Operators experiment with 5G pricing

US operators aren't charging extra for 5G, but other operators around the world are taking a much different approach to 5G service plans.

Sue Marek, Special Contributor

March 23, 2020

4 Min Read
Operators experiment with 5G pricing

When Rogers in Canada launched 5G earlier this month, the offering was free to customers with an unlimited data plan, except with this caveat: In March 2021 the company will add a $15 per month charge onto those plans.

When South Korean operator SK Telecom launched 5G nearly a year ago, the operator offered two different premium plans to consumers: One with up to 200GB of data for $84 per month and another with up to 300GB of data for $125 per month. SK emphasizes to its customers that these large data packages are ideal for streaming ultra-high-definition (UHD) content and virtual reality.

However, the operator also offers smaller data packages ranging from 8GB for $49 per month with 1Mbit/s speeds after the data cap, to 150GB for $66 per month with 5Mbit/s after the data cap. These smaller plans are discounted compared to the operator's 4G plans to help get customers to move to larger, more expensive data bundles as they become accustomed to 5G speeds.

In Europe, some mobile operators launched 5G with speed-based plans where consumers pay more for higher speeds. For example, Finland's Telia launched its 5G service last fall and offered 600Mbit/s for $45 per month and 1Gbit/s for $56 per month.

Elisa, which also operates a 5G network in Finland, is doing the same. The company is offering three plans: 300Mbit/s for $35 per month; 600Mbit/s for $43 per month and 1Gbit/s for $54 per month.

Meanwhile, in the US market, AT&T, T-Mobile and Sprint do not charge any additional fees for 5G. Verizon, meantime, is charging $10 per month extra on its cheapest unlimited data plan for 5G, and plans to add that charge to the rest of its unlimited plans at some unspecified point in the future.

Different regions, different plans
It's not unusual for mobile pricing to vary across different regions of the world. Susan Welsh de Grimaldo, a director with research and consulting firm Strategy Analytics, said that operators in some markets such as South Korea, where LTE networks are very strong, have to offer consumers something more if they want them to upgrade to 5G for an additional charge.

That's why South Korean operators are pushing virtual reality (VR) and augmented reality (AR) using 5G, and are experimenting with multi-screen viewing at sporting events. "They are trying to do more with UHD content," Welsh de Grimaldo said. Cloud gaming is another area where operators can offer new services to justify the 5G upgrade. Sprint is currently experimenting with this, Welsh de Grimaldo said.

South Korea's model of offering different tiers of plans makes sense for that market, according to consulting firm Arthur D. Little. The company, which authored a report on 5G pricing, said that 5G customers in South Korea are using three times more data per customer than 4G customers did over the same time period.

And services such as AR/VR hold promise not only for the South Korean market but also for the US and North America. According to a recent Ericsson report, AR and VR are expected to drive big increases in data traffic in North America.

Free, for now
Analysts say operators in the US and Canada are wise to not charge more for 5G right now. According to Welsh de Grimaldo, she expects these models to evolve when there are more 5G handsets and more comprehensive coverage.

Operators could also experiment with packaging services and content, like Verizon is doing by offering a year of the Disney+ video service to its mobile customers. However, Welsh de Grimaldo believes a more likely bundle in the 5G era may involve packaging mobile 5G service with home broadband.

But consulting firm Arthur D. Little believes 5G will provide some opportunities for operators to bundle over-the-top (OTT) services that are appealing to customers because they are new and different. Examples of these types of OTT services include UHD content and VR/AR.

— Sue Marek, special to Light Reading. Follow her @suemarek.

About the Author(s)

Sue Marek

Special Contributor

Follow Sue on Twitter @suemarek

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