July 21—The rise of 5G—all the rage in commercials and conversations—ranges from internet infrastructure safety and the increased use of smart cars to the cost of the next iPhone. But when we take a step back from the chatter, exactly what changes are we eagerly awaiting? Muriel Médard, an information theorist and electrical engineer, and the Cecil H. Green Professor of Electrical Engineering at the Massachusetts Institute of Technology, joins Chief Investment Officer Tony Roth to unscramble the mixed signals around this next wave for broadband cell networks.

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Muriel Médard, Cecil H. Green Professor of Electrical Engineering, Massachusetts Institute of Technology

Please listen to important disclosures at the end of the podcast

 

Wilmington Trust’s Capital Considerations with Tony Roth

Episode 37: 5G: Mixed Signals
Tony Roth, Chief Investment Officer, Wilmington Trust Investment Advisors, Inc.
Muriel Médard, Cecil H. Green Professor of EECS, Massachusetts Institute of Technology

MURIEL MÉDARD: I want my data and I want it now and I need it seamlessly. I don’t want to be messing around with connecting to this hotspot and that hotspot. And, I want it to be very reliable and I want it to arrive exactly when I need it. So, that’s a big challenge right now I would say for the current 5G.

TONY ROTH: That was Muriel Médard, an information theorist and electrical engineer who is the Cecil H. Green Professor of Electrical Engineering at the Massachusetts Institute of Technology, renowned for her research in network coding. Muriel is joining me today to demystify 5G and all the buzz surrounding it.

Welcome to Capital Considerations, the market and economic podcast that’s fully invested in your success. I’m your host, Tony Roth, chief investment officer of Wilmington Trust. The rise of 5G or fifth generation cellular technology is all over the news, popping up in conversations surrounding internet infrastructure, safety, the rise of smart cars, even the cost of the next iPhone. But when we take a step back from all this excitement, what changes are we actually waiting for and what do they mean for our ability to communicate with one another?

Today, we are honored to be joined by Muriel Médard, a member of the U.S. National Academy of Engineering and the National Academy of Inventors. She leads the Network Coding and Reliable Communications Group Research Laboratory for Electronics at MIT where she also studied, receiving three bachelor’s degrees as well as her master’s and doctorate. She has won countless awards on her research in publications and communications networking and information theory. Dr. Médard, thank you so much for being here today.

MURIEL MÉDARD: Thank you very much for having me, Tony.

TONY ROTH: So, I want to remind listeners before we jump in that any information that Dr. Médard provides today is not investment advice. They are insights from an industry expert in the technology space.

Dr. Médard, why don’t we start with defining some terms. What exactly is 5G? We had, of course, 3G. We had 4G. Isn’t this just another incremental step forward in terms of the speed of our phones? It feels like this time it’s a little bit different. People are more excited about 5G than they were about those prior generations. What’s the difference this time?

MURIEL MÉDARD: That’s a very good question and one that I get very often, Tony. So, just let me extend 5G is indeed just what comes after four. But there are some differences, between the transition from 4G to 5G relative to the transition, say, from 2G to 3G or 3G to 4G.

I’d like to start a little bit with a differentiation between the formal versus the informal definition. Let me start with the formal one, because it’s a little easier. And so, 5G is the next generation of standards for what we would call mobile or often cellular telephony. Within that there is a body called 3GPP which is formed of major players in the current mobile world, particularly cellular world. And then they got together, and they agreed to some standards.

There’s a different version of 5G, which is what I’m going to call the informal definition. And I think the informal definition is what has a lot of people excited, as you mentioned. And that’s a definition where you have truly ubiquitous communications, seamless, with very low delay, what’s often called URLLC or ultra-reliable low-latency communications, so something where you might be able to have services such as Haptic communications around being able to have remote feeling or, you know, maybe a somewhat closer term very accurate robotics or automotive, sort of really critical—mission-critical infrastructure style services that are supported by 5G.

