People who monitor these things will mark 2020 as the year 5G began nationwide deployment in the U.S. As far as coverage goes, T-Mobile (TMUS 0.70%) is in the lead, thanks in no small part to its merger with Sprint, with AT&T (T 1.07%) and Verizon (VZ 3.54%) in second and third, respectively.

However, while T-Mobile brags that its 5G is already available for nearly 250 million Americans, adoption of the new wireless service is about much more than coverage. COVID-19 is creating new economic realities, and 5G is helping many organizations and consumers adapt. Here are three reasons why.

A city skyline. A bubble with "5G" illustrated in it hovers above the city.

Image source: Getty Images.

1. A stress test for the Internet

When the economy went into lockdown in March, there was a surge in internet traffic. Households were confined to their homes, and TV streaming, video games, and remote work created a surge in data being transmitted across the web. Some networks were reporting as much as a 50% increase in data usage from February, and full-year 2020 data growth on the internet is expected to be over 20% higher than in 2019. Additionally, many organizations' private networks needed to adapt to allow for employee access away from the office. Cloud computing has thus seen a sharp uptick in adoption in 2020, even as corporate budgets overall have been cut to conserve cash.

This accelerated need for 5G is having ripple effects for companies involved in its development. Wireless networks are simply the edge of a vast network of infrastructure, the most visible part of the internet backbone that all of us make use of. Before users can utilize wireless 5G, billions of dollars of infrastructure investment is needed in data centers and fiber optic lines, as well as the software to manage it all. That better internet infrastructure means 5G coverage, network speed, and latency (the time it takes data to arrive at a user's machine after a request is made) will improve for consumers -- perhaps much more quickly than originally anticipated. 

This trend isn't just for consumers, either. Private 5G adoption at the enterprise level is also on the rise. A wave of network hardware upgrades may be coming, which bodes well for data center chipmakers like NVIDIA (NVDA 3.11%) and Marvell Technology Group (MRVL 1.84%), as well as cloud networking companies like Arista Networks (ANET 1.51%)

2. Safety is now a growth strategy

The world is trying to figure out how to safely return to some sense of normalcy, and 5G is helping in this regard. Take Verizon, for example, which has limited 5G coverage to parts of a few dozen cities (though it's worth mentioning that Verizon 4G LTE on average outperforms AT&T and T-Mobile 5G at this point). Verizon's limited rollout doesn't mean it has no vision for its next-gen wireless service -- but it's taking a different approach with 5G, primarily targeting businesses with its new network. 

In a new era of remote work and social distancing, Verizon is helping many businesses return to work safely. America's top wireless provider has wired up some manufacturing facilities with fiber optic and 5G antennas to enable better-connected industrial equipment and automation. It also recently announced a partnership with hardware provider Cisco (CSCO 0.25%) to bring 5G to sports stadiums and other large venues. In this iteration, 5G will provide venue operators with real-time analytics for crowd control, and patrons with mobile applications indicating where lines are shorter and crowds less dense at entrances, bathrooms, and concession stands. 

And for small businesses and entrepreneurs, the advent of 5G -- both at Verizon and at its smaller peers -- gives owners and entrepreneurs a new option for staying connected to the Internet. Thanks to better network technology, long gone are the days when dedicated physical office space is an absolute must. There has been a surge in new business applications in the U.S. during the pandemic, and network providers may be able to rekindle further growth in the business connectivity segments by touting the capabilities of 5G in a remote-work world. 

3. Delayed smartphone buys mean there's a cutting-edge device for everyone

Research done in 2019 showed that steadily rising prices had pushed the average time Americans held onto their smartphones to nearly three years. That average is likely to go up again in 2020. During the second quarter alone, smartphone shipments in the U.S. plummeted some 25% from a year ago, according to Counterpoint Research. With over 275 million smartphone users and annual sales nearing $80 billion a year, that implies many millions of phone purchases have been delayed during the pandemic.

That's good news for 5G uptake. Sooner or later, those phones will be due for replacement, and when they are replaced there are now dozens of 5G network-equipped models to choose from. The big three wireless network carriers are all pushing customers to make the switch with phone deals and 5G access included with unlimited data plans. To ride the next wave of smartphone upgrades, connectivity chip makers Qualcomm (QCOM 0.88%) and Skyworks Solutions (SWKS 1.40%) could be the biggest beneficiaries. 

When those old phones finally get upgraded, that will lead to a surge in 5G use. In turn, higher use of 5G capabilities will support network operator investments and improving Internet infrastructure. And whether it's public 5G for consumer use or private 5G for internal business networks, fast-forwarding to better Internet infrastructure is a positive for the economy.