Wall Street Quietly Warns That 5G Wireless Is Being Aggressively Over-hyped
from the meet-the-new-boss dept
As hardware vendors and cellular carriers prepare deployment of fifth-generation wireless networks, you may have noticed that the hype has gotten a little out of control. Claims that 5G will magically revolutionize the broadband sector sound nice and all, but as we've noted repeatedly, 5G is really more of a modest evolution in existing networks, not some kind of revolutionary panacea that's going to change everything. Still, claims that 5G will somehow usher in amazing smart cities or somehow result in a four day work week for everyone (what?) get far more traction than they probably deserve.
Alongside the generalized hype, carriers are pushing another narrative: that 5G wireless is so incredible, it's going to fix all of the telecom sector's biggest problems by delivering a massive new wave of competition. This competition will be so amazing that net neutrality will apparently be made irrelevant. It's largely bunk originating with telecom industry marketing departments, dutifully swallowed and regurgitated by an unskeptical press.
The problem: 5G, like 4G before it, isn't going to be cheap. Companies like Verizon, AT&T, and CenturyLink still enjoy a monopoly over the backhaul and core transit lines that feed these networks, meaning they're going to do everything in their power to keep prices high along the chain. Protectionist blacklisting of cheap Chinese network hardware and the death of net neutrality isn't likely to help, and Wall Street is making it clear they want 5G priced at a premium to quickly recoup any investment cost:
"How might this look? Well, we could borrow from some other industries. One simple way would be a flat premium price, similar to the "tiers" of Netflix for a higher number of devices or 4K/Ultra HD. So, perhaps $10 per line for 5G, or $25 for a family plan. Another approach would be more akin to broadband, where there are pricing tiers for different levels of service performance. So if the base 4G LTE plan is $50 per month today, for an average 100 Mbps service, 5G packages could be sold in gradations of $10 for higher speeds (i.e. $60 for 300 Mbps, $70 for 500, $80 for 1 Gbps, and so on)."
Despite what you'll hear from carriers, 5G also isn't going to be particularly widely deployed for those living in second or third tier cities or rural markets. You know, the places already hit the hardest by the cable industry's growing monopoly over decent broadband speeds. If you stop for a moment and look beyond the 5G hype curtain, you'll see even Wall Street warning that promises of 5G as a competitive panacea (or a real challenger to cable's domination of speeds of 50 Mbps or above) are dramatically overstated. Analysts at Jefferies, for example, had this to say:
"We continue to believe the threat of 5G to wired broadband is overblown. We are skeptical on the economic viability for a deep rollout given the propagation characteristics of mmWave, and expect sign ups will be slow. Further, given the full footprint rollout of DOCSIS 3.1, and the ability to upgrade the HFC plant to 10 GB symmetrical speeds with little capital investment, we expect 5G's perceived speed advantage will be short lived.”
And while you'll hear a lot of folks at the FCC and elsewhere hyping "fixed" 5G as a real competitive panacea (largely to justify carrier requests for broad, almost mindless deregulation), analysts are skeptical here, too:
"“By the end of 2020, 5G fixed wireless solutions remain niche despite deployments by more than 50 network operators worldwide,” the analysts at CCS Insights wrote in one of their predictions for 2019. “A slew of providers offers fixed wireless access as an alternative to fibre in high-density areas. They follow early launches of 5G networks in the US that take the same approach to providing broadband access in a fixed location. However, such services remain niche, representing only a tiny fraction of total 5G connections in the long term."
To be clear: 5G is going to eventually provide faster, lower latency, and more resilient networks, when it actually arrives at any real scale (think 2021 or later). But it's not going to fix all of the problems that have made U.S. broadband so terribly mediocre, including a lack of serious competition in less affluent markets, the monopoly over the business data services (BDS) market, or those protectionist laws in 21 states monopolies literally purchased in a bid to hamper competition.
And if ISPs win their looming court case over net neutrality, the nickel-and-diming we're already seeing is going to seem downright quaint in a few years, as Wall Street pushes carriers to find new, "creative" ways to charge even more money for the same service.
Filed Under: 5g, hype, investors, wall street, wireless
