Early evidence suggests 5G might carry a price premium up to 20 percent, according to the Ericsson Mobility Report. That might be the case in some markets, including South Korea, where there has been at least a little revenue lift since 5G was launched.
The difficulty is that 5G average revenue per unit might be affected by any number of other consumer choices. Perhaps consumers upgrade to unlimited usage plans, which normally are the most expensive. In such cases, it is not necessarily the 5G pricing premium but the higher-priced unlimited plans which drive revenue increases.
It is not an easy matter to predict whether 5G will produce higher average revenue per account in the U.S. market. For starters, not all the leading service providers will charge a price premium for 5G. T-Mobile US continues to say it will not charge any price premium for 5G. AT&T has not yet unveiled consumer 5G pricing.
And Verizon and Sprint both charge a $10-a-month premium for 5G access, as part of their unlimited plans, including all Verizon unlimited data usage plans and Sprint’s top unlimited usage plan.
Though T-Mobile US says it will not charge a price premium for customers of its 5G network, both Verizon and Sprint are charging $10 a month more for 5G, on the top-end unlimited plans, in Sprint’s case, or on any unlimited data usage plan in Verizon’s case. That means there is some potential for revenue increases on 5G plans, for Sprint and Verizon, to the extent that consumers choose to buy unlimited-usage plans.
Sprint’s 5G service is reserved only for its $80-per-month "unlimited premium" customers. The 5G network will not be available for use to Sprint customers buying $70-a-month or $60-a-month unlimited plans.
Access to Verizon’s 5G Ultra Wideband network is $10 per month with any of Verizon’s unlimited usage plans.
Beyond that, AT&T provides access to the 5G network as a feature of its most-expensive unlimited usage plans. So a consumer switch to one of the unlimited-usage plans creates higher revenue, though it is not necessarily 5G that drives the decision. In fact, according to AT&T, there is no price premium for 5G, in a direct sense, on such plans. Consumers pay more for unlimited usage.
Early experience with 4G probably is relevant. At first, service providers thought they might be able to charge a small premium for 4G. In the U.S. market, that rapidly became impossible, as competition heated up quickly, eliminating the chance to create premium pricing for 4G. It quickly became the case that 4G was cheaper than 3G, at least on a cost per gigabyte of usage basis.
So one might argue that 5G, as such, will not generally create opportunity for a direct increase in prices. Instead, users might find they pay more for unlimited usage plans, getting 5G as a feature of such plans.
No comments:
Post a Comment