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Is the 5G boom already going bust?
If what we saw last week is any proof… there’s trouble on the way.
And once again, we can blame the government.
Countless investors have piled into 5G stocks. They’ve been one of the hottest asset classes around.
We’ve largely stayed away from the buzz.
We’re not all that fond of our phone, after all. Plus, the 5G boom relies far too much on government intervention to really make anything of itself.
We have our eyes on another prize… a prize that went zooming overhead the other night.
As we walked down our drive just a few minutes into the evening’s darkness, we saw a series of bright white lights heading toward us. At first, they looked like a plane that was making a wide, banking turn.
But they didn’t turn.
Soon, the lights began to separate. One outpaced the other as they inched across the black sky, seemingly racing to the distant horizon.
A few minutes later, two more pairs of lights followed a similar path.
We knew what they were in an instant. We’ve been studying them for months.
They were another creation of that mad scientist Elon Musk.
They were part of his new Starlink project… a notable poke in NASA’s eye and the big threat to 5G that nobody is talking about.
On Tuesday of this week, the fine folks at the FCC launched a brand-new auction for C-band airwaves. That’s the critical spectrum 5G operates on.
All the big boys of the cellular world must now open their wallets.
Verizon, AT&T, T-Mobile… They’re all going after as much as they can.
They need it to compete.
But here’s the thing. The rights to this spectrum – which were once handed out for free – are not cheap.
The industry is expected to shell out as much as $52 billion just to get a piece of paper that says other folks aren’t allowed to use the same airwaves.
The spending is so massive that credit agencies are watching it.
All the borrowing it could take to acquire this spectrum could play hell on company balance sheets. The danger is businesses will spend so much acquiring the spectrum… that they won’t be able to spend on other necessary projects.
Or worse… they’ll spend billions on technology that will become obsolete in just a few years.
Again, we can thank the government for its part in the mess.
If you’ve been wondering why we’ve been hearing about 5G for years but haven’t seen it come to the market in any real way… here’s a big part of the reason.
This week’s spectrum offering was years in the making. Lobbyists and other industry insiders held things up in court.
It’s been a nasty, slow bureaucratic process.
Meanwhile… Musk and his fellow capitalists are launching one industry-rattling innovation into space after another.
His Starlink satellites are quickly threatening to do what the 5G gods have been promising to do for many moons now. He’s blanketing the planet with a high-speed internet signal.
It’s so promising, in fact, the government is paying him to do it.
At nearly the same time as the FCC finally opened its boondoggle spectrum auction, it announced it has awarded Musk and his team another $855 million to help stream broadband internet to rural America.
This free money will go a long way toward putting more of those satellites we saw zooming overhead into space. Musk, after all, has plans to put some 42,000 of them into orbit.
Each new launch threatens the existence of that ugly (and dangerous?) cell tower on the horizon.
Starlink’s big win in this FCC handout came as a surprise to many in the industry. Plenty of analysts didn’t expect the satellite industry to get a penny.
But in the end… it got close to a billion bucks.
We hope the 5G crowd is paying attention. The big carriers are surely getting worried.
While that industry got buried in bureaucracy, the free market mavens lit up the skies.
The satellite industry – and the shadow it casts on 5G – will be one of the biggest tech stories of 2021.
And, as usual, you can thank the government.
Do you want to hear more about the investment opportunities in the satellite industry? Let us know at email@example.com.