The 5G Promise

Does Verizon’s 5G wireless network have the power to boost entrepreneurship in the Sacramento Region?

Back Longreads Jun 26, 2018 By Russell Nichols

Dimitrios Dovas didn’t move his startup from Silicon Valley to Sacramento because he heard the high-speed 5G wireless network was coming to town. He relocated last spring looking for engineers.

“Sacramento can be the center for the next wave of technology,” he says.

His company, Highlands Power, makes compact electric motors and generators. It’s a small startup of only six people. Right now, Dovas is interviewing local engineers to expand the company, fully convinced of the Capital Region’s potential as an electric autonomous vehicle hotspot.

THE FAST LANE

In the Sacramento region, Verizon’s 5G rollout will be divided into three phases over the next 10 or so years, starting with the “less sexy part” and evolving into a network that could revolutionize industries, according to Maria MacGunigal, the city’s chief information officer.

Less Sexy Part

Set to deploy in the second half of 2018, this first phase of fixed wireless will essentially boost the city’s current fiber network, transmitting signals farther out. Verizon’s 5G network is expected to be not only lightning-fast, but also more pervasive with more capacity, a benefit to users at small businesses and in underserved communities.

Cool Stuff

In the second phase, expected in the next three-to-five years, the 5G network would have an even bigger impact. This will be when the Internet of Things (devices embedded with sensors that talk to each other and exchange data) starts to take off. The network, MacGunigal says, will boost connections between devices such as smart meters, smart appliances, wearables, vehicles and more.

Game Changer

When people talk about how 5G can revolutionize industries, this is what they most likely have in mind. MacGunigal expects this third phase to roll out at least five years down the road, which would include drones, the automation of industrial systems, health monitoring, autonomous vehicles and beyond that, “a whole host of things we do not have awareness of yet,” she says.

The news that Verizon chose Sacramento to deploy its high-speed 5G network, he says, helped verify his vision. He sees the network — the fifth generation of internet connectivity, which Verizon plans to launch in the second half of 2018 — as a bonus that will drive business by giving startups in his sector a leg up in terms of mapping traffic and road conditions, as well as transportation patterns.

“The innovation of the future can’t happen without a robust mobile infrastructure, and that’s where 5G comes into play,” Dovas says.

While his electric motors won’t hit the market until around 2020, Highlands Power is just the type of tech startup Sacramento city leaders hope to lure as a result of the Verizon arrangement.

But this is a project with many moving parts that need time to come together. Meanwhile, the City and organizations such as the Greater Sacramento Economic Council are actively pursuing tech companies now. This puts City officials in a tricky spot when trying to advertise the network for new businesses to take advantage. The 5G rollout can help Sacramento close the digital equity gap as a leader in inclusive economic growth, but right now, that selling point is based on promises, potential and predictions, says Louis Stewart, Sacramento’s chief innovation officer.

“The Catch-22 is the technology technically isn’t here, but it’s coming,” he says. “So the question is, which will be the first mover: the company or the technology?”

SMARTEN UP

Last year, the Sacramento City Council unanimously approved a partnership with Verizon, offering a reduced rate on 200 utility poles if the telecom giant agreed to make Sacramento one of the first test cities for its forthcoming 5G. Verizon will get a jumpstart in the race to deploy a next-generation wireless network, and Sacramento will be able to enhance connectivity and capacity for homes, small businesses and underserved communities throughout the region.

This summer is the target for the first phase of deployment: a fixed wireless service that uses small-cell sites (the size of a shoebox) on utility poles to transmit radio signals — instead of direct wired connections — to customers who want faster, stronger broadband. But those are just the basics, and the full-scale rollout is expected to take 5-10 years, evolving into an expansive cellular network with lightning-fast speeds for data processing and media downloads and, if all goes well, the broader foundation for groundbreaking innovations. We’re talking smart grids; augmented reality and virtual reality machine learning; and self-driving cars, like the ones Dovas plans to make electric motors for.

In this digital age, economies run on connectivity. Network upgrades keep regions competitive. Entrepreneurs want high speed and low latency. They want capacity. They want ideal conditions to manage, share and stream data online. Barry Broome, CEO of the Greater Sacramento Economic Council, doesn’t know if the new network will be a differentiator, but he hopes being an early adopter will boost the region’s tech-forward credibility, a message to the tech world that “we’re paying attention and getting things figured out.”

“You would think the Capital Region of California would have a real advanced level of connectivity to the digital market, but we fell behind most competitors,” Broome says. “The beauty of the 5G move is that it gives us a chance to leapfrog communities that have been in front of us in one movement.”

For Broome’s part, he hasn’t touted the 5G network in his pitch to potential companies. When he’s recruiting, he highlights the area’s potential for capital and talent. If a region can’t produce those key things, he says, “companies won’t be too concerned with whether you have 5G.” And many of the more advanced and lucrative technologies require 5G mobile cellular services, which analysts don’t expect to see until 2019.

According to a 2017 Accenture report, the future wireless network will create a level of connectivity and capacity that can transform a local economy through the power of a so-called Smart City.

“Research has suggested that Smart City solutions applied to the management of vehicle traffic and electrical grids could produce $160 billion in benefits and savings through reductions in energy usage, traffic congestion and fuel costs,” the report says. “These 5G attributes will enable cities to reduce commute times, improve public safety and generate significant smart grid efficiencies.”

