Update Jan 10: Xiaomi is now shipping the US$285 Redmi K30 5G, months before that price was expected. Previously: Nine companies are competing in a 5G market that has room for 4 or 5. In 2020, the difference in 5G and 4G manufacturing costs will fall to US$15-35 per phone. 150 million 5G subscribers in China will drive economies of scale in 2020. See the chart of 5G phone prices at
Result: 5G phone prices are plummetting. That will continue and is central to any analysis of the 5G future.
There is a tipping point where the price difference is so modest, 5G is the right choice for anyone able to spend a few hundred dollars for a phone. 5G will cover half of China in 2020, much of Europe and the US 2021-2022.
If I were spending US$400 or more for a phone, I would buy a 5G model not likely to become obsolete soon, if prices had come down in my country. In China in 2020, most willing to pay $300 will go 5G. China Mobile is confident 150M of the ~400M phones sold in China in 2020 will be 5G.
Europe on all of this is behind. The US will be very confusing, because the “low-band 5G” is often slower than 4G. I don’t think that should be considered 5G at all, but the hype will be overwhelming.
If many Europeans or Americans buy 5G phones, they will pressure the carriers to speed up deployments. Telecom Italia only plans 21% for 2021. I infer DT will be similar from their projected flat capex while increasing fiber to the home.
The right strategy for Vodafone or Telefonica almost surely is to modestly speed the 5G build, bring in $400-600 phones, and win important market share from the incumbents. That won’t be very expensive by telco standards. Mid-band 3.5 GHz reach is doing well.
You can reach the first half or more with a “smart build,” mostly upgrading existing towers that have reasonable backhaul. Back of the envelope, either Voda or TEF should be able to pull far ahead of DT or TI coverage by raising capex by 10-15%.
They will gain a major first-mover advantage that will gain market share and improve the company’s image for years. The incumbents will have to match, but planning and building networks is a slow job. Most incumbents, in DT, TI, and Verizon, have made strong commitments to investors not to raise capex – even if that is the right move.
A smart regulator will find a way to get one 5G network building and the others will follow.