Wireless Carriers Make It Clear: You’re Going to Pay More For 5G
American consumers pay some of the highest prices in the world for 4G mobile data. Don’t expect that to change with 5G.
With all of the hype surrounding fifth-generation (5G) wireless, there’s one subject wireless carriers haven’t talked as much about: how much this amazing new connectivity is going to cost you. But in more recent weeks cell providers have started to make it clear that whatever incredible advancements 5G brings—higher prices are going to be part of the equation.
For example, Verizon recently stated it would be imposing a $10 monthly fee (on top of your existing charges) simply to connect to its shiny new 5G network. But after reviewers hammered Verizon for comically overstating 5G availability in these spotty early launches, Verizon backed away from imposing the surcharge for what it stated would be an “undetermined” period.
Last week, AT&T also made it clear it has its eye on charging higher rates for users who take advantage of the faster speeds 5G offers.
Speaking on the company’s earnings call last week, AT&T CEO Randall Stephenson said he envisioned a future where wireless consumers pay more money for faster speeds, something common on fixed-line networks but avoided on wireless networks, where congestion and limited spectrum has historically made guaranteeing speed tiers more difficult.
Consumers “are willing to pay a premium for 500Mbps to 1Gbps speed and so forth,” said Stephenson. “And so I expect that to be the case. We're two or three years away from seeing that play out."
Matt Wood, General Counsel of consumer group Free Press, told Motherboard in an email that additional fees for 5G usage “aren't necessarily a bad thing” in that, at least for now, you’ll only have to pay more money if you’re actually using 5G.
“It's far better for the actual users of new technologies to pay for the cost of the upgrade than it is for the rest of the customer base to wind up subsidizing a technology they aren't using yet,” Wood noted. “And it's far worse when every customer is forced to move to the higher speed and higher price, even if a lot of people would prefer to keep a more affordable service with slightly slower speeds.”
But there’s one problem as consumer groups see it: US 4G (LTE) customers already pay some of the highest prices in the developed world for mobile data. In addition these high flat-month billing rates, LTE wireless networks are also subject to all manner of odd restrictions and caveats, many of which are designed to covertly raise your monthly rate even higher.
Wireless carriers often impose monthly usage caps and overage fees to generate additional revenue and sometimes disadvantage streaming competitors. And while carriers have also embraced “unlimited data,” these plans usually have some very obvious limits. Verizon, for example, bans HD streaming on its unlimited data plans unless you pony up additional cash.
Carriers haven’t been clear about what kind of restrictions they intend to impose on 5G networks in post-net neutrality era. A lot of that will depend on whether 23 state attorneys general win their ongoing lawsuit against the FCC; a case that could either restore the FCC’s 2015 rules, or open the door to entirely new network restrictions and caveats.
Between the Trump tax cuts and favors from the Trump FCC, consumer groups say wireless carriers have netted an almost incalculable windfall in recent years. Despite increased network investment being the primary justification for neutering consumer protections, carriers like Verizon have made it clear this money isn’t going back into the network.
When these countless subsidies and regulatory perks are factored in, it’s a reasonable question to ask whether US consumers already pay more than enough for wireless data, regardless of generation. 5G network pricing could have you not only paying extra for faster speeds, but even more to ensure your connection is truly unlimited.
It’s uncertain whether consumers will even want to pay more money for a technology surveys say they don’t really understand and aren’t all that interested in. Customer surveys do indicate that consumers are generally happy with 4G speeds, and what they want most of all is a lower bill. That’s pretty clearly not happening with 5G.
“It's a pretty weird system we live in, with a mixture of corporate subsidies and central planning on one hand, and an absolutely unfettered market on the other,” Wood said. “In both cases it's the companies soaking up almost all of the benefits.”
Once it’s fully cooked 5G will provide numerous benefits to American consumers. Over time, the standard will help create networks that aren’t just faster (AT&T just reported test speeds upwards of 2 Gbps) but more reliable overall.
But 5G has been marketed as something far more than a better, faster version of the networks we already know. Both the FCC and mobile carriers have framed 5G as a technology that will utterly revolutionize the world and almost magically solve the country’s broadband availability issues, particularly in forgotten corners of rural America.
But between napping regulators, the death of consumer protections, and America’s obsession with competition-eroding merger mania (T-Mobile’s looming merger with Sprint, for example), US telecom sector dysfunction could ensure these promises fall well short, with 5G priced just out of reach of those that stand to benefit the most.