How much would a 5G connection be worth to you? Verizon is hoping at least $10 more a month.
The carrier will start offering 5G service in parts of Chicago and Minneapolis on April 11, it announced in a statement on Wednesday. The service will be offered for free to Verizon customers for the first three months. After that it will cost them $10 a month more than 4G.
This is the year speedy 5G wireless networks come to the United States, and companies are clamoring for every advantage, from launching in new cities first to debuting 5G-compatible devices.
The 5G service Verizon is rolling out in these cities will only work on its Moto Z3 device and require a new attachment, which will snap onto the phone. Starting on Thursday, customers will be able to pre-order the $350 attachment for $50, though the company did not say how long it would offer it at the lower price.
Dan Hays, an adviser at PricewaterhouseCoopers’ consulting firm, said $10 a month is right in line with what its research shows customers are willing to pay for premium wireless connections. Hays said he believes most people aren’t willing to change the device they’re currently using to another brand or model just because it has 5G.
Verizon’s move into new cities is an attempt to entice wireless customers with the ultrafast speeds and low latency connections that 5G promises. The technology has been touted as a major breakthrough that will allow for more seamless streaming of videos and lightning-fast response times from self-driving cars.
But while innovations in 5G technology are happening in several places in the United States, there isn’t an existing network that’s widespread enough to benefit the majority of wireless customers right away. The transition from 4G to 5G networks in the United States won’t be widespread until 2020, and will involve infrastructure upgrades that cost companies billions of dollars. It will also require lots of testing.
So far, 5G technology is primarily available to customers as fixed wireless 5G, which works in homes similar to broadband internet, and 5G wireless hotspots that convert airwaves into Wi-Fi.
There also isn’t a phone available yet to US customers that can operate independently on 5G. In February, Samsung announced its first ever 5G smartphone. The device will be available to Verizon customers during the second quarter of this year. It will be available from other wireless carriers later this summer.
5G is currently available in a handful of US cities from different carriers. Verizon (VZ) offers the technology in Sacramento, Calif., Los Angeles, Houston and Indianapolis. It plans to expand coverage to more than 30 US cities in 2019. AT&T (T), CNN’s parent company, offers it in more than a dozen cities. Sprint (S) and T-Mobile (TMUS), which are planning to merge later this year, also have their sights set on rolling out 5G coverage in 2019.
The companies are all betting on customers being excited enough about 5G to upgrade when it is fully available.
“What the mobile industry is facing is a gigantic chicken and egg problem: Do I spend billions of dollars deploying a network before devices are widely available or do I motivate people to pay a premium to use compatible devices while the network is getting ready,” Hays said.