So, what this means is, to some extent, both a matter of looking currently at the kinds of services that are being offered often with just higher bandwidth, better throughputs and also look at the future with the kinds of services that people are hoping for or predicting, such as helping with self-driving cars, helping in health care, etcetera.

TONY ROTH: So, using a car metaphor perhaps, you know, maybe 2G was a 10-mile-an-hour car and 3G was a 30-mile-an-hour car and 4G was a 40-mile-an-hour car. 5G is almost like a 150-mile-an-hour car and it’s one that goes from zero to 60 in two seconds, something like that. It’s really a quantum leap, if you will, not just in speed but in ideal latency.

MURIEL MÉDARD: Well, it’s interesting. That’s definitely the hope. But actually, you know, your bringing up the speed is a really, really good comparison because, you know, if you think of roads, it’s not just about speed. When you make roads, you don’t just want the roads to allow for high speed. You also want them to have enough lanes. You also want to be enough of the road, of roads such that you have a good network, a good connectivity so that you don’t have, you know, areas that are really difficult to get to or you have to use basically a gravel path to reach.

So, it is very much something where you’re trying to expand the type of transportation so that you can have pretty wide roads everywhere. And a lot of that has to do, for instance, with expanding things like the spectrum that you use. So, mobile telephony uses spectrum as does say Wi-Fi. One of the things, for instance, that makes 5G special is that if you look at the standards it’s the first standard where 3GPP is saying, well, you know, we realize that you’re also going to be using non-3GPP technologies which really stands in mostly for Wi-Fi.

Now what’s happening, for instance, when you look at spectrum with 5G, many of your listeners will have heard that, you know, there has recently been, for instance, an auction, which I think brought, you know, close to $90 billion. So, we’re talking about major, major money in terms of people securing rights to spectrum. But, you know, some of the spectrum that’s being used is at very, very high frequencies. You know, basically you can think of spectrum as just notes on a piano and we’ve been working all around the same octaves and there’s some octaves at really, really high frequencies that we haven’t really been using and those are tricky octaves. Going back to the comparison to roads, they have a lot of space on those roads but it’s, it’s full of potholes and they’re really, really difficult to travel on.

TONY ROTH: So, I want to ask you a bit more about these standards, because as a layperson and as a consumer, one of the things that’s been frustrating is I’ve read a few articles over the years, last year or so. The idea of this 3GPP would suggest that there is, you know, for the first time some type of uniformity in what you get when people say they’re offering a 5G service. But from what I’ve read it seems like there are different levels of 5G and everyone claims to have the best 5G, which is different than everybody else’s 5G.

So, what’s the reality around 5G? Is it really the case that if I have, quote/unquote, 5G on my phone it’s really 5G?

MURIEL MÉDARD: I think that you make a really good point, Tony, which is 5G is a lot messier and a lot more heterogeneous than the previous versions. I’ll give you an example going back to that piano analogy. You know, if you think of what was going on in 4G, pretty much everybody was working over roughly the same octaves, even more that the case in 3G. Now, when you’re looking at 5G, it’s like people are not even all using a piano, right. Everybody’s using different instruments and, strictly speaking, it is 5G. It’s all under the same umbrella.

But in practice, you’re looking at really very different technologies with super-different performances and also very different costs of deployment. I mentioned those high frequencies, you know, the piano octaves at these really high frequencies. What happens is that just like you do when you’re playing an instrument, you notice that the very, very extremely high frequencies are not going to carry quite as far, right. But it’s, you know, if you hear, say, a car with a radio on some distance away you pretty much only hear the bass, right, the boom, boom, boom. It’s not because the music is all bass. It’s because that travels further. Those lower frequencies travel further.

Some carriers are deploying 5G at very high frequencies, which means that because it doesn’t travel as far you may need to do different deployments of hardware. Some of them have actually gone to lower frequencies than what we saw in 4G. And all of them are using a whole lot of Wi-Fi. Even your current 4G service I would hazard to guess, Tony, that, you know, you use your phone with Wi-Fi more than you actually use it with your 4G carrier.

