Turns out AT&T’s 5G E is just LTE-A after all

Network measurer OpenSignal has had a look at the performance subscribers are getting from AT&T’s whizzy new 5G Evolution service and it’s nothing special.

“Analyzing Opensignal’s data shows that AT&T users with 5G E-capable smartphones receive a better experience than AT&T users with less capable smartphone models, for example those with an LTE Category below 16,” wrote OpenSignal Analyst Ian Fogg. “But AT&T users with a 5G E-capable smartphone receive similar speeds to users on other carriers with the same smartphone models that AT&T calls 5G E. The 5G E speeds which AT&T users experience are very much typical 4G speeds and not the step-change improvement which 5G promises.”

In other words there’s nothing special going on. If you’ve got a phone that supports LTE-Advanced you’re going to get around 29 Mbps download speed regardless of whether your operator cheekily rebrands it on your phone screen. Unless you’re on Sprint, however, which has a best effort of around 20 Mbps (see table).

Opensignal 5GE table

AT&T was universally mocked when its bright idea of rebranding LTE-A at 5G E first emerged. Sprint, of all companies, even decided to call the lawyers in to challenge the claimed deception, but AT&T continues to insist it was a great idea. Its marketing department presumably won’t be thanking OpenSignal for this latest revelation, but what did they expect?

T-Mobile uses FWA and digital divide as latest Sprint merger justification

T-Mobile US has announced the launch of an LTE Fixed Wireless Access service, which could address the connectivity needs of 50 million people, assuming the Sprint merger is approved of course.

It hasn’t been billed as an Uncarrier move from T-Mobile, however it has the potential to be quite disruptive. The team has pointed to statistics which suggest 61% of rural customers either have no or only one home broadband services available to them, offering a significant opportunity for CEO John Legere and his magenta army, if they can prove the concept works effectively.

In the first instance, T-Mobile plans to invite 50,000 customers to participate in the live trial, though should the bureaucrats approve the Sprint merger, the team would be able to open this up to 9.5 million customers by 2024. And thanks to 5G, T-Mobile is promising speeds “in excess” of 100 Mbps to 90% of the forecasted FWA footprint, also by 2024.

“Two weeks ago, I laid out our plans for home broadband with the New T-Mobile,” said Legere. “Now, we’re already hard at work building toward that future. We’re walking the walk and laying the foundation for a world where we can take the fight to Big Cable on behalf of consumers and offer real choice, competition and savings to Americans nationwide.”

Although FWA is not a long-term, realistic alternative to fibre, at least not on the current airwaves, T-Mobile could certainly craft a useful position here. Pricing the service at $50 per month, the team suggests customers could save $360 per year, assuming the average monthly cost of home broadband is $80.

For T-Mobile this is perfect timing to plug the benefits of the Sprint merger and gain the interest of influential politicians. With the 2020 Presidential Election machine beginning to crank into first gear, potential candidates and the President himself will be looking for soundbites to rollout to the Middle America rallies. The FWA service ticks two boxes here.

Firstly, with so many rural consumers (and potential voters) either unable to purchase a home broadband service, or only having a single option, T-Mobile is providing an answer. In most cases, the reason home broadband is not available is due to an inability for the telco to prove ROI or the geographical landscape makes it incredibly difficult. FWA addresses these problems.

Secondly, $360 is a lot of money. T-Mobile has a track record of undercutting rivals while delivering a service which is at least on par. This might well be an offering which will attract the interest of many.

Should any politician be involved in forcing the T-Mobile and Sprint merger through, it would be an excellent anecdote for the ambitious politicians to take to potential voters. Not only are they delivering Middle America the internet, they are doing it cheaper than what is available to everyone else around the country.

T-Mobile is promising the merged company will use a low-cost structure to aggressively capture market share by undercutting rivals. This strategy is not only a chance for Legere to further irritate AT&T and Verizon, but it is a massive plug for the merger. In an FCC document, T-Mobile suggests by “monetizing available spectrum and leveraging off of other deployed network assets, the in-home service will be profitable on its own”. The underlying message is quite clear; look what we can do once you greenlight the merger.

