5G Rollout Race Begins with Verizon Lighting Up Chicago and Minneapolis

Verizon brought in their 5G launch date by over a week announcing on April 3rd that Chicago and Minneapolis are live. Initially, the launch was scheduled for April 11. The unveil gives Verizon the bragging rights of being the first carrier in the world to offer commercial 5G. The Korean carriers SK Telecom, KT, and LGU+ will launch their 5G networks on April 5, coinciding with the Samsung Galaxy S10 5G debut.

Why are bragging rights so important to carriers?

Well, it’s all about market perception. Carrier exclusive hardware is quite rare today. Therefore, competition has moved back to network superiority, service plans, and other sweeteners (think of many of the carrier freebies such as the T-Mobile ‘uncarrier’ initiatives, free Netflix, Hulu, iTunes, Gogo wifi, and more).

From the perspective of the US carriers, it is super important to lead the 5G rollout so operators can point to a tangible brag they can use for marketing purposes. Sprint and T-Mobile were late to LTE (4G) and they bled subscribers for years. T-Mobile attempted to market HSPA+ as 4G and it was a complete disaster. Both Sprint and T-Mobile will not allow Verizon and AT&T to market themselves as clear leaders of 5G this go-around. All carriers will brag they are leading 5G rollout.

While there can only be one winner, ultimately it is all about public perception. Each carrier will pluck a data point they can use to make the claim they are leading in 5G. And, there are many metrics to choose from. For example, carriers will use point of presence (POPs), subscribers, the percentage of data running on the network, number of metros covered (could be partials), number of 5G devices in the line-up, and various speed tests. When it comes to speed tests remember empty pipes test fastest. Also, it is relevant to know whether the test shows peak speed, average data rate, or edge data rate. Peak speed is the most used but usually the least relevant. Even if carriers are concerned about the return on investment on the massive costs of a 5G upgrade, they cannot afford to lose the marketing battle. We expect they will cherry pick one or more of these unique stats.

What about pricing and hardware availability?

Pricing varies by carrier and region. Look for most global carriers to charge a premium for 5G service. They may bundle 5G with more data or other enticers, but most will seek an increase in average revenue per user (ARPU). It will be a difficult balancing act. Carriers want to start moving data over to the 5G pipes as soon as possible to begin benefiting from the massive investment. However, they do not want to stifle growth by pricing it too high.

So far, Verizon and T-Mobile have announced their pricing plans. Verizon will charge a $10 premium, or about 14% higher, for 5G service. T-Mobile has stated 5G services will cost the same as 4G. Sprint and AT&T are yet to announce pricing.

Korean carrier 5G service pricing plans begin at 55,000 Won ($48 US dollars). There is a lot of fine print to complicate the costs. SK Telecom will charge about a 10% premium for 5G service. But, there are enticers such as free music streaming, 5G game pack, and more. Subscribers can also use their 5G smartphone as a hotspot connecting up to two devices. KT announced similar price level increases for 5G service, up about 10%. If subscribers exclude data roaming service, 5G service is priced the same as LTE. LGU+ 5G service pricing will cost about 8% higher than similar 4G service plans.

In terms of hardware, Verizon will launch Motorola’s 5G Moto Mod. The 5G Mod will connect to Motorola’s Z3 smartphone. Within a few weeks, the carrier will also launch the Samsung 5G S10. Sprint has announced its first 5G smartphone will come from LG. There will also be 5G hotspots launching across the major carriers. Lacking in 5G during 2019 will be Apple. It presents an opportunity for some iOS to Android switching. We expect Android OEMs to attack this opportunity with marketing money.