TONY ROTH: So, let me ask about that. And I think that’s—that part of it seems sort of intuitive to me if I have it right, which is that when you say they’re actually using Wi-Fi, I’m sitting in my home and I’m talking on my phone on a call with you today, Muriel, you don’t mind if I call you Muriel, I know because…

MURIEL MÉDARD: Of course.

TONY ROTH: …we’ve already spoken several times. Okay. Thank you. But I actually initiated the call with my cell phone. But in reality, because my cell phone is connected to my Comcast internet, the call is actually being carried over Wi-Fi. And so, even though I’m paying Verizon probably to make this call, even though I don’t get charged minutes, it’s part of my plan, they’re somehow using the Comcast Wi-Fi to make the call. I get the benefit. It’s probably even more clear and more stable. But does Verizon pay Comcast for the privilege of using the Wi-Fi over which the call is actually being carried? How does that work?

MURIEL MÉDARD: So, you’re opening up a very interesting, I was going to say can of worms but let’s say at least topic, which is that a huge amount of traffic, and it’s assumed that at this point 4G is already mostly carried over Wi-Fi, is being carried over Wi-Fi. Now, Wi-Fi has also been having its own different versions and it’s also been progressing. You know, the Wi-Fi that you have in your house now is probably better than the Wi-Fi that you had say 10 years ago.

Generations in mobile communications, these different Gs that we talk about, tend to come at around, you know, ten-year marks roughly. It used to be to a large extent that it was kind of tied to retiring equipment, you know, sort of the obsolescence of equipment or, you know, the—basically you had, you know, fully amortized your equipment. It was time to buy some new equipment. And in, you know, in previous incarnations of the telecoms industry there were some really strong regulatory reasons why upgrading equipment very often was actually beneficial.

But, the Wi-Fi industry has also been progressing. That one is not at all under the purview of 3GPP. So, 3GPP, as I mentioned, is really a very closed club.
So, Wi-Fi is actually run by IEEE. It’s the Institute of Electrical and Electronics Engineers. I’m a fellow of that society. And, you know, some of you may have heard of Wi-Fi as 802.11. I don’t know if you’ve ever heard it called that.
It’s 802-dot-11. It’s actually that’s the name of the standard in IEEE.

TONY ROTH: So, is 5G—I know there are different versions of it as we’ve discussed. Is 5G essentially as fast as 802.11, you know, the average 5G? So that if I am home and I’m on the Wi-Fi, but then I migrate someplace else that doesn’t have access to Wi-Fi, my device will automatically switch to 5G, and I’ll experience a similar level of speed and bandwidth that I would have if I was home connected to my Wi-Fi. Because if that were the case, I could understand why 5G would be so important because it’d be essentially providing the quality of connectivity that I have when I’m sitting at my home on Wi-Fi much more broadly.

MURIEL MÉDARD: Yeah. So, it really depends on the service provider and where you are. I would hesitate to talk about, you know, an average 5G at this point, just because the deployments are very incipient in some places. And as I mentioned, they’re really taking very different forms.

TONY ROTH: But that’s the goal I suppose, right?

MURIEL MÉDARD: That is the goal, yeah. I should mention, you know, a really interesting development in Wi-Fi, which was announced, it was funny. I barely saw it mentioned in the news and to me it was—it looked like such, just such a big deal and potentially very impactful in terms of technology was that so, basically what happens is there is a Wi-Fi Alliance formed of multiple companies. And then, they come up with, in effect if you will, sort of a recommendation and then it’s IEEE that I mentioned before that really sort of pulls it together and cleans it up.

And the Wi-Fi Alliance works pretty fast, I would say generally much faster than 3GPP. And they actually went ahead and said, hey, you know, we want to allow roaming. So, what would roaming mean? It would mean actually that you could not have to do the really clunky current, you know, signing in all the time when you go from one Fi hotspot to another and that you would have roaming in the same what that you’d have roaming with your phone.