Interestingly enough, T-Mobile seems to be fighting the competition concerns in the wireless market, with the opportunity to enhance competition in the wireline market. Soon enough, the merger judges will have to decide what is more important; maintaining the four MNO balance or creating more competition in the home broadband arena.

“These pro-competitive and pro-consumer in-home broadband benefits are clearly merger-specific, verifiable, and compelling considerations to inform the Commission’s overall review of the merger’s effects on competition and the public interest,” the statement to the FCC reads.

Another point which will gain the attention of the pro-consumer politicians and bureaucrats is the promise of free hardware. T-Mobile is promising the LTE router will be provided and installed at no-cost to the consumer, and as soon as 5G is available in the area, the upgraded 5G router will be provided free of charge.

The merger is still hanging in the balance, but the promise of increased competition in the broadband world, especially with the prospect of a race to the bottom, might turn some heads. The pros and cons of the T-Mobile/Sprint merger are starting to become very interesting

Inmarsat once again in the acquisition crosshairs

Acquisition rumours are once again swirling around British satellite company Inmarsat, this time to take the company back to private equity control for £3.3 billion.

The consortium, featuring Apax, Canada Pension Plan Investment Board, Ontario Teachers’ Pension Plan Board and Warburg Pincu, comes at a time where the firm has been facing investor pressures. Over the last six months, poor performance from Inmarsat share price decline by 26%, while acquisition rumours have caused this trend to reverse recently. Share price is still down, but there does seem to be appetite in the market for an acquisition.

On January 31, Inmarsat received a non-binding proposal from the consortium offering $7.21 per share for the entire issued, and to be issued, share capital of the firm. The offer values the business at $3.3 billion, roughly £2.5 billion. This is not a concrete offer, but it is seemingly enough to get the market excited.

Although Inmarsat has reported flat sales growth in its core business units, maritime and government connectivity contracts, there has been increased demand in the aerospace industry, as more airlines demands connectivity, while 5G is on the horizon. The failure to deliver material progress on the promises does seem to be frustrating investors, but there is potential.

While satellite connectivity has been snubbed in recent years, usecases which demand ubiquitous connectivity in the future imply satellite has a broader role to play outside of the developing nations. Due to the civil engineering difficulties, and sometimes commercial constraints of connectivity, satellite is increasingly becoming a critical component of the connectivity mesh.

Interestingly enough, Apax might be a familiar sounding name to Inmarsat lifers. Apax was part of a consortium which bought the satellite firm in 2003, before taking it public two years later.

For some, this might be good news, but what is worth noting is this deal will be placed under scrutiny from the UK Government, which will view Inmarsat as a national strategic asset, and other attempts have failed. EchoStar attempted to acquire the business last year, investors rejected an offer worth £3.2 billion, while Eutelsat was also rumoured to be considering a bid.

Germany pushes back against US Huawei threats

It tried scaring her, to convince her with niceties, the diplomatic approach and finally threats, but the US cannot seem to break the will of German Chancellor Angela Merkel over Huawei.

Speaking at the Global Solutions Summit this week, Merkel has continued to defy the desires and demands of the US over China and its telco champion Huawei. Germany is not only standing resolute against the political propaganda, but this message seems to be more of a push back against the White House.

“There are two things I don’t believe in,” Merkel said during the interview. “First, to discuss these very sensitive security questions publicly, and second, to exclude a company simply because it’s from a certain country.”

This has been the on-going message from Germany and it seems the US threat of intelligence exclusion has landed on deaf ears. Germany wants proof of nefarious activities, and it will not make a knee-jerk reaction to punish a company (or a country for that matter) when the drivers are political and economic.

While there is of course a threat of espionage from the Chinese Government, this on-going narrative is one chapter in the wider US/China trade saga. Threats should of course be assessed and mitigated in a reasonable fashion, but you must consider all branches of the storyline. And Germany isn’t buying into US chest beating.

In terms of what has actually been said, there are five key takeaways:

  • Sensitive security issues should not be discussed on the public stage
  • Punishing a single company is not the right way to ensure security
  • Targeting China due to its economic success is unfair
  • Security requirements should be across the ecosystem to mitigate risk
  • The same security requirements should be escalated to a European level

Each of these points made by Merkel this week, and various German government agencies for months, are completely fair, reasonable and pragmatic. But fair, reasonable and pragmatic does not help the US.

