During this year’s mid-January Consumer Electronics Show (CES) in Las Vegas, AT&T announced that they would be rolling out their new 5G mobile service by the end of 2018 in more than a dozen locations. They have not specifically identified which cities will be first for the mobile service, but they had previously disclosed that they had worked on the fixed infrastructure (i.e. signals are sent between stationary antennas) for 5G in twenty-three cities and had plans for trials such service in Kalamazoo, Michigan; South Bend, Indiana; Waco and Austin Texas.
Other service providers had also announced previously plans for 5G by late 2018 (T-Mobile and Sprint Corp. have so announced but without any specifics). The most detailed plans have come from Verizon: they will roll out in Sacramento plus a few more cities by end of 2018 with a pilot program available in 1H18 to customers in various eleven cities (Ann Arbor, Atlanta, Bernardsville (NJ), Brockton (MA), Dallas, Denver, Houston, Miami, Sacramento, Seattle; and Washington, D.C.)
While the question of which cities will first see mobile 5G service remains an open question, of far more importance are the technical installation and consumer cost questions. The installation problems include optimizing software and equipment that will be able to handle the expected increased effects of interference from weather, buildings and trees, and do so with a signal strength able to support the presumed increased consumer demand. Estimates from various consulting firms predict the costs to the mobile-phone companies and support industries will be at least $200B per year for three to four years in order to successfully bring 5G to fruition. (Consulting firm Accenture actually estimated in 2017 the industry will spend $275B on 5G over the next 7 years.)
Naturally enough, consumers can expect to ultimately foot a large portion of such a bill. How much those exact costs to the consumer will be have not yet been released by AT&T or Verizon. We can perhaps draw some conclusions from previous consumer cost expansions: according to the Bureau of Labor Statistics, service costs averaged $608/year in 2007 (the year the iPhone was first released) versus $963/year in 2014. Thus, if the average consumer might see as much as a 50% increase in their bill with 5G service and will almost certainly need to buy a new phone, the next question is, who needs 5G? To be sure, 5G promises to be much faster and more reliable than 4G or 4G LTE, but talking or texting wouldn’t require such improvements. It is also unlikely that accessing most aspects of the internet won’t need it either. That leaves the current users of game applications and HD movies as probable beneficiaries. However and consistent with our recent blog post on AR/VR technology, this writer/consumer believes the arrival of 5G in late 2018 and the predicted boom in AR/VR technology in 2019 promises to be a very convenient confluence of technologies. This may be one more example taken from Steve Jobs’ playbook: invent a technology that the consumer does not yet know he “simply must have”. It worked for Apple and their iPods, etc., will it work for 5G/AR-VR?
However as we noted with respect to AR/VR in the previous post, 5G has the potential to offer a route to the cell phone and semiconductor industries to revive growth. The combination of two such new technologies can only increase the probability of industry growth. Hopefully it will prove to be good for producer and consumer alike. Melissa Arnold, President of AT&T Technology certainly thinks so: “5G will change the way we live, work and enjoy entertainment.” …”ultimately deliver and enhance experiences like VR, future driverless cars, immersive 4K video and more.”