I actually don’t know what the consequences of that are. But you can imagine right away that that might really mean a very big competition.

TONY ROTH: Whenever I leave my house, I seem inevitably to not be able to connect to the internet. And the reason I can’t connect to the internet is because my phone connects to a hotspot through Wi-Fi that the cable company provides. But that hotspot, in fact, doesn’t actually have any bandwidth on the internet. It’s not working correctly. So, I have to turn off my internet when I leave the house so that my 5G operates.

MURIEL MÉDARD: That’s exactly it. But so, you, you know, you just described the problem perfectly. But, of course, you know, that’s actually not a problem that’s technically that difficult to get around.

TONY ROTH: Because the cable company is too cheap to invest the appropriate resources in their Wi-Fi nodes so that they actually have the appropriate bandwidth for all the people that are connecting to them.

MURIEL MÉDARD: Yeah. In some cases, actually, what companies have done is they have given incentives to their customers, particularly in urban and fairly dense suburban areas so that they can use customers’ spare Wi-Fi and –

TONY ROTH: Right. I have that on my Gateway. I can turn it on or off if I choose to.

MURIEL MÉDARD: Exactly, yeah. And that also has, you know, it’s sort of taking off more in urban and suburban areas, particularly Northeast in the U.S. It has been around for quite a while in a lot of Europe

And actually, that gets us a little bit to the next question. It’s like, okay, you’ve just identified the problem. Everybody knows this problem. Everybody’s aware of this sort of bizarre coexistence between Wi-Fi and 5G/4G.

One of the things that’s going to happen is eventually when you have these kinds of inefficiencies, somebody’s going to come in and fix them. Right? right.

TONY ROTH: In other words, why do I pay Verizon $300 a month for my family to use their 5G network when 98% of the activity is actually happening over Comcast Wi-Fi network? I mean does Verizon pay Comcast anything for the privilege of using their Wi-Fi and their, ultimately their system in order to route all their calls?

MURIEL MÉDARD: I do not believe that that is the case. But, of course, I’m not privy to agreements. But generally, I don’t believe that that’s the case. You know, I, I’m basically allowing my phone, and sometimes it’s even app-dependent, to join only by Wi-Fi or join only by phone or to transfer to Wi-Fi, because you know, I know that I make calls on my phone when I’m not at home and, you know…

TONY ROTH: Right.

MURIEL MÉDARD: …friends’ Wi-Fi hotspots and, you know, I can’t imagine that they could be tracking.

TONY ROTH: So, five, so the 5G providers, the cellular providers have a pretty wonderful business model at the moment because they don’t need to build up a system that can have, that can handle the bandwidth of what their customers are really utilizing because most of that bandwidth is going over the Wi-Fi and, you know, the internet directly. So, how will the industry adapt to that? Will there become a provider that allows me to only pay for bandwidth when I’m outside of my home so that when I’m in my home I can just use the Comcast and I can save a lot of money?

MURIEL MÉDARD: So, you could imagine the possibility’s entirely there. Right? But you, you’re going to need somebody who’s doing the engineering, doing it over the top. I mean the traditional service providers in the U.S. have what they’ve called deskilled over the last decade or so, certainly since 4G. That’s to say that they’ve really outsourced a lot of their, engineering to the companies that provide them their equipment, you know, the Ericssons, Nokias, Huaweis of the world. And it may have been a solution that, you know, made sense at the time, you know.

But it, it’s certainly right now, I think, it’s a risk. You know, it’s something that I think the industry has realized is a risk and I’m not just saying that because, of course, I’m an engineer and I think everybody should have, you know, lots of engineers on their staff. It really is, you know, something which you don’t need it until you really need it, right.

