In the past few months, a number of MNOs have introduced their highly anticipated mobile 5G services. Offers vary considerably across and within markets, with options for handset and router bundles as well as SIM only deals.
Launching in December 2018, South Korea was the first market to offer 5G services, first providing connectivity to a few business customers in a limited area before operators expanded services to consumers in April.
In May 2019, operators in Switzerland, the US and the UK launched their own consumer mobile 5G services.
With operators investing huge amounts in the new technology, they will need to launch their products and services at the right price.
Here we look at 5G tariffs by dividing them into two categories: unlimited and limited data plans.
With 4G, we saw operators move towards data-centric operating models. It is therefore interesting to compare unlimited 4G and 5G plans available.
Since the devices offered in bundled packages vary from market to market, we will predominantly focus on SIM only plans.
As one would expect, at least for the operators that have launched so far, unlimited 5G tariffs are more expensive than 4G.
Based on operators’ data, the average monthly 5G tariff is around $89 compared with $68 for 4G (see chart, below, click to enlarge).
The difference in average cost between 5G and 4G unlimited plans varies from $5 to $72 per month. Some of the variation can be explained by the various extras offered by the operators.
Operators can prevent excessive usage by either adding fixed data caps or by throttling speeds once a certain amount of data has been consumed. KT’s 5G slim package for example reduces speed to 1Mb/s once 8GB of data has been expended in a month.
KT has one of the widest gap in pricing with a $51 difference between unlimited 5G and 4G plans. The 5G average monthly tariff however, comes with up to a 50 per cent discount on premium family along with unlimited data roaming at up to 3Mb/s and VVIP Membership.
At the other end of the scale, LG Uplus 5G prices are only $5 higher than 4G. The extras include unlimited national calls, SMS and Mobile TV, these benefits are also available on its 4G packages.
SK Telecom (SKT), has a $9 gap: the lowest-priced 5G unlimited plan at $80 is actually cheaper than the 4G plan from this operator, but does not come with any extras beyond free calls and texts.
Verizon was the first US operator to offer 5G and its average tariff is the lowest of any of the investigated unlimited plans.
Prices are an average of $18 higher than 4G, but come with free roaming in Canada and Mexico along with Apple Music.
Switzerland was the first country with commercial 5G services in Europe: the higher cost of tariffs in this market are to be expected with it consistently coming top of the list of most expensive countries.
There is a huge $72 gap between the average cost of unlimited 5G and 4G packages with incumbent Swisscom, but users can chose to pay $198 for a 1Gb/s service, or $89 for 300Mb/s. Both include free roaming in Europe, Canada and USA, plus free Swisscom TV.
Sunrise, the second Swiss operator, simply offers 5G services for an extra $10 on top of its 4G unlimited plans, which equates to either $74 for the standard package or $105 with roaming.
In May, EE became the first operator to launch 5G in the UK. As with 4G, the operator has a policy of offering capped data packages and so unlimited data is not available.
We expect a more harmonised unlimited 5G tariffs across various countries once all the main operators have launched 5G services. This pattern will continue until challenger brands push the prices down to the level of current monthly 4G plans.
Limited data plans
These allow operators more control over the volume of data on their networks, while also enabling customers with less intensive data needs to get a flavour of 5G at a lower price point. Operators can also expect many customers, having experienced the power of high speed data, to upgrade to a larger or unlimited data package in the future.
Overall, the average cost for 1 GB data on 4G is $17 compared with $13 on 5G (see chart, below, click to enlarge). While customers will, in many cases, be able to get the same amount of data for a lower price, the faster speeds mean that more data may be consumed.
Operators offer substantial allowances on their limited plans. SKT’s allowance is 200GB per month for $63 USD, equating to a cost per GB of $0.32. Servicing the other end of the market, KT’s 5G plan provides 8GB a month for $46, averaging $5.75 per GB.
LG Uplus currently provides plans to service both ends of the market. Its high use tariff provides 150GB a month for $63 ($0.42 per GB), while lower volume users can opt for 9GB at $46 ($5.11 per GB). Both of these plans come with mobile TV and tethering.
Sunrise in Switzerland is the exception to this rule, with 5G cost per GB an average of $13 USD higher than 4G.
Verizon has not yet introduced 5G limited data plans however this is likely to change in the future as other operator launches introduce competition.
EE launched one the cheapest 5G plans in terms of cost per GB, at an average of $1.40. By selecting one of the larger packages, customers can bring the cost down to as low as $1.
Over time, 5G will become mainstream and, as with earlier generations, it will be included in standard tariffs. For the time being however, especially in the case of unlimited plans, customers should in many cases expect to pay a premium for the faster service.
Operators might also consider differentiating their 5G tariffs based not only on the amount of data in each package, but also by network performance indicators such as throughput and latency rates.
– Qmars Safikhani – senior forecast analyst, GSMA Intelligence
The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.