Analysts say monetizing 5G deployments will be very difficult in next few years

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 BTIGin 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.”


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6 thoughts on “Analysts say monetizing 5G deployments will be very difficult in next few years

  1. When Is 5G Coming to the US? (Updated May 1, 2019)-US 5G Rollout:

    -Verizon: Fixed and mobile 5G is live in a few areas
    -AT&T: Mobile 5G for select customers in 19 cities; wider coverage in 2019
    -T-Mobile: Commercial 5G launch in second half of 2019; nationwide coverage expected in 2020
    -Sprint: Deploying 5G to select areas in May
    -U.S. Cellular: 5G services coming in second half of 2019
    -C Spire: Fixed 5G services in Mississippi
    -Charter: Testing 5G, but no solid rollout plans
    -Starry: Fixed 5G currently in Boston, Denver, LA, New York City, and Washington DC

    Dish Networks not mentioned, but they are attending ITU-R WP5D meetings on IMT 2020 and must use the spectrum they purchased to build a new wireless network soon!

  2. Gartner Group on 5G

    5G is not just another upgrade from 4G mobile networks; it represents a major enhancement in service provision, bandwidth, agility and data processing power.

    Traditional relationships for mobile communications service provision have been facilitated solely through IT or technical arms of organizations, with very limited direct connection into the supply chain itself.

    Closer collaboration between IT departments and supply chain is increasing; especially within organizations that recognize the tactical and strategic importance of emerging technology (such as 5G) for planning and investment decision making.


    Supply chain leaders responsible for technology and solutions for supply chain operations should:
    1. Ensure that 5G mobile networks are an integral part of all ongoing objectives for improvements to technology systems and processes.
    2. Confirm that 5G is embedded across strategic planning cycles in supply chain, especially for initiatives such as digital, Internet of Things (IoT) and end-to-end supply chain networks.
    3. Develop closer ties to communications service providers (CSPs) and/or telcos to elevate core competencies for emerging 5G best practices, bench marking, pilots and peer connections as they relate to supply chain.
    4. Evaluate the impact 5G will have across supply chain and your customers.
    5. Ensure a broad and representative range of all stakeholders across the supply chain are consulted and briefed on developments and work relating to 5G.

  3. A shadow over 5G?
    Do consumers really want 5G? Will they pay any extra for the eye-watering data speeds that have been promised? Or is 5G an answer in search of a question? In recent months, the technology hype cycle has continued to run its course, with a broad range of reports and commentators interrogating the 5G value proposition. Some of this analysis is pertinent -– for example, relating to the urgent need to improve deployment regulation as well as planning and orchestration tools to cut costs and maximise assets in dense networks. And some of it is weirdly occult – only even number radio iterations (i.e. 2G, 4G) turn out to be successful.

    Making 5G successful will depend on many factors that, in addition to compelling service propositions, include progressive siting and spectrum regulation, effective virtualization strategies, the developing role of neutral hosts, the growing adoption of sharing strategies and network aggregation. However, from a user perspective, it’s important to stop talking about 5G as somehow separate from the rest of the connectivity toolbox. At Real Wireless our starting point is never technology but customer requirements. In this context, 5G can take its place with Wi-Fi, LTE and even 2G (see our latest report [link]) as a new asset with huge potential and a business case that comes most vividly to life alongside a broad range of connectivity technologies.

    Real Wireless CTO Simon Fletcher attempts to bring some balance to the debate.

  4. Why 5G will disappoint everyone

    The wireless carriers hope 5G will enable them to compete with or replace ISPs, cable companies, and satellite internet and TV companies. So that’s nice. But it will probably be more than 15 years before 5G replaces 4G for most users most of the time.

    5G won’t be reliable enough anytime soon for companies such as Apple and Samsung to remove the supercomputer-like processing power from smartphones and move everything to the cloud. I’m afraid that $1,000-plus smartphones are here to stay.

    And because of the way 5G works, rollouts will soon face another huge hurdle.

  5. Panel Session Video on Rise of 5G Connectivity:

    There is a worldwide race to adopt 5G and Enterprise executives are paving the way for the speedy next generation wireless technology. Cloud infrastructure and advancements in machine learning, paired with 5G can create new revenue streams, cut costs and increase profitability for enterprises and consumers. We’ll examine how technologies such as drones and augmented reality could be enhanced and how large businesses are embracing 5G to drive future innovations of IoT, forge alliances with telecom companies and startups and invest in new architecture to boost productivity in their organizations and beat the competition.
    -Steve Canepa, Global Managing Director, IBM Telecommunications, Media and Entertainment Industry
    -Beth Devin, Managing Director & Head of Innovation Network & Emerging Technology, Citi Ventures
    -Quinn Li, Senior Vice President & Global Head, Qualcomm Ventures
    -Ulf Ewaldsson, Senior Vice Pres, dent of Technology Transformation, T-Mobile

    Moderator: Selina Wang, Reporter, Bloomberg News

  6. Thank you for publishing this awesome article on the challenges network operators will have in monetizing 5G after spending billions of dollars on deploying new infrastructure and paying for 5G spectrum at auctions.

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