So, I think that it’s going to be a very tricky—it’s going to be a very interesting period of time to see what happens. A lot of the research that I do is actually about being able to use the Wi-Fi network and the mobile network, say 4G or 5G, simultaneously optimally, so maybe using all of the resources that you have and combining them optimally rather than sort of switching back-and-forth clumsily between one and the other and sort of just connecting to everything that you can connect to at a time and just merging all of the services in a seamless fashion.

TONY ROTH: What kind of companies do you think are apt to come in and try to exploit this, sort of this bizarre relationship that exists between the, you know, the cable providers, i.e., the Wi-Fi carriers, on the one hand, and the cellular providers on the other?

MURIEL MÉDARD: So, you know, you can imagine hyperscalers like cloud providers could do it. They’re not really doing it yet, but it, it’s clear, you know, if you read the sort of the, you know, industry rags that, a lot of the network management right now is actually being handed over to hyperscalers, the usual suspects that manage the cloud.

So, you could imagine them doing it but generally they’re not doing it yet. You could imagine actually service providers, you know, current service providers, say the descendants of Ma Bell doing it themselves. They definitely could. They sort of already have the customer base. Often, they have very good relations with the customers, and they could provide these services. But right now, they don’t.

You could imagine that the network equipment manufacturers could themselves say, all right, you know, we’ve had a good run. But, you know, if you can’t beat them, join them. Let’s figure out how to make our equipment work together with Wi-Fi in a way that’s just going to reduce the, you know, total cost of ownership for our customers.

So, all of them could. Right now I think is sort of this little bit of an awkward standoff when you’re trying to figure out, you know, who’s going to jump first. As soon as one person does, then everybody will.

TONY ROTH: So, let’s talk a little bit about the utilization of cellular generally.

MURIEL MÉDARD: Yes.

TONY ROTH: So, yes, it’s much faster, bigger roads, smoother. When I think about my phone, right, it’s funny that we call this device a phone, right.

MURIEL MÉDARD: Yeah.

TONY ROTH: Because a phone implies that I’m using it to talk and that, I would imagine, pretty low bandwidth type of activity. And maybe I use it to surf the internet. And so, you know, as a layperson, at the surface I would sort of think, well, is it really that big a deal? Is all this that a big a deal? All I’m doing is having a few conversations, I’m surfing the internet, and I’m sending a few texts.

But then when I think about it more, I realize that, well, I’m doing more than that. I have home cameras that I tap into.

MURIEL MÉDARD: Right.

TONY ROTH: And even if I’m not at home and I’m actually using the cellular, I may just leave it turned on for a while and, you know, poor Verizon has to pay for all that bandwidth utilization when I’m not even paying attention to it. And there’s the whole idea of self-driving cars that need, they need to be connected to a network in order to not crash. So, what are the industries and areas that, you know, away from the actual cellular providers that are going to be able to reach that critical point and change our lives by offering new capabilities and new services on the back of this very big bandwidth mobile data capability?

MURIEL MÉDARD: That’s a really good question, Tony. And, actually, this will take me to a question of then what is speed, okay? We’ve been talking about speed right now, sort of comparing it to cars. I’ll use a different analogy if you’ll allow me to change metaphors.

And a lot of your listeners may be more familiar with that, you know, during this whole pandemic staying at home. A lot of people started, say, you know, ordering meal services, right.

So, if you think of ordering, you know, your meals at home, you say you order 52 weeks of meals per year, right. So, insufficient rate would mean that you didn’t get 52 weeks’ worth of food, okay.

Speed is different. You know, if somebody delivers you 52 weeks’ worth of food but they only deliver to you say every four weeks, then what happens is you did get enough food. Let’s say you got enough data, but a lot of it is old by the time you get to the end of the fourth week. And that goes back to this new desideratum in 5G that I was mentioning at the beginning of our chat of ultra-reliable low latency communications.

