Verizon Forced To Back Off Charging Extra For 5G

from the overhyped dept

While fifth-generation (5G) wireless will result in faster, more resilient networks (once it's finally deployed at scale years from now), the technology has been over-hyped to an almost comical degree. Yes, faster, lower latency networks are a good thing, but 5G is not as paradigm-rattling as most wireless carriers and hardware vendors have led many in the press to believe. 5G is more of a useful evolution than a revolution, but it has become the equivalent of magic pixie dust in tech policy circles, wherein if you simply say "it will lead to faster deployment of 5G!" you'll immediately add gravitas to your otherwise underwhelming K Street policy pitch.

Here on planet Earth, most consumers couldn't care less about 5G. In most surveys U.S. consumers -- who pay some of the highest prices in the world for mobile data -- say their top priority is usually lower prices. That's increasingly true during a pandemic and economic crisis, where every dollar counts.

Enter Verizon, which, instead of reading the market, has been repeatedly trying to charge $10 extra for 5G despite consumers not seeing the value. Verizon executives had fooled themselves into thinking a "premium" upgrade warranted a premium price tag. But consumers quickly realized the extra money simply wasn't worth it. For one, Verizon's network is barely available (one study stated a full 5G signal was available about 0.4% of the time). First generation 5G devices are also expensive and tend to suffer from crappier battery life. All for admittedly faster speeds most users don't think they need yet.

With consumers not really that interested, and no other wireless carriers attempting to charge extra anyway, Verizon has been forced to finally back away from the $10 monthly surcharge after flirting with it since last year:

"The collapse of Verizon's attempt to charge extra for 5G doesn't come as much of a surprise. No other provider in the US – including Verizon's own MVNO partners – is charging extra for 5G.

However, the development has significant implications for the 5G sector in general because it means operators cannot make any extra money from 5G when selling it for consumers' smartphones, despite the money they're plowing into deploying the technology.

Granted that's not really true. With the FCC having recently dismantled itself at lobbyist behest (including the demolition of net neutrality rules), there's not a whole lot keeping Verizon from nickel-and-diming U.S. wireless consumers in a wide variety of creative ways. The company already sells "unlimited" data plans that prohibit HD and 4K unless you pay more, so the precedent has been set and the door is open wide to a variety of spurious new surcharges.

That's particularly true given that captured U.S. regulators in the Trump administration keep signing off on terrible mergers that are guaranteed to reduce competition and raise rates. So while Verizon has struggled to extract its pound of flesh via an additional 5G surcharge, they'll surely come up with some ingenious new fees down the road. And U.S. regulators and Congress, by and large, will not only be fine with that, but they'll help Verizon pretend it's the pinnacle of innovation. After all, we wouldn't want to lose the "race to 5G," right?

Update: and like that Verizon appears to have found another way to charge users more, by making 5G only something you can get if you subscribe to one of the company's (not actually) unlimited data plans. Funny how that works.

Filed Under: 5g, competition, surcharges
Companies: verizon