U.S. wireless carriers have been telling consumers for years that 5G networks will change everything. In practice, their implementation has entailed enormous costs, and the technologies these networks require have not been widely adopted.
At CES 2021, 5G technologies were mentioned at almost every booth. Mobile networks of the future will be linked to autonomous vehicles, remote surgery and augmented reality. Consumers were led to believe that the low latency and high capacity of these networks would change everything. US operators Verizon and AT&T paid huge sums for 5G bands, and T-Mobile swallowed one of its competitors (Sprint) whole to come out on top.
CES 2024 opens in a month and hardly any of its attendees will even mention 5G. Instead of fantastic scenarios, fifth generation mobile networks are used like their predecessors: for watching videos on smartphones and connecting home routers when there are no other options. And American telecom operators are now looking for every way, no matter how small, to offset their costs for these networks at the expense of subscribers.
A striking example was the operator Verizon, which paid $45.5 billion for 5G bands at a wireless spectrum auction – almost twice as much as its competitor AT&T. During Verizon’s recent earnings release, investors directly asked the company’s CEO when he expected a return on this colossal investment. Verizon CEO Hans Vestberg answered this question by juggling phrases like “…” “The right offers for our customers” And “Generating a net profit for us”mentioned “Price adjustment” and some “new value” for customers, but essentially all those words meant nothing.
Verizon’s financial report largely gives operators an indirect idea of the development of 5G: in reality, there is no talk of robotic surgery and self-driving cars – the deployment of many such projects requires the creation of autonomous networks which continues. The switch to the 5G standard alone does not indicate new achievements: millimeter wave networks offer high speeds but have a limited range, and low-frequency networks are sometimes slower than 4G. Another strategy used by operators is to organize private networks for companies. However, selling them requires sales staff with a good knowledge of the specifics of the respective industry. And not every manufacturer needs such a network. In theory, 5G has potential in the automotive industry, but in practice many factories were built a long time ago and are difficult to modernize.
The changes were more noticeable in the consumer segment. T-Mobile and Verizon have begun intensively connecting households with 5G as an alternative to traditional landline cable access. The possibilities of mobile communication have expanded – for example, fans of singer Taylor Swift in the Texas city of Arlington once generated 29 TB of traffic from the AT&T operator in one day, and 5G has proven in practice that its throughput is higher than that of LTE. AT&T spokesman Jim Greer noted that traffic on the operator’s network is growing 30% annually – subscribers are happy to be able to stream video from a crowded stadium without having to wait to return home, where there is Wi-Fi.
Jeff Fieldhack, director of Counterpoint Research, also points to the potential of network slicing, where operators prioritize certain types of traffic. This makes sense for safety-critical applications: priority should be given to the car driving through the intersection, not the YouTuber in the back seat. Now operators no longer differentiate between clients. This requires independent 5G networks – among American operators, only T-Mobile has succeeded in this. As a result, Verizon was faced with the fact that investments in 5G did not bring additional profits: interest rates in the US are high and smartphone sales are falling. And the company can only boast that it achieved this in 2023 “Prize Events Worth More Than $1 Billion”to keep customer churn low.