But this low latency means that, you know, it also has to get there quickly enough, right. Suppose I need some data. You know, if I want to, say, play a game or watch a movie, I only need so much data. Now, I still need maybe a lot of data. But, you know, I don’t need an infinite amount of data. I really need it to get there on time. Or, if you’re driving a car, you don’t need infinite amounts of bandwidth. You do need the stuff to get there on time.

And so, a lot of the schemes actually that traditional 4G and even 5G to a large extent have been using are good at doing the reliability part, but they do it at the cost of putting lots and lots and lots of redundancy and that really hits you on the delay part. So, that has been a really big problem for the way I would say 5G is going done now.

So, this gets back to what we said at the very beginning. What’s the difference between actually, you know, what’s happening in standards versus the sort of informal definition of 5G which is, hey, you know, I want my data and I want it now and I need it seamlessly. I don’t want to be messing around with connecting to this hotspot and that hotspot I want it to be very reliable and I want it to arrive exactly when I need it. So, that’s a big challenge right now I would say for the current 5G.

TONY ROTH: So, what are the areas of the economy that are going to be the biggest beneficiaries once the 5G gets, you know, fully built out and meets its promise, if you will, from a data standpoint? Is it self-driving cars? Is it the electrical grid? What are the areas that we should be looking at just generically, you know, as investors thinking about what areas of the economy are really set to benefit in the years to come as a result of the advent of this, you know, massively powerful data network that is still in the beginning stages?

MURIEL MÉDARD: Yeah. So, I would say I’m not quite sure how 5G’s going to look, okay. I believe the informal definition of 5G will happen. Whether it happens largely because of the 5G that 3GPP has worked on or only very partially, I think time will tell. So, I want to be very careful when we talk about 5G. I’m really talking about the informal definition of 5G.

One of the big drivers of traffic right now actually is not necessarily so much new applications but is data due to machine learning. So, analytics. A huge amount of analytics are actually creating the majority of the traffic increase. So, this is not from customers or new services coming on. That’s not where the bulk of the traffic is coming.

TONY ROTH: Is it financial analytics? Is it health care analytics? Is it social media analytics?

MURIEL MÉDARD: All of the above. All of your advertisement, all of those analytics are actually, they’re the lead item, you know, they’re the first order, the factor in …

TONY ROTH: So, the whole system is a self-perpetuating beast in a sense.

MURIEL MÉDARD: Indeed. Exactly. I mean as you were talking before, you said, hey, here’s my phone. But actually, you know, I’m not really using it as a phone all that much. You know, I’m using it more as a handy little laptop in effect.

Now the question is now who’s paying for that, you know, as you were mentioning before. I mean to some extent right now, you know, you’re paying for data that is basically being used by a hyperscaler to sell you stuff. It’s a business model that sort of leaves the door open to a lot of people to come in and do some—do some arbitrage.

TONY ROTH: And what about this idea of 6G? Is it going to be as revolutionary and important as 5G was? And when is 6G going to happen? Because I’m—we’re still talking about 5G just getting off the ground.

MURIEL MÉDARD: Yeah. I would say 5G is very mixed. You know, some parts of it, like particularly the high frequency things that I mentioned and some items around some of the antennas, what’s called MIMO, multiple input/multiple output, massive MIMO, lots of antennas. That is pretty advanced. A lot of other parts of 5G are not advanced, are not particularly advanced at all, particularly the redundancy I was mentioning to you before.

So, I think that, you know, if you look at 5G really from a technical perspective it’s a mixed bag. A lot of the people who are announcing it’s very revolutionary have a dog in the fight. Right?

TONY ROTH: Right. Yeah. They want to commercialize it. But so 6G is going to come along and fill a lot of those gaps, I guess. And what’s the timeframe on that?

MURIEL MÉDARD: That’s a good question. Obviously we’re already having discussions about 6G. It’s unusual to already have the next generation being discussed when the previous generation is really not that deployed.

One of the questions that you can ask is at some point do you stop having Gs? You know, why do we really have these sort of discreet numbers every 10 years? It’s not because you have, you know, a natural evolution of technology where every ten years something fantastic comes along.