Why is Germany resisting?

The simple answer is that it doesn’t make sense to ban Huawei.

Firstly, from a competition perspective the telco industry is not flush with vendors, especially ones which can offer the same scale as Huawei. Removing Huawei, and Chinese vendors across the board, reduces the number of vendors available for telcos to choose from. This weakens the negotiating position of the telcos and, theoretically, slows down the deployment march.

Secondly, a Huawei ban would impact some European nations more than others and Germany is one of them. Huawei has deep relationships with German operators, with equipment embedded into 4G networks. Banning Huawei would potentially result in kit having to be ripped and replaced, slowing down progress, while backward compatibility becomes more difficult also, again, slowing down progress.

With the world increasingly being defined by wireless, Europe’s largest economy cannot afford to slip too far behind in the 5G race. According to data from Opensignal, Germany has been falling behind numerous European nations when it comes to average 4G speeds.

While it might not have a massive impact on what we associate with connectivity today, primarily consumer smartphone applications and entertainment, with 5G promising a revolution in the way connectivity influences enterprise and the economy, this could become much more of an issue in Germany.

In short, Germany cannot afford to stomach the consequences of banning Huawei.

The turning tide of momentum

The anti-China rhetoric from the US has been consistent and loud over the last couple of months, though it does not seem to be gathering the same support as during the initial propaganda assault.

After Australia, Taiwan, South Korea, Japan and New Zealand seemingly turned against Huawei and China, the ear-whispering has not been as successful in Europe. The European continent has been a successful arena for Huawei in recent years, and such is the dependence of telco infrastructure on the vendor, it is unsurprising these nations are resisting the call to ban Huawei.

While individual states have been pushing back against US ambitions, this leaves the governments in slightly precarious positions. Such is the power and influence of the US economy, individually European nations will be in a frustrating negotiating position when defying US requests. However, escalating to a European level changes the dynamics.

This is perhaps why Merkel is keen to escalate this discussion to European Commission level. The power of the collective against US ambitions is an excellent way to mitigate risk on an individual level. Sovereign nation states often begrudgingly hand over power to the Brussels bureaucrats, but in this instance, it might prove to be a very pragmatic idea.

The European Commission was reportedly looking into new rules which would effectively ban member states from purchasing equipment from Chinese companies (although China would not be mentioned specifically), but we can’t see this carrying through. Brussels would face a huge amount of backlash when seemingly contradicting the wishes of the majority of its member states.

That said, should the US be able to produce concreate evidence of Chinese espionage and collusion with Huawei, attitudes could shift incredibly quickly.

What does this mean for Huawei?

This is neither good or bad; it’s pretty much maintaining the status quo.

Being banned in the US won’t really impact the prospects of the business, it never really cracked this market, while it will continue to maintain its healthy position in Asia. Europe is a key battle ground though.

Europe is in a difficult position. It needs to tread carefully to ensure it can still use equipment from the vendor. European governments will not want to ban Huawei and this continued resistance is a good sign for Huawei. Germany and the UK, two influential voices across the bloc, are both preparing frameworks to allow Huawei’s business to continue, and should such ambitions be escalated to the European Commission, these trends would likely continue.

Due to on-going security concerns, some of which are not fairy tales despite a lack of evidence, and telcos desires to introduce more diversity in the supply chain, Huawei is unlikely to dominate the 5G world in the same way it did 4G. This is far from a secured position, politics has a way of U-turning occasionally, but the anti-Huawei brigade is starting to run out of puff.

US warns UK on efforts to cage Huawei

The UK Government feels it is capable of mitigating any risk associated with Huawei 5G equipment, but the US is not so sure.

According to the Financial Times, a US delegation has reached out to the UK Government warning its means of testing and monitoring Huawei equipment will not protect it against any curious eyes from the Chinese Government. How this warning is received could dictate the US/UK relationship over the coming months.

