Heads Up! 5G Will Need Equipment Finance

by Scott Nelson and Aaron Dym

Scott Nelson is the president and chief digital officer of Tamarack Technology. He is an expert in technology strategy and development including AI and automation as well as an industry expert in equipment finance. Nelson leads the company’s efforts to expand its impact on the industry through innovation using new technologies and digital transformation strategies. In his dual role at Tamarack, Nelson is responsible for the company’s vision and strategic planning as well as business operations across professional services and Tamarack’s suite of AI products. He has more than 30 years of strategic technology development, deployment and design thinking experience working with both entrepreneurs and Fortune 500 companies.

Every generation of technology promises innovation and 5G is no exception. Scott Nelson explores variations in 5G that could make equipment finance more relevant to both providers and consumers of the technology.

5G is on everyone’s mind right now. The carriers have installed enough 5G equipment to provide usable coverage so they have unleashed their marketing armies upon us. AT&T seems to be in the lead – fictional advertising commercial salesperson Lily Adams is now affectionately known as “the 5G Girl.” But whether its Ryan Reynolds, Chris Rock, Tom Brady virtual golfing with Rob Gronkowski, or just family characters living better lives through their new 5G phones, it’s a full court press.

The 5G messaging is populated with simple offers for consumers – new phones promising more speed – and often vague operational improvement promises to business via more bandwidth. Each generation of cellular technology is rolled out with great fanfare because “we all need better phones” and quickly discover that we can, in fact, consume even more bandwidth. Each successive generation of cellular technology has consistently launched another generation of equipment and operational performance across every industry.

But what does 5G mean to Equipment Finance?

I have worked with wireless networks for over 35 years and worked with network equipment providers of various types over the past decade. One of those is MultiTech. An industry veteran, MultiTech is one of the original M2M (machine-to-machine) companies founded more than 50 years ago to build analog (fax) modems. Recently MultiTech announced the launch of the first industrial 5G router. I spoke with Daniel Quant, VP of strategic development at MultiTech, to find out how the roll out of 5G was going and how he saw it affecting the equipment space.

“5G has been designed from the ground up to address a broader group of stakeholders, including government, transportation, mission critical infrastructure and allows enterprises big and small to deploy in both shared and license exempt bands. This enables most every segment of society to consider a private or dedicated network of their own leveraging cellular technology,” said Quant.

Of course, 5G succeeds 4G, which is also known as LTE or “long term evolution.” LTE was a name chosen to help equipment manufacturers and operational leaders recover from the whiplash they experienced trying to keep up with the transitions from 2G to 3G to 4G over one product lifecycle – roughly 10 years. The 3GPP, the governing body of the cellular technology ecosystem, worked hard on this round of cellular infrastructure to give everyone the confidence that 5G technology was going stabilize such that users would not have to worry about rolling trucks to replace 30,000 cellular connected devices, as some equipment vendors did during the 2G/3G to LTE transition.

Every generation of technology promises innovation and 5G is no different. After talking with Quant, I think 5G is different from previous cellular technology generations in several ways that will make equipment finance more relevant to both providers and consumers of the technology:

  1. Wired network performance without wires – high bandwidth, low latency, and high reliability traditionally delivered only by wired networking.
  2. Multi-function network convergence provides business continuity – very high bandwidth networks AND very low bandwidth IoT networks all part of one ecosystem.
  3. Private network licensing – any enterprise can own their own 5G network without having to buy their own spectrum.

Wired network performance without wires

5G is designed to be higher speed, lower latency and much higher reliability than LTE – roughly 1000 times more reliable as shown in the table below. Reliability is a key network parameter for mission critical applications like self-driving vehicles and production operations. The higher speed and lower latency come from the design of the technology. When one combines the gigabit bandwidth with low latency and very high reliability almost any application is now viable on 5G networks without pulling wires.

Table 1 5G expands wireless network functions 10 to 1000 times.

Latency 0.010 sec1 <0.001 sec
Streaming Time
(per 100MBytes)
0.1 sec <0.005 sec
Up Time 99%- 99.9%2 99.999%3


Multi-function network convergence provides business continuity

The 5G standard includes low cost, low bandwidth networks as well as mission critical, e.g., self-driving vehicle, capabilities. 5G integrates the functionality of high-speed fiber, low-cost Bluetooth, and ubiquity of Wi-Fi into one network. Quant says that enterprises want to converge their networks with standardized secure technologies that enjoy large and vibrant ecosystems of vendors. The 5G release does this and removes any functional or financial friction to adding connectivity to equipment.

Lessors should anticipate all equipment to be connected. They should anticipate real-time asset monitoring and they should anticipate that any equipment already in the field, i.e., under contract, that is not connected is going to be replaced soon. Lessors should prepare for a turnover of equipment to either new models or new functionality through connectivity retrofits.

MultiTech is a unique provider of networking capability in that they not only provide both the high speed and “IoT” 5G network equipment, but also offer a uniquely IoT network technology called LoRa. According to Quant, the company is seeing increasing deployment of enterprise level IoT networks as well as integration of its high speed 5G products into equipment manufacturer’s roadmaps.

Private network licensing

“Over the next 10-15 years, many analysts are now forecasting that enterprise spend on cellular technology will overtake the vast sums of money that traditional mobile network operators spend on cellular infrastructure,” said Quant.

This rings the dinner bell of a third promise. 5G will differ from previous generations of cellular technology in who will buy the equipment and thus how equipment finance can play a key role in the 5G and IoT network roll outs. The enterprise spend will be driven globally by the sheer number of hospitality, office, industrial, medical and warehouse facilities looking for improved coverage and deterministic performance. Quant says MultiTech is already seeing both OEMs and enterprises take it upon them selves to stand up their own networks – both LoRa and LTE in the form of a special band called CBRS.

Many of the 5G network equipment providers anticipate that “manufacturing and campus-built enterprises will migrate to private 5G networks for both lower operating expense and better security.” They key to this quote is “expense.” Enterprises view networking as an operating expense and when they invest in their own networks, either buying them or building them, they will want to make them part of the operating expense, e.g., an operating lease. These enterprises are already customers of the equipment finance industry for everything from operational equipment to real estate, and they will look for the same help with 5G.

Helping make 5G simple

As AT&T’s 5G advertising spokesperson Lily Adams says, “It’s not complicated.” While I’m not sure this is true about 5G technology itself, I agree when it comes to the business impact. 5G is simplifying decisions and strategies around connected equipment and the equipment finance industry has an opportunity to help keep the financing of the transformation simple. The big difference with 5G is that the opportunity is not limited to a few carrier relationships. 5G could potentially impact every equipment manufacturer and any enterprise with a campus or facility will want the opportunity to deploy their own networks as part of their digital operations.

The 5G roll out is going to require a lot of equipment and over the next decade, the majority of that will be purchased by our existing customers.

It’s great to be needed.

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