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Authorised and regulated by the UK’s FCA to provide investment accounts, we are bound by CASS rules to segregate and protect client assets.

September 2020 investment update

August was the month that all nine of our global multi-asset models went into positive territory on a YTD basis. While we are happy with the performance, our main focus remains on avoiding market downturns and thus minimising portfolio volatility.

The cyber security skills gap

The cyber security skills shortage has been making headlines for years, but the Covid-19 pandemic has made it more critical than ever.

Dolfin shortlisted twice in Citywealth’s Future Leaders Awards

Investment Associates, Anny Giavelli and Joseph Casanova have both been shortlisted in this year’s Citywealth Future Leaders Awards.

China leading the world in 5G

The race is on to connect people and things to 5G. For the moment, China is winning. But what makes 5G so important – and why is the US worried about Beijing’s head start? Jay Williams, Dolfin’s Head of China Desk, reports

10 December 2019 / Technology

In February 2019, President Trump tweeted that he wanted to see the US lead on 6G. “It is far more powerful, faster, and smarter than the current standard,” he wrote. “American companies must step up their efforts, or get left behind.”

A typically Trumpian outburst. Why? Because 6G doesn’t exist: it is at best a concept. Still, the point was made: telco connectivity will shape the world, and the US needs to lead in it.

But it’s not leading in 5G. Instead, that role is going to China. Chinese companies are building the networks, and Chinese people will be the first to connect to them en masse. Market analyst CCS Insight says there will be one billion users of 5G by 2023, half of whom will be in China.

Why is this so worrying for the US? Well, 5G promises far more than an incremental upgrade on LTE, HSPA+ and the other flavours of 4G. It can run at speeds of between 10Gbps to 50Gbps. It has even reached one terabit per second in a test environment. That’s 65,000 times faster than 4G – fast enough to download 300 movies in a second.

More than mobile phones

But the benefits of 5G go beyond speed. There’s also capacity. On average, 4G supports around 2,000 connected devices per 0.38 square miles; 5G can handle one million connected devices in the same space. This should mean the end of network overload, liberating infrastructure from cables and wires and bringing fast broadband to remote locations.

Ericsson says 5G will reach 65 per cent of the world’s population by the end of 2025

At the time of writing, around 20 countries have launched limited live 5G services and, according to Ericsson’s Mobility Report, there are currently around 10 million 5G subscribers. The small footprint – and the modest number of 5G handsets – has restricted customer numbers.

Obviously, this will scale up fast. Device-makers are lining up dozens of new 5G models; China’s Xiaomi alone will launch at least 10 in 2020. And the carriers are racing to ramp up connectivity too. Ericsson says 5G will reach 65 per cent of the world’s population by the end of 2025, with 2.6 billion connections by this point. It says smartphone users will each consume 24GB of data a month as they explore new, data-hungry services.

But people are only one part of the 5G revolution. Machines, not humans, will be using a good chunk of the vast network capacity. Ericsson expects more than four billion ‘things’ to be connected by 2024.

Could this be the launchpad for entirely new industries? In the 4G era, the network effect of always-on smartphones created the right conditions for Instagram, Uber and Tinder to transform photography, taxis and dating respectively.

What could the network effect of billions of permanently connected smart things deliver? Driverless cars? Robot-run factories? Remote surgery? VR entertainment? It’s inevitable that the entrepreneurs of tomorrow are working on all these ideas and more.

Another arms race

This explains why governments are so fixated on 5G – and why the tech has caused such agitation between the US and China. It’s possible to trace this tension back to 2015, when Beijing launched its ‘Made in China 2025’ plan. The aim of the project was to reinvent China as a tech pace-maker, rather than a factory for the rest of the world. Since then, according to Deloitte, China has outspent the US by $24bn in wireless infrastructure and built 350,000 new sites compared with the US’s 30,000.

Whatever its reservations, the US has little choice but to buy its 5G network tech from overseas.

Marina Koytcheva, VP of forecasting at CCS Insight, says: “5G is not just about smartphones. It is about the industrial IoT, which will impact every area of our lives. China already has the biggest 4G market in the world, and its people are very technologically advanced. But it is still seen as a follower. Now it wants to be a leader.”

The issue, the Americans say, is not competition but the extent to which the Chinese government is skewing it. In an interview with the South China Post, Jacob Parker, VP at the US-China Business Council, said: “The problematic aspect is… the government heavily subsidising development, or discriminating against foreign companies or forcing technology transfers from foreign companies. These are elements of unfair competition and should be opposed.”

Whatever its reservations, the US has little choice but to buy its 5G network tech from overseas. Three companies – Nokia (Finnish), Ericsson (Swedish) and Huawei (Chinese) – dominate the infrastructure market. As of August 2019, Huawei had won 50 commercial 5G contracts, Nokia had 45, and Ericsson 23.

Obviously, none of these entities are American. How has this happened? Some say it goes back to the 90s, when US regulators allowed carriers to choose their own mobile standard. As a result, the major telcos ran on a variety of network technologies (CDMA, UMTS and so on), while the rest of the world was agreeing to support just one: GSM. This meant that big US infrastructure companies such as Lucent and Motorola struggled in global markets. They were backing the wrong horses. In the end, both were bought by Nokia Networks.

Ultimately, does the nationality of 5G suppliers matter? True, there are concerns around data privacy and national security to wrestle with. But maybe innovation will determine the ultimate winner, not who builds the equipment. Here, the US still has the edge. China can point to successes such as WeChat, TikTok and Alibaba, yet is has little to match the global impact of Intel, Microsoft and Apple.

If the analysts are correct, and more than half of the world is on 5G by 2025, we will soon find out.

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Africa’s growing taste for cross-border investments

Rapid growth and increasing foreign direct investment in Africa has given rise to a new class of wealthy individuals and corporations. Sebastian Halle-Smith, Senior Relationship Manager at Dolfin, explores how they are choosing to invest their wealth and whether there is a renewed scramble for Africa as a result.

Dolfin
/ 3 December 2019

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