The UK, and generally Europe on the whole, has taken a much more pragmatic approach in dealing with the potential threat of Chinese espionage. While the US was quick to banish any Chinese equipment from critical infrastructure, European governments are implementing new regulations and conditions to heighten security requirements, theoretically mitigating risk while also allowing telcos the luxury of increased choice.

This might sound like a perfectly logical way to manage a potentially nefarious situation, but the US is not happy. Perhaps this is evidence of the eroding influence which the US has on the world and a shift in the geo-political landscape. Once upon a time, US politicians might have been able to whisper in the ears of the European political elite and achieve their aims, but this does not seem to be the case anymore.

US officials fear that because 5G networks will be software-orientated, any equipment which is embedded into communications networks could altered at a later date, creating virtual backdoors at will. Theoretically, this is a genuine risk, however, nefarious individuals at any juncture of the supply chain, in any country, for any vendor, could also create the same vulnerability.

Although the National Cyber Security Centre is yet to respond to the comments from the US, CEO Ciaran Martin played down fears during a conference speech last week.

“Huawei’s presence is subject to detailed, formal oversight, led by the NCSC. Because of our 15 years of dealings with the company and 10 years of a formally agreed mitigation strategy which involves detailed provision of information, we have a wealth of understanding of the company. We also have strict controls for how Huawei is deployed. It is not in any sensitive networks — including those of the government. Its kit is part of a balanced supply chain with other suppliers.”

While the US has been visiting various countries around the world in an attempt to convince governments to ban Chinese companies, successes are becoming less frequent. European governments in particular have seemingly been very resistant to the idea, with the US reportedly threatening Germany with consequences; should the Germans allow Huawei into their networks, German intelligence agencies would not be granted access to US intelligence databases.

This plea to the UK Government seems to be setting up a similar timeline; should the UK not react in the same manner, the US might well start thumping its chest and stamping its feet, threatening a similar exclusion.

What is worth noting, is that while the US is preaching the benefits of a total ban on Huawei and other similar Chinese vendors, it has not done so itself. Chinese companies are barred from providing products and services in most critical and sensitive products, but the White House has not gone as far as a complete ban. Perhaps the worry is over repercussions from the Chinese, though it does not seem to care whether China punishes its allies.

FCC casts an eye north of 95 GHz

The FCC has unveiled plans to create a new regulatory framework for spectrum above 95 GHz.

While these bands have largely been considered outside the realms of usable spectrum, progress in radio tech has made the prospects much more realistic. And, dare we say it, such a regulatory framework could begin to set the foundations for 6G…

“Today, we take big steps towards making productive use of this spectrum,” said FCC Chairman Ajit Pai. “We allocate a massive 21 gigahertz for unlicensed use and we create a new category of experimental licenses. This will give innovators strong incentives to develop new technologies using these airwaves while also protecting existing uses.”

The Spectrum Horizons First Report and Order creates a new category of experimental licenses for use of frequencies between 95 GHz and 3 THz, valid for 10 years. 21.2 GHz of spectrum will also be made available for use by unlicensed devices. The team envision usecases such as data-intensive, high bandwidth applications as well as imaging and sensing operations.

With this spectrum now on the table, the line between science fiction and reality could begin to blur. Data throughput rates will become almost unimaginably fast, meaning computational power in the wireless world could start to replicate the kind of performance only seen in human brains.

“One reason the US leads the world in wireless is that we’ve moved quickly to open-up new spectrum bands for innovative uses,” said Commissioner Brendan Carr. “We don’t wait around for technologies to develop fully before unlocking spectrum so that entrepreneurs have the incentives to invest and experiment.”

While such a statement suggests the FCC is doing a wonderful job, flooded with foresight, the industry tends to disagree.

In 2017, the mmWave Coalition was born. Although this is a relatively small lobby group for the moment, it does have some notable members already including Nokia and Keysight Technologies. This group has been calling for a regulatory framework above 95 GHz for 18 months, pointing to developments around the world and stating the US risks falling behind without amendments.

A good example of other initiatives is over in Europe, where the European Telecommunications Standards Institute (ESTI) has created the ISG mWT working group which is looking at how to make the 50 GHz – 300 GHz band work. This group has already been running trials with a broad range of members including BT, Deutsche Telekom, Intel, InterDigital and Qualcomm.

