5G Probably Benefits Mobile Operators More than Consumers, at First

Some complain that 5G is not being introduced fast enough in the U.S. market. But phased 5G service coverage is not the problem believe. Building one new continent-sized network always takes years. Building four simultaneously is harder. That is true of all next-generation mobile networks. It has been a decade since people lived through such a change--and some never have--so we tend to forget that. 

Still, compared to the introduction of 4G, phased deployment might not matter so much, for reasons of end user experience, service provider economics and ecosystem dynamics. We tend to forget that major device suppliers, such as Apple, historically lag the networks. 

The first Apple iPhone launched using 2G. A 3G iPhone was not launched until 2008, the year 4G launched in the U.S. market. A 4g iPhone was not available until 2013, about five years after 4G first appeared. It appears the iPhone 12, expected, in 2020, might feature both 4G and 5G models.  

The point is that the most-rapid-possible adoption is not always meaningful, nor harmful. 

That might be especially true in the 5G era, when many so-called 5G impacts actually are enabled by edge computing, internet of things, artificial intelligence or other correlated developments, not 5G itself. 

Are there network effects? Yes. Whenever an app, a process or a service or a product requires scale to provide value, it is said to be an example of network effects. Phone service, use of facsimile machines, social networks and online marketplaces of all sorts provide examples. 

Some point out that 5G is no different: 5G phones are most valuable when there is 5G service available, and 5G networks make 5G phone purchases more valuable. It’s a bit of a nuance, but what is not true is that 5G phones make mobile networks valuable, or that 5G networks make devices valuable. 

A 5G device can use a 4G network, and vice versa. So with the exception of any device features specifically related to 5G (access, mostly), all the other device value is obtainable, even when a user decides not to use--or cannot use--a 5G network. 

The point is that the speed of the 5G rollout might not matter to consumers so much. It will matter for mobile network operators, who can gain subscribers or lose them, based on the completeness and availability of their 5G offers. 

5G also will matter for mobile service providers with limited spectrum resources, as 5G will allow customers to shift usage to a new network featuring lots of bandwidth (millimeter wave, especially) and little contention, at the moment. As each user switches off 4G and on to 5G, experience for all the remaining 4G users improves, as there is less network loading. 

5G ubiquity also matters for developers of 5G use cases, apps and services, since there scale really does matter. And 5G device manufacturers also benefit from greater demand as customers actually can generally use their devices on the 5G networks. 

There, the actual performance advantages arguably are less important than the customer “knowing they can use a network they are paying for (in terms of new device purchase and possibly new service plan). 

Faster networks are “better” than slower networks, generally speaking. But that is conditional. If the user cannot benefit from the additional speed, does faster speed really matter? 

It matters most for service providers, who have to keep increasing capacity, but must realistically expect to do so for roughly the same prices as at present, best case. Lower cost per bit, in other words, is the key value, but for service providers, not consumers, directly.