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5G Is for Show-offs, Bernstein Says

Dave McCombs

(Bloomberg) -- With 5G, the latest, greatest wireless networks promise to revolutionize industries from transportation to medicine. But for mobile-phone users, 5G is a way to show off, said analysts at Sanford C. Bernstein.

Handsets compatible with the superfast service are more expensive, but don’t offer practical benefits over the latest 4G models that already download at speeds well above that required to stream high-definition video, wrote analysts Chris Lane and Samuel Chen in a Friday note to clients.

“We see no rational case for a consumer to upgrade to 5G,” wrote the analysts. “And yet they are.”

South Korean carrier SK Telecom Co. reached one million 5G subscribers last month, 140 days after introducing the world’s first commercial service, representing about 3.5% of its user base. China will have about 170 million 5G smartphones available by next year, according to estimates by China Telecom Corp., which targets 60 million 5G users for its network.

Carriers in the U.S., Australia and other markets have also introduced 5G services to limited areas, with plans for expanding coverage nationwide over the next few years.

The latest 5G handsets do not “future proof” users because the technology isn’t fully matured and will continue to evolve, while a new 4G handset will still be a leading-edge device in two years, Lane and Chen wrote. Specifically, first-edition 5G phones can’t access millimeter wave bands that will be added in coming years to fulfill the technology’s high-speed, low-latency promise.

At the same time, carmakers are looking to 5G’s speed for eventual use in guiding autonomous-driving vehicles, while surgeons are already performing remote procedures using the technology, which transmits data with virtually no lag time. Manufacturers intend to use 5G networks for automation, robotics and machine-learning systems.

“Having the latest 5G smartphone, and equally importantly, showing it off might be its single most important benefit,” the analysts wrote. “Especially if you are one of the first. For a single millennial in search of a partner, it might even provide validation of them as a potential good catch.”

--With assistance from Ryan Lovdahl and Gao Yuan.

To contact the reporter on this story: Dave McCombs in Tokyo at dmccombs@bloomberg.net

To contact the editors responsible for this story: Sam Nagarajan at samnagarajan@bloomberg.net, Ryan Lovdahl

For more articles like this, please visit us at bloomberg.com

©2019 Bloomberg L.P.