Several Wall Street and Market analysts weigh in with opinions on Monetizing 5G Technology (UPDATED November 1, 2019):
Many believe that if 5G is just “faster and more reliable service,” many consumers will wait to adopt. They need to see and understand the other products and benefits, like longer battery life or portability of a fast home broadband connection. Here’s a sample of recent opinions:
Investor interest in 5G remains high and there is general understanding that 5G can offer higher throughput and lower latency connections. However, Citi continues to receive questions on how carriers can monetize the new 5G platform given concerns regarding the current competitive landscape, limited evidence on the scalability of potential fixed wireless broadband services, and an absence of specific timing for new application development by enterprise firms.
Citigroup takes a relatively optimistic view of 5G and believes that carriers will first try to monetize new 5G deployments by charging more for greater speeds.
This author believes that Verizon is waiting for new 5G software releases and 3GPP Release 16 spec completion in the 2020 time frame to dynamically allocate 5G services to the spectrum it owns. Also, VZ is looking to differentiate with ultra-wideband mobile broadband using mmW spectrum in urban environments, but that requires many more small cells due to distance limitations of mmW spectrum. And that entails obtaining permits to mount the small cells in public structures (street lamps, traffic lights, buildings, etc).
Other U.S. carriers such as T-Mobile US, Sprint and AT&T may create marketing advantages if they can fill out their coverage maps with 5G before their competitors do. That will largely depend if the U.S. carriers use mmWave spectrum which is really on practicable for dense urban areas due to short range transmissions and need for many small cells. Some network experts remain enthusiastic that new antennas with beam forming can improve propagation for mid-band spectrum (2.0-6.0 GHz), similar to the PCS band (1.8 GHz).
In an earlier bearish report, S&P Global Ratings last year warned that AT&T, Verizon and other wireless firms planning 5G wireless services could wait five to 10 years for a payback on investments. Consumers may resist higher service fees on faster 5G wireless speeds for video streaming, S&P said.
Recent research on 5G consumer attitudes conducted by PwC shows that significant headwinds are ahead for 5G pricing. Indeed, fully two-thirds of consumers indicated that they would not be willing to pay anything additional for the increased speeds and capabilities delivered by 5G. When combined with those who would be willing to pay, the average premium barely approached $5 per month, less than half of the initial pricing recently announced.
“Based on recent checks, we believe this ‘5G hype’ may be a bit premature, and near-term fundamentals have been somewhat ‘so so’ at best in given some key (and somewhat unique) initiatives in our view going on at each of the respective US wireless carriers,” wrote the analysts at Wall Street research firm Wells Fargo Securities in a recent note to investors about the cell tower industry. “As a result, we believe the risk / reward for the sector at the present time is not an overly attractive one.”
“We tested Verizon’s newly launched 5G network in Chicago. If performance does not improve, investors will once again question whether Verizon will have to materially increase its capital investment in order to enable millimeter wave spectrum in more than just limited hotspot locations,” wrote Walter Piecyk, an analyst with Wall Street firm BTIG, in a recent blog post.
Warned BTIG’s Piecyk: “Verizon has insisted that it can use their existing cell site footprint to roll out 5G technology on millimeter-wave spectrum. That seems very hard to believe. In our limited testing, the 5G small cells provided coverage of just ~350 feet. In fact, 5G performance suffered from reduced reliability beyond 200 feet when faced with street obstructions. That’s not even close to the 800-2,000 feet radius that Verizon and their vendors have promised. Meanwhile, Verizon’s LTE network, using mid-band spectrum, was clocking speeds north of 250 Mbps, which is more than adequate for nearly all applications.”