The report estimates that in California alone, more than 11,000 short-term jobs can be created from the network deployment, and 375,000 long-term jobs can come from the ripple effect.

CONSTRUCTION AHEAD

Even though fixed wireless might technically be easier to set up than fiber, the success of deployment hinges on a collaborative effort between the public and private sectors to make it easy for businesses to plug and play, says Gordon Feller, co-founder of Meeting of the Minds, a nonprofit focused on innovations in smart and sustainable cities.

This November, when the 12th Meeting of the Minds Annual Summit convenes in Sacramento, hundreds of leaders will talk about urban issues. The 5G network will be a topic of discussion, and participants will get a close-up tour of some of the assets in use on Sacramento streets.

“The idea is this: We engage those organizations — from government and from the independent sector, such as NGOs — who are on the frontlines, enabling startups to grow,” Feller says. “But the question is always: Who is stepping up to be the first mover? How well can they position themselves and make a track for others?’ Stumbling on the first move could signal this is hard, and that could be detrimental.”

It was a bit of a gamble to give up potential full-price lease payments for pole space, says Maria MacGunigal, Sacramento’s chief information officer. There are 40,000 city-owned poles in Sacramento with about 9,000 suitable for wireless development.

The 200 poles Verizon leased for a discount in the deal will pay off for the City if this 5G network can attract innovative startups and help boost local businesses, MacGunigal says. By leveraging the poles, the City hopes to reduce visual blight, limit signal disruption and provide equal distribution for users all over.

“We want to make sure we’re providing services to all communities, not just downtown, which is resource rich from a carrier’s perspective,” MacGunigal says.

With older neighborhoods and underserved communities, there is a challenge of site visibility between radio structures. The City is trying to figure out how to roll out the network in different kinds of geographies to serve the most people.

“It’s like building an airplane while you’re flying,” she says.

BARRIER TO ENTRY

For existing tech-based businesses, proponents say the 5G network opens up an array of possibilities with lower costs and higher capacity, especially compared to the current ecosystem.

Right now, startups that rely heavily on web technologies like cloud computing, sensor networks, and media and content creation can’t afford to compete with big players, such as Google and Amazon Web Services, says Nile Mittow, chief technology officer for Hacker Lab, a Sacramento-based coworking space. By lowering the “barrier to entry” with access to high bandwidth network connections, he adds, small companies can try out new ideas while sidestepping some of the more costly hurdles that come with doing business in the tech world.

“Assuming that 5G is well-implemented, well-supported and made easily accessible to non-enterprise customers, it does have the potential to enable startups to test out their tech without relying on third-party hosting providers,” Mittow says.

But there is such a thing as too much hype. Pat McMurray, president of T&R Communications, knows that from first-hand experience. His Sacramento-based business delivers data, voice and fiber optic cabling, and for decades he has heard doomsday stories that wireless networks would take over cable. But with so many large buildings made of steel and concrete, and windows coated in UV-resistant material, cell signals bounce around and people still lose calls.

“There are people speculating that with the advancements of speed with wireless, we won’t need cabling anymore,” McMurray says. “But, gosh, I’ve been hearing that for 25 years now. Cabling is dependable, and people want what they call ‘five-nines reliability.’ That’s 99.999 percent.”

The 5G network can help eliminate call drops in urban zones, but it is essential that unserved and underserved areas have high-speed access to drive growth and innovation in the 21st century, according to Valley Vision, a Sacramento-based nonprofit economic development agency, which says that only 43 percent of California’s rural population has internet access equivalent to urban areas. McMurray lives in Woodland, in a house he calls “cabled all to heck.” To get his 4G signal, he had to point an antenna to Sacramento and install equipment that repeats the signal inside. Given his profession, he had access to these devices.

“Most residents in rural areas wouldn’t be able to get that,” he says. “Or they’re going to stand in one specific spot in one room of their house with one foot in the air in order to grab that right signal. And that’s with 4G, sometimes 3G. But 5G? I don’t think I’ll see 5G in my lifetime.”

The early parts of this rollout process have been rough, but MacGunigal with the City of Sacramento believes the network’s full potential will prove itself in time.

“We will see wireless move from a secondary, supporting technology to an actual general-purpose technology, which is something that is very foundational,” she says. “This is equivalent to water systems or electricity or the printing press.”

Comments

Visitor (not verified)June 27, 2018 - 4:12pm

"The early parts of this rollout process have been rough, but MacGunigal with the City of Sacramento believes the network’s full potential will prove itself in time."
Rough how? Details,pleeeeeezzzzze...

Russ Steele (not verified)June 27, 2018 - 6:40pm

In 2016 Sacramento struck a Wireless Marketing and License Agreement deal with 5 Bars, which was bought by XG-Communities.

The agreement “establishes a partnership with 5 Bars to assist the City in addressing both long and short term wireless broadband infrastructure needs. 5 Bars will function as the City’s expert technical resource for managed wireless services. 5 Bars will act on the City’s behalf to negotiate agreements with other parties such as telecommunication service providers to meet the needs of the community, service providers, and utilize City assets to manage and streamline the wireless development process.”

According to this article, It appears Sacramento was dealing directly with Verizon. “Last year, the Sacramento City Council unanimously approved a partnership with Verizon.” According to a Sacramento Business Journal article, there was a lawsuit by a former partner that is slowing the 5G rollout. May this lawsuit be the rough patch in the deployment mentioned at the end of the article? What is XG-Communities role today?

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