While the US is certainly taking a step in the right direction, it would be worth noting it is by no-means the first to get moving beyond the 95 GHz milestone. Europe is leading the charge at the moment.

However, Commissioner Jessica Rosenworcel believes the FCC is being too conservative in its approach.

“I believe that with these way-up-there frequencies, where the potential for interference is so low, we should flip the script,” said Rosenworcel. “The burden should be on those seeking exclusive licenses to demonstrate the interference case and justify why we should carve up an otherwise open space for innovation and experimentation.”

Rosenworcel points to the incredibly short-distance this spectrum will offer, as well as the creation of new antenna designs, like quasi-optical antennas, to ensure efficiency. With the shorter distance and better control of the direction of signals, interference does not pose a threat and therefore an unlicensed approach to spectrum should be prioritised.

Commissioner Michael O’Reilly is another who also supports this position.

“While I strenuously advocate for both licensed and unlicensed spectrum opportunities, I understand that it may be a bit premature to establish exclusive-use licenses above 95 GHz when there is great uncertainty about what technologies will be introduced, what spectrum would be ideal, or what size channel blocks are needed,” said O’Reilly.

Both of these messages effectively make the same point; don’t make assumptions. Taking the same approach to spectrum allocation will not work. The traditional approach of licensed spectrum allocation is perhaps unnecessarily rigid. It might be necessary in the future but granting innovators freedom in the first instance would provide more insight. Perhaps it would be better to react to future developments than to try and guess.

“Better that than being forced to undo a mess later,” said O’Reilly.

While it is of course encouraging the FCC is taking such a long-term view on industry developments, the team needs to ensure it does not over-complicate the landscape right now with unnecessary red-tape. Future regulation needs to protect innovation and grant the freedoms to experiment; a light-touch regulatory environment needs to blossom.

Oracle reports flat growth as cloud segment booms

As a late-comer to the increasingly profitable cloud segment, Oracle has yet to make more than a minor dent, and this quarter appears to be another demonstration of mediocrity.

The company stopped reporting its cloud business revenues as a standalone during last year, so it is difficult to give a complete picture, though total revenues tell a part of the story. Total Revenues were $9.6 billion, down 1% year-on-year, though once constant currencies are applied the boost was 3%. Combined with a outlook which promises a range of 0% growth to negative 2% (1% to 3% growth in constant currency), its not necessarily the prettiest of pictures.

This is not to say Oracle is in a terrible position, the company is still profitable, and the growth prospects of the cloud segment encourage optimism, but it is not capturing the fortunes of its competitors.

Despite the heritage and continued influence of this business, perhaps we should not be surprised Oracle is not tearing up trees today. Back in 2008, CTO and founder Larry Ellison described the technology industry as the only segment “which is more fashion driven than women’s fashion”, suggesting cloud was nothing more than a passing fad.

Hindsight is always 20/20, but after this condemning statement about the embryonic cloud industry you can see why Oracle is reporting average numbers while others are hoovering up the cloud cash. Despite this late start, in 2016 Oracle felt it had caught up, with Ellison declaring “Amazon’s lead is over” during an earnings call.

While executives can make all the claims they like, reeling off various customer wins and pointing towards heritage in the technology industry, the numbers speak for themselves. Oracle is not profiting from the cloud bonanza in the same way competitors are.

Alongside the effectively flat revenue growth, Non-GAAP net income in Q3 was down 8% to $3.2 billion, while the merged cloud revenues and license support unit grew, it was only by roughly 1.1%. When you consider AWS, Google, IBM, Microsoft and Alibaba are all quoted numbers which are notably higher than this, it does paint a relatively gloomy picture.

Recent data from Synergy suggests revenues for 2018 passed the $250 billion across seven key cloud services and infrastructure market segments, operator and vendor revenues, representing a 32% increase year-on-year. Oracle will of course not be applicable for all of these segments however the overarching cloud trends are incredibly positive.

