How much will consumers pay for 5G services? According to Verizon, they will pay an extra $10 per month. But analysts say that Verizon’s pricing scenario (which it revealed earlier this week) is really just a trial to see whether consumers will pay an additional fee for 5G. And unlike past wireless technology evolutions, such as 3G or 4G, 5G pricing will likely vary among the operators and depend upon what consumers can do with 5G and which spectrum bands the operators are using to deploy their 5G service.
Verizon is in the spotlight this week because it announced that it will launch its mobile 5G service, called 5G Ultra Wideband, April 11 in select areas of Chicago and Minneapolis as a $10 add-on to the carrier’s existing unlimited plans. To get the 5G service, consumers will have to purchase a Motorola Moto Z3 with a $50 hardware accessory called the “5G Moto Mod” to actually use the service.
While operators typically try to attract their high-end users when they roll out their latest wireless technologies, some analysts are skeptical that this early 5G offering will appeal to these types of consumers. “This is targeted at the high-end user, but they want the newest and greatest phones,” said Lynnette Luna, principal analyst with GlobalData. “Will they want this Motorola phone? Maybe they will think the Samsung Galaxy S10 is worth waiting for.” Verizon has said it will exclusively offer the Samsung Galaxy S10 5G sometime before July.
Verizon, of course, is using its millimeter wave spectrum assets for the company’s initial 5G deployments, which is why it is only offering it in certain cities where it has mmWave spectrum and why it is only available in limited coverage areas. Luna said that this is the reason why we are seeing this type of experimentation with pricing. “In the future, when everyone is on par with spectrum and there is a more ubiquitous network, I expect we will see plans tied to specific applications that they can charge more for,” she said.
That sentiment was echoed by wireless industry analysts Chetan Sharma. Sharma said that once operators get bigger 5G coverage footprints and more handset options, he expects to see pricing that might be targeted toward certain types of users, like mobile gamers that will pay more to have higher network performance.
In the meantime, Sharma said that Verizon’s initial mobile 5G launch in two markets and its $10 add-on pricing to unlimited plans is a niche experiment to help the operator figure out what will work. He also compared it to the early launches of LTE-enabled devices like tablets where operators charged consumers $10 per month to add these devices to their existing rate plans. “This is a way to control the onboarding process,” he said. “They can see what the appetite is and go from there.”