Skip to main content
Thanks to 5G, your phone bill could skyrocket - and that's fantastic news!
Ian Dickson

Ian Dickson

Driverless cars. Drone deliveries. Remote surgery. Virtual reality. The world as we know it is changing – and you've got 5G to thank for that. The cost? Worth it.

Want to gauge how significant 5G will be?

Here's what Qualcomm chief Steve Mollenkopf said at CES a couple of years ago:

“5G will have an impact similar to the introduction of electricity or the car, affecting entire economies and benefiting entire societies."

And he's not the only tech leader making bold statements about 5G.

“The first step in mobility was about letting people speak to each other; then, through 3G and 4G, we saw real connectivity - which works but isn't really designed for quality streaming," said Börje Ekholm, the CEO of Ericsson. “With 5G, we won't just be able to communicate better: it will democratize machines."

Instead of replacing 4G, the next-gen network will build on it, using higher frequencies to offer up to 100 times faster internet speeds and the ability to handle more information.

But 5G is so much more than just faster browsing. It has lower latency (tech-speak for the delay you experience when you click on a link or start a video). This means better connectivity between machines. Instantaneous video playback. Glitch-free gaming. And that's for starters.

 

Everything that can be connected will be. The Internet of things will become a reality. 5G will power smart cities and grids. Automate industry and supply chains. Enable cars to talk to each other and the road network. Artificial intelligence and virtual reality will finally have the bandwidth it's so desperately lacking.

Some speculators are calling this the fourth industrial revolution. That's how impactful 5G  is going to be. It's the technology of the decade.

As the former CEO of Verizon, Lowell McAdam, said:

“Latency is very important when you think about autonomous cars and things like that - 5G will really change the game, and I think will be another spike of growth in the wireless industry."

5G could even help us live longer. As Nokia's chief Rajeev Suri predicts: “Imagine someone who has had a heart attack on the street, and they are picked up by an ambulance with 5G connectivity, high-definition scanners, and cameras... You start taking a scan in the ambulance so all of that data is transferred to the surgery before the patient arrives, and a diagnosis is already underway."

The bottom line

But like all the best things in life, this progress comes at a cost. Quite a significant one.

Moving to 5G isn't a case of flicking a switch. The networks require dense clusters of antennas and masts, the laying of fibre-optic cable and, in some cases, an upgrade of existing 4G. According to McKinsey, networks will have to increase their expenditure by 60% from 2020 to 2025 to be 5G ready.

Greensill, an industry finance provider, put some figures behind that. It reckons upgrading to 5G will cost between $500 million and $1 trillion by the end of 2020. That's just the infrastructure cost.

To make the most of 5G, we'll need to upgrade much of our technology, from cars to appliances to our buildings, factories and hospitals. Greensill reckons this transformation will push the cost of 5G up to $2.7 trillion by the end of this year. The question is, who's going to pay for it?

In a press statement, AT&T said: "5G brings capabilities that are going to cause us to think differently about pricing. We expect pricing to be at a premium to what we charge today."

The industry website Telecompetitor said that unlike previous iterations of connectivity, 5G will cost more. “Traditionally, when carriers have launched a new generation of wireless service, they have not required customers to pay extra for service supporting the newer-generation connectivity," it wrote. “But when it comes to 5G, carriers are rethinking that tradition. Verizon has indicated plans to add $10 a month onto customers' monthly bill for 5G access, although the company initially has waived that fee."

It's worth noting that the infrastructure networks build will be a very valuable asset and give them new areas of growth. Morgan Stanley Research predicted 5G will drive $156 billion of recurring annual revenues from seven use cases over the next decade. And account for 40% of current mobile service revenue.

While costs for 5G will rise for early adopters, in the longer term these new revenue opportunities might even off-set the cost of phone bills.

When 4G launched, contract prices for consumers spiked but then came back down. To make the most of 5G, you'll need an unrestricted data allowance and a new handset. According to Mobile World Live, the average cost of a 5G plan is currently $89 compared to $68 for 4G, while the handful of phones available cost several hundred dollars.

But perhaps that's a small price to pay for 5G's limitless possibilities. While 4G gave us universal access to music streaming, social media and same-day shopping, this game-changing rollout is set to take connectivity to the next level – and change the way we move, work and live forever.