That said, perhaps the most damning piece of evidence is these numbers met analyst expectations. The team should be applauded for this fact however, it does suggest the analyst community no-longer consider Oracle a front-runner in the technology world. If the estimates are mediocre when the ingredients for success are so abundant, it doesn’t make for the most positive perception of one of yesteryears heavyweights.

Facebook reportedly facing criminal charges over data sharing

Facebook’s day started off with a major outage and, should reports turn out to be true, it is ending with the social media giant facing a criminal investigation from Federal prosecutors.

According to the New York Times, a grand jury in New York has obtained records from two smartphone manufacturers, via subpoena, which will detail the data sharing partnerships in or previously in place with Facebook. Sources has retained anonymity and it is not exactly clear who the subpoenaed parties were, though Facebook did have more than 150 such relationships in place before winding-down over the last couple of years.

Although the investigation has not been officially confirmed, it will come as a surprise to few considering the scrutiny those dominating the data-sharing economy are facing. Over the last few months, there have been numerous attempts to weaken the influence of the internet giants, with some even suggesting legal force to break-up the empires. The internet giants created a cosy position, but this is certainly under threat.

That said, while the scandals over the last 18 months might lead some to presume the practice of selling personal data would be scaled back, there seems to be little evidence of this. A recent Motherboard investigation suggests various US telcos are still reaping the benefits, and in some cases, scaling up the practice.

What is worth noting is the concept of selling personal information is not illegal, as long as the right consent has been obtained from the end user. This is what Facebook, and the third-parties who entered into such arrangements, are facing criticism for today. Accusers suggest proper content was not obtained or done so in such a complicated fashion it should not be considered valid.

The data-sharing economy is gaining validity across the world, but only when the practice is managed in a fair and responsible manner. This is what GDPR and other regulations intend to enforce. The idea is not to stop the practice, but to ensure the companies involved act in a responsible manner, with the user properly informed and in control of the situation. The data-sharing economy can work, and can benefit everyone involved, as long as no single party abuses their position.

The partnerships which are reportedly being investigated here, however, have come under criticism for some time. Privacy campaigners suggest the partnerships violate a 2011 consent agreement between Facebook and the FTC, after allegations the social media giant had shared personal information in a way that deceived users. At one point, there were more than 150 such partnerships in place, though Facebook has been phasing out most of the agreements over the last few years.

Although this is a retrospective investigation into the company, it could potentially contradict statements from CEO Mark Zuckerberg and other executives suggesting the business was being more transparent and managing user data responsibly. Facebook has been making this statement for several years. This case could prove Facebook mislead the world with these claims as well.

There is a general feeling of ‘if’ not ‘when’ here. Politicians, governments and regulators are seemingly scouring the Facebook business for any cracks, allowing them to slap a significant fine and parade the streets with a victory on behalf of consumer privacy. Facebook’s lawyers have done a pretty good job of wriggling so far, but there is a bit of a feeling the dam could burst at any point.

Huawei CEO tries to deflect cybersecurity spotlight onto Ericsson and Cisco

It was just a matter of time before Huawei played the whataboutism card and Founder/CEO Ren Zhengfei couldn’t resist in a recent interview.

Chatting to CNN in Shenzhen Ren said the following when referring to the US ban on Huawei gear: “They have to have evidence. Everybody in the world is talking about cyber security and they are singling out Huawei. What about Ericsson, what about Cisco, don’t they have cybersecurity issues? Why has Huawei been singled out? There’s no Huawei equipment in the US networks but has that made the US networks totally safe? If not how can they tell other countries that your networks will be safe without Huawei?”

When Huawei announced its lawsuit against the US government we figured it would have a pop at Cisco sooner or later, but Ren decided to involve Ericsson for good measure (but not Nokia). He has a bit of a point, we suppose, but there are a couple of flaws in this fallacious approach. Firstly, if he thinks any other vendors might be a security risk then he is subject to the same burden of proof he is applying to the US. Secondly, even if they are dodgy that doesn’t mean Huawei isn’t.

