When cell phones became popular in 1981, they were as big as bricks and felt twice as heavy. The only thing you could do with one was make a call — and sometimes not even that would work.

#-ad_banner-#The second generation of phones allowed voice and data connections in 1992 while 3G and 4G brought advancements in speed and the ability to view videos. They’re not even called cell phones anymore. They’ve evolved into ‘smart phones’. With each evolutionary step, they ‘ve become more ubiquitous in our daily lives.

Now, the next stage in mobile technology is upon us. And it might not be merely evolutionary but revolutionary.

5G technology could bring the capabilities for which consumers have been waiting for more than a decade. The speed available could allow consumers to take their computing completely mobile. The next wave in mobile tech could refresh the buying cycle, from manufacturers to carriers and consumers, and a few leaders are already positioning for an advantage.

Internet Speeds Up To 200-Times Faster Could Create A Tectonic Shift
5G could finally mean the death of the desktop. Mobile is already over half of search and 5G could bring speeds comparable with desktop performance. Verizon has said its 5G network could be as much as 200-times faster than the 5Mbps speeds its users get on the 4G LTE network.

Those speeds will mean an uninterrupted browsing experience and, crucially, will allow teams to collaborate seamlessly through mobile devices.

It’s not just a question of mobile versus desktop devices. 5G will be needed to support the explosion in Internet of Things (IoT) products, including home appliances, security, and smart cities. Research firm Gartner estimates there will be 20.8 billion devices connected to the internet by 2020, compared to just 6.4 billion devices today.

The U.S. Federal Communications Commission (FCC) cleared the way for 5G in the United States with new rules allowing wireless broadband operations in frequencies above 24GHz in 2016. Verizon and AT&T have already announced plans for 5G trials in 2017 and the first networks are expected to roll out in 2018 or 2019.

Early Leaders Emerging In The Coming 5G Boom
This evolution of mobile tech will involve everyone from wireless carriers to equipment makers, but there are a few early leaders emerging to take advantage of the shift.

Swedish telecom equipment provider Ericsson (Nasdaq: ERIC) is at the forefront of testing and readiness for 5G and has partnerships with both Verizon and China Mobile. Equipment needs for telecom carriers run in waves, surging when technologies and phones start a new cycle before falling again after the initial rush. Sales have been week for a couple of years and have forced the company to seek greater efficiency in operations.

That efficiency should pay off when sales start to increase again. Ericsson signed a broad partnership with Cisco (Nasdaq: CSCO) in November 2015 and announced an extension this year. The partnership has helped the company develop products across other media, including TV and IoT equipment. Shares trade for just 11-times earnings and pay a healthy 7.8% dividend yield.

Qualcomm (Nasdaq: QCOM) has been rocked by a recent lawsuit brought on by Apple but remains a leading provider of wireless technology. The company is developing parallel switching equipment for mobile devices that will be able to jump between 4G, 5G, and wireless networks.

Qualcomm is the world’s largest wireless chipmaker and its intellectual property is licensed by nearly all wireless device makers. That’s a fairly large moat and gives it a lot of negotiating power with buyers. Shares surged 37% in 2016, but the recent selloff may present a good buying opportunity.

American Tower Corporation (NYSE: AMT) will benefit from the need for more signal towers. New wireless technologies typically run on higher radio frequencies because the frequencies are not in use. The problem is that signals at higher frequencies don’t travel as far, so the industry needs to continue building out tower infrastructure. Shares have been under pressure since last November, along with the rest of the REIT space, as investors fear that higher interest rates will weigh on the performance of real estate investments.

Contracts on the company’s towers tend to run for a decade or longer, making its cash flow more stable. The company has been expanding aggressively outside the U.S., especially in faster-growing markets like Brazil, India, and Mexico. The company’s 2.2% dividend is only about 35% of adjusted funds from operations and leaves a lot of room for growth.

Risks To Consider: Widespread commercial availability of 5G is still a year or two out, so early investors may have to wait for the rest of the market to bid up the major players.

Action To Take: Position in these three companies to prepare for the next mobile revolution.

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