5G has the potential to connect billions of objects and enable concepts such as autonomous vehicles and smart cities to become reality. Intel predicts autonomous vehicles will provide and consume four terabytes of data an hour (the average person consumes 650 megabytes in the same period). Infrastructure investors are embracing data as the third major vertical alongside energy and transport.
“There have been huge reductions in the cost of data capture, processing, transport and storage,” says Jack Colbourne, co-head of telecoms at Arcus Infrastructure Partners. “Even something like planning a delivery truck route has become a highly data-intensive exercise. That has physical implications for fixed and wireless communications networks and data storage facilities, which in turn creates exciting opportunities for us as infrastructure investors.”
These opportunities can be found in each of the three pillars of digital infrastructure investment – towers, fibre and storage. “Wireless network infrastructure will experience significant growth as we move to 5G and beyond,” says Christopher Ehrke, the other co-head of telecoms at Arcus. “More equipment, more sites and more densification will be required.”
High in fibre
Fixed networks will also be transformed. Only fibre has the capability to deliver the speed and capacity needed to transport vast amounts of data and interact with mobile networks. “To facilitate this material evolution in wireless, we need the parallel build of future-proof dense fibre networks,” adds Ehrke.
Massive amounts of money are needed to build storage, and a growing number of infrastructure investors have turned their attention to an area dominated by trade specialists and real estate players. There seems little doubt that the demands of tech giants will drive a need for square footage. But with corporate cloud penetration at less than 20 percent in Europe, there is also an opportunity to provide outsourced data storage facilities for millions of SMEs. Meanwhile, 5G roll-out may mean mini-centres will be needed deep inside cell towers and hubs.
New forms of data storage are also being developed, including in synthetic DNA, and if this technology is scaled it could overtake large-scale storage. “While there is huge opportunity in the near term, we do see innovation in data storage presenting some degree of technology risk,” says Ross Israel, head of global infrastructure at QIC. “The opportunity that we are more focused on today is in the investment required to deliver the fibre optic and wireless networks.”
The 5G opportunity
5G has huge implications for infrastructure. More than $250 billion is due to be spent in the US on upgrading fibre optics and towers in the next eight years, according to QIC’s Ross Israel.
5G will facilitate growth in the Internet of Things, dramatically driving data flow and data storage. Ericsson predicts a market surpassing $1.2 trillion within a decade, with more than 150 million 5G connected devices in less than 12 months.
“5G opens up use cases including smart traffic management, smart buildings and smart lighting in urban settings,” says Arcus’s Christopher Ehrke. “There are also interesting industrial use cases being developed using 5G technology. The process-driven manufacturing sector is crying out for private network solutions that could be provided by third parties. They will then be able to use this new technology to great effect, increasing the security and efficiency of their manufacturing processes and being able to adapt it in fractions of a second to avoid waste or downtime.”
“Pretty soon we will be positioning 5G on rooftops and on lamp posts, to create these smart cities, populated by smart devices for power, gas and water” adds Jeffrey Altman, senior advisor at Finadvice. “It really is all about data, data, data.”