Rant

Why the U.S.’s 5G Rollout Has Been so Slow

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5G

Consumers associate 5G with faster mobile broadband. But the rollout of 5G in the U.S. has been anything but. According to some estimates, it may take another two years before 5G service that is appreciably better than the current 4G service reaches even two-thirds of people in the U.S.

The Promises of Fifth-Generation Wireless Networks

It is astonishing really that 5G was initially promoted to the American consumer three years ago. The hype was real, and people were expecting blazing speeds tomorrow. But that never transpired. Sure, most wireless carriers operating in the U.S. claim to offer 5G service and technically do. However, 5G in those cases is rarely if ever notably better than the 4G service already available. In other words, the 5G we do have does not even come close to delivering on those promises from three years ago.

Estimates Do Not Paint a Promising Picture

One might think that they must be close at the three-year mark, but recent estimates suggest not so fast. Evercore ISI—a top-ranked independent research firm—recently released a forecast that the U.S. is as much as 24 months out from true 5G reaching more than 65 percent of Americans. According to James Radcliffe—an Evercore analyst—there is some good news. After all, reaching 65 percent of the U.S. population with 5G would be better than what carriers are currently able to do with 4G home internet. The half-glass-full perspective aside, the first carrier to reach two-thirds of the U.S. with 5G that provides a significantly higher speed will do so 30 months after the rollout of the first 5G phone.


The Factors Resulting in the Slow Rollout

For comparison’s sake, true 4G had reached a broad audience within just 18 months of the first 4G-capable phones being sold. One factor is that 5G requires a finer balance than 4G when it comes to longer signal ranges and faster transmission speeds. It is also true that 5G requires new equipment installed. This presents logistical challenges exacerbated by the fact that much of the hardware is manufactured outside the U.S. and further exacerbated by the COVID-19 pandemic. Some insiders also assert a lack of killer apps driving demand. Streaming mobile videos motivated many consumers to upgrade to 4G, but there is no similar service currently being offered that really benefits from 5G.


A Lack of Motivation to Hurtle Ahead

Despite the then-demand for 4G, the telecom companies like Ting Mobile got dissatisfying returns on that investment. There is not a lot of motivation to speed up the expansion of the network until the picture of 5G-based revenues is clearer. In the meantime, a methodical and cost-effective approach suits them. A killer app that excites and motivates consumers could change that perspective and drive faster implementation.

Revenue Models and the Road Ahead

The funding for 5G networks has to come from somewhere. While 5G does certainly offer faster speeds than 4G—as much as 100 times faster—the average consumer is not willing to pay more for that. There will have to be a service that consumers want that needs that additional speed and likely benefits from the additional simultaneous connections that 5G allows. Demand among businesses is already much higher, but those needs are often met through private 5G networks. Until true consumer demand is there, expect the 5G network rollout to continue at a snail’s pace.

 

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