T-Mobile Makes Bold Pricing Move – No Price Increase for 5G Service

The US carrier results are in from the fourth quarter of 2018. US carriers have been all bragging about being the ‘first’ to roll out 5G service, but never has pricing been discussed. The biggest bombshell from the quarterly earnings reports has barely been talked about — T-Mobile talked 5G service pricing. The carrier announced that 5G smartphone service plans will not change from today’s 4G service plans.

This has the potential to cause multiple ripple effects through the industry.

  • It may force AT&T and Verizon to keep prices flat. There is some wiggle room. Carriers could expand equipment installment plans to longer payoff periods—36 months a possibility. This would lower monthly costs. Carriers could then drop in a 5G service premium while keeping monthly costs the same. At CES, AT&T floated the idea of the return of subsidies. A carrier could incentivize premium family plans, for example, by offering a subsidy on hardware but charging extra for 5G service.
  • This may increase 5G handset uptake. If 5G service is the same price, some premium subscribers may opt to ‘future-proof’ their handset purchase and upgrade to a 5G smartphone even if their area does not have full (or any) 5G service. With postpaid handset holding periods rising to close to three years, this is plausible. By YE2020, carriers intend to have vast 5G coverage.
  • 5G pricing and rollout may increase pressure on Apple. If 5G uptake is higher than initial, tepid 2019/20 estimates, it will apply pressure to Apple to launch a 5G iPhone earlier. There are many moving parts including a bitter lawsuit with 5G modem supplier Qualcomm. However, Intel must deliver, or the Qualcomm legal dispute resolved. A Spring 2020 5G iPhone would be a welcome addition for US and global carriers and vastly increase 5G device sales estimates.

For more details on carrier 5G rollout plans, see our recent carrier reports:

T-Mobile dominated net adds and recorded solid postpaid and prepaid performances. Despite this dominance in net adds, the company sold 14% fewer handsets during the quarter. For complete T-Mobile and Metro details see (here).

AT&T had a drastic drop in hardware sales, down 25% YoY. There were improved financial metrics. There are big expectations from the carrier’s vast media purchases. For more details on AT&T and Cricket insights see (here).

Sprint’s management has changed its narrative from having a network on par with Verizon and AT&T to a narrative the carrier will be in trouble without combining with T-Mobile’s low-band spectrum. For complete Sprint and Boost details see, (here).