5G technology will be crucial in the development of self-driving cars, bringing futuristic cities from fiction to reality. Roads of the future will require fast and dense wireless networks with minimal lag if they are to remain safe, notes Fitch Solutions Country Risk & Industry Research in a September 9 commentary.

“Our core view regarding 5G is that it will be an evolution first, then a revolution, as an increasing number of industries will use the technology in combination with other older wired technology as part of an overall trend towards digitalisation,” writes the subsidiary of American credit rating agency Fitch Ratings.

5G will also be rapidly adopted in the aftermath of Covid-19, says the research body, where social distancing put an end to carpooling. “During the Covid-19 pandemic, autonomous vehicles (AVs) proved their worth in a period when human contact had to be reduced as governments all around the world tried to contain the spread of the virus.”

Before AVs hit the road, however, 5G technology will be used in smart, automated factories. “We maintain our view that the current 4G networks will be sufficient to handle the data transfer requirement for over-the-air updates and infotainment systems for connected vehicles excluding AVs. That said, while we believe that smart factories will be among the first to adopt 5G technology within the automotive industry, the continued development of AVs will only see the need for a higher speed wireless network increase over the next decade to 2030.”

Fully automated and driverless AVs are not expected to be commercially viable within the next five years, adds Fitch Solutions Country Risk & Industry Research. That said, autonomous forms of public transport have already been tested in some large cities.

“Large cities are increasingly looking to adopt autonomous buses for their set bus routes as they will have more control over the system and boundaries in which the AV will operate. For example, in June 2020, Guangzhou, the capital of south China's Guangdong Province, launched the country's first pilot Bus Rapid Transit route that fully adopts a 5G intelligent coordination system,” says Fitch Solutions.

“The Guangzhou Municipal Transportation Bureau also stated that this can effectively streamline the city's public transportation scheduling and save the route's transport capacity by up to 10%.”

Earlier this year, a McKinsey Global Institute (MGI) report warned of a growing “digital divide” between regional economies that could limit Southeast Asia’s ability to realise the full potential of 5G connectivity.

Analysing hundreds of 5G use cases in the mobility, healthcare, manufacturing, and retail sectors (around 30% of the global economy), the report found that the most promising use cases in these four sectors alone could lead to a US$1.2 trillion - US$2 trillion ($1.72 trillion - $2.86 trillion) increase to global GDP. Gains from the global economy as a whole are estimated to vastly exceed this amount.

See: 5G offers promises but digital divide will widen: McKinsey

Developing countries will benefit significantly from such advances in connectivity. The addition of two billion internet users in the developing world would initially generate an extra US$1.5 trillion to US$2 trillion in global GDP, representing significant economic gains for developing countries like Myanmar and Cambodia.