Analysts Say First Broadly Available 5G Handsets Won't Be Available for a Year

While fifth generation is "incredibly powerful,” some of capabilities depend on how much spectrum is available for the connection, said Peter Rysavy, president of Rysavy Research. Tests that show throughput above 1 GB are “using millimeter-wave and radio channels that are 400 MHz wide,” or 20 times wider than the typical LTE channel today, he said. “These are the early days,” he said. “The technology is capable … but industry has to be a little careful that we don’t overhype those capabilities.” Super-high speeds require small cells and signals don’t go very far, he said: “You’re going to need [a node] practically at every intersection and you’re going to have to collocate indoors. Right now, it’s only in select locations.”

Now isn’t the time to buy a 5G smartphone, said Avi Greengart, lead analyst at Techsponential. Samsung says it has sold more than a million units of its Galaxy 5G handset, but most of the sales are likely in South Korea, he said. “I’m a little skeptical how well 5G phones are doing out of the gate,” Greengart said: “No one has really shown me a use case for why I need one. … Certainly, not right now.” Phones people buy now won’t be ready for the 5G of the future, he said. Even in areas that have fifth gen, its reach is a limited to a few square blocks, Greengart said: “It might be a street corner and you have to be faced in the right direction.”

All U.S. carriers will first be deploying most aggressively in lower-band spectrum, Rysavy said. But he said U.S. carriers are a year ahead of schedule with the first 5G deployments: “By the end of 2020, there will be a lot of lower-band, mid-band deployment. You will be able to experience 5G and greater speeds, although not necessarily hugely greater at the cellular frequencies.”

Recon’s Roger Entner predicted the first devices that use 5G in various bands will be available in mid-2020. It’s always the case that if one waits longer, one gets “a better device,” he said. Almost half of consumers buy a new phone every year and the others wait until they need a replacement, Entner said.

The first 5G phones start at $1,200, Greengart said. “You’re paying an awful lot of money for something you’re not going to get much use out of,” he said. Carriers likely will start targeting consumers with low-cost 5G phones when they work across multiple bands, he said. In the U.S., only two categories of handsets are available today -- super-premium phones that cost as much as $1,800 and phones that cost $300 or less, mostly used for prepaid, he said. Mid-range phones will be available first in Europe, he said.

Carriers will have a tough time charging much more for 5G, Rysavy said. If 5G is 10 times faster, “you can’t charge consumers 10 times as much,” he said: Some operators are charging $10 more per month for this standard, but “there’s going to be continuing downward pressure on revenue.” The only way to increase revenue is to reach new markets, he said, and business customers may prove critical. Charging more for 5G isn’t “sustainable,” especially until consumers see real benefits, Greengart said. “It’s going to be very difficult to extract too much more revenue unless you can show very specific use cases” like mobile gaming, he said.

AT&T’s initial 5G offering is focused on businesses “replacing Wi-Fi with 5G for added security and speed,” Entner said: “For the first time, a new wireless generation is actually business focused.”