Government declares 2021 as 'Year of 5G'

Two 5G spectrum auctions are scheduled for next year. Is this good news for ASX-listed companies like Telstra and TPG Telecom?

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The Federal Government announced on Wednesday not 1 – but 2 – 5G spectrum auctions for next year.

Communications Minister Paul Fletcher revealed that high-band 5G spectrum (26GHz) would be sold off in April, while low-band (850-900MHz) would be auctioned sometime in the second half of 2021.

Mid-band spectrum was sold in late 2018.

"We are making the low, mid and high bands available so that the telcos can provide better, faster and stronger 5G in Australia," said Fletcher.

"Low band spectrum can carry the 5G mobile signal longer distances, and is best for wide coverage indoors and outside. The mid band spectrum provides broad coverage and fast speeds and the high band spectrum will allow blazing fast speeds over shorter distances."

The government thus declared 2021 as the 'Year of 5G'. 

It forecasts 5G technology will add up to $2,000 in gross domestic product for each Australian after the first decade.

5G's current state of play in Australia 

Telstra Corporation Ltd (ASX: TLS) and rival Optus – owned by Singapore Telecommunications Limited (SGX: Z74) – already operate 5G mobile networks in limited areas.

Third player TPG Telecom Ltd (ASX: TPG) has thousands of locations in the planning phase. It plans to cover Australia's 6 largest cities by the end of next year.

Telstra shares were down 1.09% on Wednesday, to sit at $2.73 at close of trade. TPG was down 0.99% at $7.00.

Fletcher said 5G was important not just for faster mobile and broadband speeds but it would enable use cases like "smart farming, robotics, telemedicine and automated vehicles".

"The sooner 5G is deployed, the sooner Australia can secure these benefits," he said.

For a given area, 5G can connect 10 times the numbers of devices as a 4G network. This is why it can better accommodate "internet of things" devices such as agricultural sensors and remote controls for vehicles.

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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