The cost of 5G technology: will it be expensive?
5G technology continues to be implemented around the world. It will connect us to a much faster mobile network and entire industries will benefit from a faster connection, such as autonomous cars, drones, the IoT, or the healthcare industry. As estimated, by 2023 there will be 1 billion 5G customers. But what about the cost of 5G technology? How much will we have to pay to become one of these 1 billion 5G users?
The 5G story goes back to December 2018, when South Korea was the first market to offer 5G services. In May 2019, operators in Switzerland, the US, and the UK launched their own mobile 5G services for consumers.
In recent months, several mobile network operators have introduced their 5G mobile services. The offers vary considerably between and within markets, with options for phone and router bundles as well as SIM-only offers.
Will 5G technology be more expensive than 4G?
When it comes to the operators, they are expected to spend more than 1.3 trillion dollars over the next 7 years on networks. Of these, the majority, 75% will be allocated to 5G. The rest will be spent on upgrading and expanding 4G, which will coexist alongside 5G.
As for consumers, 5G rates can be divided into two categories: unlimited and limited data plans.
Since the devices offered in combined packages vary from one market to another, we will only talk about plans with SIM.
Unsurprisingly, at least for the carriers that have launched so far, unlimited 5G rates are more expensive than 4G. Based on carrier data, the average monthly fee for 5G is around $ 89 compared to $ 68 for 4G. The difference in average cost between the 5G and 4G unlimited plans ranges from $ 5 to $ 72 per month.
Of course, operators can avoid overuse by adding fixed data limits or reducing speeds once a certain amount of data has been consumed.
Switzerland was the first country with commercial 5G services in Europe and there is a huge gap of $ 72 between the average cost of unlimited 5G and 4G packages with Swisscom, but users can choose to pay $ 198 for a 1Gb / s service, or $ 89 for 300Mb / s. Both include free roaming in Europe, Canada, and the US, plus free Swisscom TV.
In May 2019, EE became the first operator to launch 5G in the UK. As with 4G, the operator offers limited data packages, so unlimited data is not available.
We expect more harmonized unlimited 5G tariffs in various countries once all major carriers have launched 5G services. This pattern will continue until brands lower prices to the level of current 4G monthly plans.
In South Korea
KT has one of the widest price gaps with a $ 51 difference between 5G and 4G unlimited plans. At the other end of the scale, LG Uplus 5G prices are only $ 5 higher than 4G. SK Telecom (SKT) has a $ 9 gap.
In the United States
Verizon was the first US carrier to offer 5G and its average rate is the lowest. The prices are an average of $ 18 higher than 4G, but they come with free roaming in Canada and Mexico.
Limited data plans
These plans allow operators greater control over the volume of data on their networks, while also allowing customers with less intensive data needs to get 5G at a lower price. Operators can also expect that many customers, having experienced the power of high-speed data, will upgrade to a larger or unlimited data package in the future.
Overall, the average cost for 1GB data on 4G is $ 17 compared to $ 13 on 5G. While in many cases customers will be able to get the same amount of data for a lower price, faster speeds mean that more data can be consumed.
Check out our recent post about the 5G impact on Digital Transformation if you want to know more.