The main theme of this resumption of the Ren roadshow was to augment the points Huawei made when in its lawsuit. Ren stressed he would rather shut the company down than let the Chinese state muck about with it and said US tactics will result in scaring away investment in the country. He also tried playing the martyr card, insisting that what doesn’t kill Huawei will make it stronger and even suggesting this aggro represents a timely wake-upcall for complacent Huawei employees.

Ren’s media tour coincides with parallel attempts to win hearts and minds among US allies, but it looks like those are being trumped by a more direct approach from the US. A recent report from Bloomberg reveals German spooks think Huawei is just too dodgy to be allowed into the country’s 5G networks.

Apparently the German intelligence officials remain unconvinced by Ren’s vows never to collaborate with the Chinese state and are also worried about upsetting the US. “It’s above all a matter of trustworthiness and of the impact on our relationship with our allies,” a Foreign Ministry official told some parliamentary committee.

On top of that the EU has recently been publicly expressing concerns about Chinese 5G kit in general so, for the time being at least, momentum seems to have swung back in US favour. Ren’s attempt to metastasise the aggro to other networking vendors must be causing some alarm, not least because it raises the prospect of them being caught in the orbit of the law suit. If we’re on a Huawei to hell, we’re taking you with us, seems to be the message.

 

Is ‘superfast’ enough to pry an extra tenner from our wallets for 5G?

The US market is one which has suffered in the ‘race to the bottom’ but a $10 add-on for 5G connectivity from Verizon is certainly an interesting way to get ARPU heading the other direction.

With 5G networks officially ‘running’ in various markets around the world, one of the big questions which remained is how much the telcos would actually charge for the superfast bonanza. Verizon has been one of the first to twitch off the starting line with a new offer which will use 5G as somewhat of an ‘added value’ proposition to existing and new subscribers, and only for $10 a month.

“Continuing our track record of 5G ‘firsts,’ we are thrilled to bring the first 5G-upgradeable smartphone exclusively to Verizon customers,” said Verizon’s CTO, Kyle Malady.

“Not all 5G networks are the same. Verizon’s 5G Ultra-Wideband network is built by the company with the nation’s best and most reliable 4G LTE network. It will change the way we live, work, learn and play, starting in Chicago and Minneapolis and rapidly expanding to more than 30 US markets this year.”

Starting in Chicago and Minneapolis the 5G euphoria will quickly spread throughout the US. What is worth noting is coverage will of course be limited in the first instance, but that will unlikely be a roadblock for the early adopters who want to have 5G for the sake of having 5G.

For those who are concerned the network will be available without the compatible devices, Verizon has also partnered with Motorola to launch what the telco is promising will be the world’s first 5G smartphone. The device itself will not be 5G compatible, but users will have the option to purchase a 5G moto mod, which can be attached to the devices to plug into the superfast networks.

What we’re more interested in here is the sales strategy.

This has been one of the big questions which the industry has faced over the last couple of months; how will 5G connectivity be sold to the consumer? As it stands, there are few demands on the consumers digital lifestyle which are not answered by 4G. This will not be the case in a few years when new products and services emerge, but right now, 5G is an answer without a question; it’s a tricky conundrum for the telcos.

This is an interesting approach from Verizon however. We suspect anyone selling a 5G contract to subscribers will face failure, aside from the early adopters, though positioning the superfast connectivity as an add-on to subscriptions could be an interesting way to gain traction. And then there is the price.

$10 extra each month is affordable, and it is a very good play on nuance. If Verizon attempted to sell subscribers 5G connectivity for $60 a month, most would probably ignore it. However, by selling a 4G contract for $50 a month and offering an upgrade for $10, more would possibly consider it. It’s fundamentally the same outcome, but clever manipulation of the customer could achieve the desired results.

Buying something for $60 a month is scary, because that is a lot of money, but adding on an extra $10 onto a necessity becomes much more palatable. It’s the very same reason Netflix or Amazon Prime are priced so low compared to some other premium content platforms; spending $10 a month doesn’t sound like it will break your bank account, but scale of subscribers makes a difference for the provider.

While we still believe consumers are too cash conscious for consumer 5G tariffs to be a roaring success in the immediate future, this is certainly an interesting approach to generating ROI. Other telcos should take note, this is the sort of initiative which will give the best opportunity for success.