Vodafone Backtracks; Might Charge Extra for 5G

Vodafone 5G

How much will 5G cost?

Pricing for 5G plans is starting to get a bit confusing. Unlike previous generations of mobile network technology, 5G might actually come at an extra cost to consumers. That is, you might have to pay extra per month to use a 5G network, or get caged into 4G and below if you don’t pay up.

Telstra already announced its intention to make that the case. After June 30, lower tier Telstra postpaid plans won’t be able to access 5G unless an extra $15 is paid. Optus has stayed mum on the subject, opting not to commit to charging or not charging for mobile 5G access. And Vodafone now confuses things even more – they initially indicated there would be no extra charges for 5G access, but now they say they might charge in the future.

Why are telcos leaving the door open to charging extra for 5G access?

The fifth generation of network technologies is just another generation. Like 4G, 3G, 2G, and 1G, 5G just connects you to the internet wirelessly. So what’s the big deal?

Well, 5G is a vast improvement over previous generations. Eventually, the technology will be able to get up to 100 times faster speeds than 4G, provide a whole lot of bandwidth, and offer ultra low latency. All this stacks up to an in-demand technology for many, many sectors, not just consumers.

Right now, 5G in Australia is standalone (SA), using a 4G core. This helped the technology get launched quicker, but it kind of limits what its really capable of. Eventually, the Australian Communications and Media Authority (ACMA) will allocate higher frequency bands to the major telcos, allowing them to roll out their 5G networks with greater performance. mmWave, as they call it, is already being trialed by Telstra ahead of that allocation, and Optus plans to do the same this year. This all means building new infrastructure, independent from a 4G core.

At that point, when mmWave becomes the norm, you can bet your telco will charge extra for 5G. But why?

Perhaps the investments poured into SA 5G and mmWave 5G are just too high to recoup without additional charges. That might be the case to some extent, but it could also be that what 5G has to offer is simply too premium a service to not charge for its use.

5G, as advertised, is blazing fast and offers solutions to several newer technologies. With the full capabilities of 5G, we’ll see Artificial Intelligence, the Internet of Things, robotics, etc., get a jump start. This means smart cities, driverless cars, smart factories, and so on, being accelerated with the aid of 5G – a wireless network far superior to 4G.

So, as stated, 5G might simply be looked at as a premium service. What it offers is just beyond what the average Australian actually needs. The average Australian might just want to browse, stream music and movies, get on social media – all of which can be done smoothly with 4G. In other words, 5G is pretty much an upgrade to a premium service for needs that you can already fulfil with current wireless networks.

4G was superior to 3G, but didn’t charge extra – why?

But we’ve experienced new wireless network generations taking over previous ones before. 4G did so to 3G, and 3G to 2G, and so on. Each new generation was faster than the last, but costs to the consumer remained the same.

The question, then, is why didn’t 4G, for instance, incur additional charges when being used instead of 3G? After all, it was a newer, better network technology.

Generally, 4G didn’t require so much more infrastructure. 4G technology could rely on 3G towers, but with their own antennas. This could contribute to the absence of additional costs for 4G access over 3G – less infrastructure costs than 5G which might eventually require multiple antennas scattered throughout the country, perhaps even in front of your house.

Also, 4G is only around 10 times faster than 3G. While that’s pretty fast, the difference between 4G and 3G is nowhere close to the difference between 5G and 4G. Where 4G is 10 times faster than 3G, 5G could be up to 100 times faster than 4G.

Based on the speed comparison between 4G and 3G, we can’t say 4G is far superior to 3G – it’s better, but not far superior. That means 4G couldn’t be classified as some sort of premium technology. But with 5G capable of being far superior to 4G, perhaps its not far-fetched to classify it as premium, warranting extra charges for its use.

Final words – Why telcos haven’t just come out and declared extra charges for 5G

There’s a high likelihood that all telcos will eventually charge extra for 5G. But so far, only Testra has come out and said they will and, for now, that’s only for their lower tier plans after June 30.

Vodafone and Optus, on the other hand, are straddling the fence. While Vodafone initially indicated there would be no additional charges for 5G access, the telco recently changed its position, saying it might charge extra.

So why won’t these telcos just come out and say which way they’ll go – extra charge or no extra charge? Perhaps its because 5G hasn’t been completely rolled out yet. The technology is still fairly young, and its only available in select areas. In fact, Vodafone 5G is live only in Parramatta for now.

So because 5G is not yet widespread, one can imagine telcos’ hesitation to charge extra for it right a way. Vodafone has recently alluded to this as a reason, stating that 5G is not yet “ubiquitous and customers therefore may or may not be accessing 5G services from time to time.” Charging extra right now for a service that isn’t widely available might not make much sense; waiting until it is widely available before charging, seems to be telcos’ approach.

Neil Aitken

Having worked in 3 countries for 4 telcos on both voice and data products, Neil is in a position to give you the inside track. Get beyond the marketing messages to the best plan for you.