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T-Mobile Surprises Market by Announcing there won't be Price Increase for 5G Service

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T-Mobile's quarterly results are in for the fourth quarter of 2018. While US carriers have all been bragging about being the 'first' to roll out 5G service, never has pricing been discussed. The biggest bombshell from the quarterly earnings was T-Mobile talking about 5G service pricing. The carrier announced that 5G smartphone service plans will not change from today’s 4G service plans.


This has the Potential to cause Multiple Ripple Effects through the Industry


Today's Counterpoint report listed three major points in how T-Mobile's announcement could effect the 5G market.


#1: "It may force AT&T and Verizon to keep prices flat. There is some wiggle room. Carriers could expand equipment installment plans to longer payoff periods—36 months a possibility. This would lower monthly costs. Carriers could then drop in a 5G service premium while keeping monthly costs the same. At CES, AT&T floated the idea of the return of subsidies. A carrier could incentivize premium family plans, for example, by offering a subsidy on hardware but charging extra for 5G service.


#2: This may increase 5G handset uptake. If 5G service is the same price, some premium subscribers may opt to ‘future-proof’ their handset purchase and upgrade to a 5G smartphone even if their area does not have full (or any) 5G service. With postpaid handset holding periods rising to close to three years, this is plausible. By 2020, carriers intend to have vast 5G coverage.


#3) 5G pricing may increase pressure on Apple. If 5G uptake is higher than the initial tepid 2019/20 estimates, it will apply pressure to Apple to launch a 5G iPhone earlier.


There are many moving parts including a bitter lawsuit with 5G modem supplier Qualcomm. However, Intel must deliver, or the Qualcomm legal dispute resolved. A Spring 2020 5G iPhone would be a welcome addition for US and global carriers and vastly increase 5G device sales estimates."


Although the Counterpoint reporter brings up an interesting wish, Apple would have to break with tradition to introduce new 5G iPhones four or five months earlier than their standard September launch time. While it would be a welcomed move to see Apple wanting to bring 5G earlier to market to satisfy Apple fans, it's likely not going to happen.


In related news, The White House is preparing a sweeping executive order that could bar Chinese companies from selling equipment for use in future US telecommunications networks, claiming Beijing could exploit the technology to carry out cyber intrusions and espionage.


In T-Mobile's testimony in a Congressional hearing yesterday "T-Mobile US Chief Executive Officer John Legere says his company doesn’t use equipment from Huawei Technologies and won’t after buying Sprint to form a bigger No. 3 in the U.S. wireless market.


Legere said in written testimony prepared for a hearing Wednesday before the House Energy Committee’s communications and technology subcommittee: "Let me be clear —- we do not use Huawei or ZTE network equipment in any area of our network. Period. And we will never use it in our 5G network."  


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