Verizon has been forced to ditch the $10 premium that it charges customers to access the 5G network as the performance delivered is exactly what the laws of physics predicted.
Verizon, of course, has dressed this up as a sales promotion but this fools no one.
The reality is that frequencies of 28Ghz and above (where Verizon is operating) offer incredible capacity and speed (as observed) but very poor signal propagation.
This is because the energy in the radio wave is being consumed very quickly because it vibrates so rapidly, meaning that the entire signal is often absorbed as soon as it hits anything.
It also means that the radio wave will not travel very far from the base station (as observed) before its energy is completely depleted.
The net result is that when one is stationary within line of sight of the base station fantastic performance is delivered but the minute one moves or even turns one’s back to the transmitter, things go rapidly south.
This is why early users have reported blazing fast internet when they can get a signal near a base station but as soon as they move the signal is quickly lost.
Furthermore, tests also showed that there was no sign of the supposed 1msof latency with latencies in the range of 20-30ms being observed (see here).
This is, of course, a very limited data set, but the promise of 5G is to deliver consistently superior latency which in this case it is not.
Early performance of 5G is clearly inferior to 4G on speed, latency and jitter as BTIG and RFM’s indoor tests show (see below).
Verizon now has a nasty chicken and egg situation.
It badly needs to roll out thousands and thousands of base stations to deepen its 5G coverage so that it becomes worthy of the $10 premium, but it will be reluctant to spend all this money with no visibility on users’ willingness to pay.
Its peers are in an easier position as they are operating their initial roll-outs at the much more forgiving frequencies below 6Ghz, but it is still a mystery to me how this service will be better than gigabit LTE.
The net result is that early signs are that 5G is not nearly good enough to command a premium price which combined with the early stage of the terminals (see here) means that volume is going to be tiny.
I suspect that this leads us straight back to what has always been my core use case for 5G which is the very boring but economically exciting fixed wireless access in the USA (see here).
Hence, I think that the real value of 5G to an operator at this stage remains bragging rights and nothing more.
This will result in an initial roll-out of thin coverage and then a pause while everyone searches for a use case over 4G and the while technology matures.
Once this is in place an orderly roll-out will follow and over time, 5G will eventually replace the much older 3G and 4G networks.
However, much hype and promise have been made on the instant success of this technology and so there will be a period of disappointment and falling valuations as the laws of physics reassert their supremacy.