And I think, you know, one of the things to remember about 5G is that this has been a network equipment manufacturer push. This was not a pull from the network service providers, okay. So, the network service providers were not screaming for this by and large. Sure, they always wanted some improvements, but they were not asking for the next generation. They weren’t saying, you know, our customers are screaming for this or that or the other. You know, the network equipment providers said, hey, it’s time for the next G and you guys should be buying it.

TONY ROTH: And what about you’ve used a term around 5G in our previous conversations, Muriel, about the idea of this being a generation that’s vertically integrated.

MURIEL MÉDARD: So, we didn’t mention it specifically, although we sort of mentioned it obliquely, because again, having automotive, having robotics, having health care, these were a lot of systems that were generally very standalone.
So, 5G very much has a desire to do vertical integration and that’s a big difference between 5G and any of the other previous generations. So, that is also part of the—that excitement that I mentioned at the beginning, you know, being able to have all these services in an integrated fashion. But it also means that it’s a very, very high hurdle and unprecedented high hurdle for the technology to clear.
00:41:02
TONY ROTH: Can you give me an example of what a vertical, you know, integration would look like.

MURIEL MÉDARD: So, for instance, let’s take automotive. You know, you mentioned self-driving cars. So, this would be a system where the same network is managing the self-driving car and, say, you know, other services that are being offered inside your car. For instance, there’s something called the edge, the edge of the network, which is all of the nodes that are sort of close to each other physically in proximity and may not use necessarily the 5G network per se to communicate with each other.

So, it’s like this combination of the local and the global all under the same umbrella, rather than say having one system that’s just making sure that you don’t bump into things, which, you know, a lot of cars, high-end cars, already have, and having another system that’s making your phone calls for you…

TONY ROTH: Right.

MURIEL MÉDARD: …and having another system that’s maybe, you know, connecting to a satellite service for emergency as opposed to having all those three systems be separate. And maybe even have, you know, a small Wi-Fi network on your car so that, you know, your kids can watch whatever they want in the back while you’re driving around. Rather than having all of those be standalone, that those are all integrated.

TONY ROTH: There’s one last question that I do really want to ask you about, which is, you know, it’s not really a scientific question per se I don’t think. It’s more of a geopolitical question. So, back in the prior Administration, the Administration was very focused on making sure that the Chinese didn’t get into the build out of the infrastructure, not only in our own country because it was felt that their—5G was so important, if it wasn’t controlled by Western companies that it would create significant security risk and such.

How do you react to that whole sort of ecosystem of thought?

MURIEL MÉDARD: So, let’s go back to 3GPP. You know, if you look at the roster of the companies that were involved there say 10 years, even more, 20 years ago and you look at the roster now, you can see that certainly the footprint of the U.S. has decreased. You do have a case where particularly U.S. in sort of traditional telecommunications does not have relative to the rest of the world the same footprint it did, right.

There is also a lot of health in some of the parts of the industry. I would say there’s a lot of health in, I mentioned the parts that, say, deal with Wi-Fi. There’s a lot of health in the parts that are doing what I would call the close to the hardware technology, what we usually call, you know, the physical layer. There’s a lot of health over the top, you know. The hyperscalers, of course they’re the U.S.’s—a lot of strength.

TONY ROTH: Is there any respect in which we’re confusing, you know, commercial hegemony or the idea that we may not be dominant in areas where we have been historically, we being the United States, with valid autonomy or security concerns? In other words, is the latter masquerading as a pretext to try to maintain the former or is it rather that there’s more competition and but that competition doesn’t mean that we are fundamentally losing control of the security of our system?

MURIEL MÉDARD: So my view is that one should be treating systems as not secure by and large, you know, regardless of where they come, because even if, you know, you trust your supply chain, do you really trust that everybody’s doing their upgrades properly and that all the operations are correct? We talked about the importance of Wi-Fi. Okay, maybe you’re worried that, you know, some nation state has put in something in the equipment that’s in the network. My local coffee shop I go to because they’re lovely and they make a nice cappuccino. I don’t go there because they have the best hygiene with respect to updating the Wi-Fi router. Right?

At least one way to reduce that concern, I’m not talking about whether the concern is warranted or not, because that’s outside my expertise. But I’m saying that one way of reducing that concern is actually exactly doing what we talked about earlier in our conversation, Tony, which is that if you actually connect to multiple network sites at once on purpose, not just because that’s just the most efficient and, you know, economical way to connect, which is just use all your resources. If you do some mathematical schemes around this called coding, you actually also secure your system. It’s actually very interesting.

TONY ROTH: Everybody needs to have self-responsibility for their own safety and security. They couldn’t rely on the system. They shouldn’t really on the system. They really need to be proactive in this environment of ransomware. And the fact that more and more of what we do in our lives in fact, indeed invokes data and the transfer of data just means that this is even more important because we’re more reliant on the safety of that data.

MURIEL MÉDARD: I think service providers need to be responsible for providing this. I don’t think this is something that you can expect customers to be doing this. But I think service providers, whether they’re the current ones or the ones that will emerge on top if the current service providers don’t keep up, which like I said I think they can.

TONY ROTH: Right.

MURIEL MÉDARD: But they will need to hurry up. That would be their—that would be for them to do. You know, I think that that should be part of the reliability. If you want to be vertically integrated and you really want to be part of the critical service infrastructure, then I think you need to provide that level of security. I think those go hand-in-hand.

TONY ROTH: Fascinating. Well, we’re going to have to leave it there because we’re out of time. But just terrific insights. Let me try to summarize, as I always do at the end of the episode, three key takeaways for us.

I think I’d start with the idea that there’s more to 5G than meets the eye, if you will, which is to say that 5G is not just about speed. It’s not just about latency. It’s about a whole ecosystem of carrying data that meshes with another ecosystem that’s critical, which is Wi-Fi. And the interaction between those two spheres is quite critical in understanding where the commercial opportunities are going to be going forward as, in fact, we see one borrow from the other and rely on the other in such deep and profound ways. And so, 5G can’t really be understood in isolation. It needs to be really understood as it relates side-by-side to Wi-Fi.

Second thing is that we’ve talked a little bit about this idea of vertical integration, the idea that 5G is a system that allows for a much more complete delivery of an ecosystem of data management in a sense. But it also creates a lot of risks around security and around dependency on service providers, etcetera. And it’s really important that we hold those service providers accountable for the safety and security of data.

It’s a complex equation of ideas there. But, as the 5G providers become more important and do more things for us in an integrated way it also creates more risk for us, and we need to make sure we manage those risks, and we demand a lot of those service providers in that way.

And then lastly, I would say that the investment implications for 5G are indeed far-reaching. It’s not just the relationship between the cellular and the Wi-Fi providers. Obviously, there’ll be more reliance on them as we use more data and there’s more investment opportunity potentially in those core providers. But even beyond that, when we think about industries like self-driving cars and health care and big data and analytics that all use these rails if you will of data or security companies that provide the right kind of security that may not be provided by the service providers today and need to be overlaid. And these are opportunities that we as investors are thinking about every day as we build out portfolios.

So, Muriel, I want to thank you again for your terrific insights. We could’ve just gone on and on today. But I’ve really enjoyed the conversation.

MURIEL MÉDARD: Thank you. So have I, Tony. I really appreciate the discussion, really appreciate the invitation, and I really, I had fun talking to you.

TONY ROTH: Thank you so much. I encourage all of our listeners to visit wilmingtontrust.com for a roundup of all of our latest investment and planning ideas. And you can subscribe to Capital Considerations on Apple Podcast, Spotify, Stitcher, or your favorite podcast channel to ensure you get updates on future episodes.

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