Verizon and AT&T try to convince Americans they need 5G now

A big advertisement on the LED screen outside the Apple store is to heat up the iPhone 12 series, which is officially on sale on the 23rd. Shanghai, China, October 21, 2020.

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American wireless giants AT&T and Verizon had big plans last year to announce why customers should upgrade their phones and start using 5G wireless.

Then the pandemic hit and with everyone trapped at home, showing breakneck speeds and consumer use cases in stadiums, airports and public places it was not only irrelevant, it was clumsy. Gaming in the cloud, checking instant odds of gaming apps from stadiums, and downloading Netflix movies at the airport became much less important than the ability to work from home – a better message for the cable companies that already offer. high speed home broadband.

“We almost lost the year,” said David Christopher, executive vice president of 5G ecosystem development and partnerships for AT&T. “But now, people are excited to get out of their homes and experience 5G in the wild. We are going to dramatize the use cases that are important to customers. “

AT&T and Verizon want to transfer customers as quickly as possible to 5G networks, not only to recoup the high investment costs of building updated national networks, but also to secure customers and prevent them from switching to T-Mobile .

Both AT&T and Verizon have offered promotional pricing this year on 5G phones to retain customers and attract new ones. But T-Mobile tends to offer the cheapest prices among the big three, while outperforming both Verizon and AT&T in 5G download speed and availability, according to Open’s July 2021 5G User Experience Report. Network.

“Focusing on 5G won’t be flattering to either Verizon or AT&T,” said Craig Moffett, wireless analyst at MoffettNathanson. “They are lagging far behind T-Mobile in what will soon be most important: speed and 5G coverage. And they charge consumers much higher prices than T-Mobile. “

That puts pressure on both companies to sell consumers why they should choose AT&T and Verizon, making 5G a marketing challenge as Americans emerge from pandemic quarantines.

Convincing Consumers

Getting Americans excited about 5G may not be easy.

A JD Power survey last year found that only about a quarter of wireless subscribers said they believed 5G would be significantly faster than current 4G LTE technology, and only 5% of those surveyed said they would be willing to pay. more for 5G service.

Even AT&T Communications CEO Jeff McElfresh told CNBC last year that he “has always tried to soften people’s expectations of 5G.”

Much of the messages about 5G so far have been about business solutions. A Deloitte Insights consumer survey this year found that consumer use cases demanding a faster network just don’t exist yet.

Last year, Verizon helped produce a documentary on 5G called “Speed ​​of Thought,” showing business-centric examples such as a robotic arm that a doctor can use from anywhere and an augmented reality headset for users to use. firefighters help see through the smoke. It also scouted cities testing 5G-enabled technology to avoid car collisions.

AT&T leaders have also said that the real opportunity for 5G is in business cases, particularly in the case of machines and equipment that communicate via Internet of Things technology.

But both companies plan to illustrate specific consumer use cases in ads in the coming months to convince customers to upgrade.

In a summary of its 5G strategy for this year, AT&T detailed use cases that include AR-assisted shopping experiences for consumers in stores and downloading content at airports. Earlier this year, AT&T announced that it would give its customers access to Bookful, which creates augmented reality experiences around books to try and improve reading comprehension. Christopher said that viewing a street map through a phone is reliable and hassle-free in 5G, more easily enabling activities like an augmented reality guide for a city, whereas it would have been consistently lagged with 4G.

Verizon is currently running a series of 5G-related TV ads, including those featuring “Saturday Night Live” star Kate McKinnon, about a promotion to receive $ 800 for a 5G phone when consumers switch from their old device.

Verizon has also done some marketing on what its 5G will do for games, both in its Super Bowl ad earlier this year and in a digital video released in May that attempted to illustrate what the video game-like delay would look like in everyday life.

But Verizon’s campaigns still don’t show why 5G is necessary or important to average consumers.

In a recent Verizon ad, viewers see a series of images (a man climbing a cell phone tower, a thunderstorm, cars driving on the street, photographs of cityscapes) with statements expressed about “next generation service “,” Broader spectrum, “and” the more the extra mile matters. ” But the only clear consumer use case shown in the one-minute commercial is video chat, an activity that doesn’t require 5G.

5G advertising may backfire on both companies if consumers view the networks as interchangeable and simply choose the lowest-priced offering, which will be T-Mobile, Moffett said.

Christopher notes that educating consumers about 5G will benefit the entire industry. “We are not going to waste our resources talking about each other,” he said. “Everything educates the customer about the broad benefits of 5G as a category, and that’s good too. We are happy with that ”.

Verizon’s 5G Home Strategy

Verizon’s 5G marketing strategy has yet to go live because the company has yet to illuminate its national C-band spectrum footprint, said Manon Brouillette, recently appointed chief operating officer and deputy CEO of Verizon Consumer Group. Verizon CEO Hans Vestberg has promised that 100 million Americans will have access to speeds of up to 1 Gigabit per second by March 2022.

Brouillette believes that 5G’s biggest selling point is as a replacement for cable broadband once Verizon’s so-called “ultra-broadband” network is fully functional. Verizon spent nearly $ 53 billion on radio waves earlier this year.

“When it comes to courier, we need to make sure any consumer understands that they no longer need fiber to get home,” said Brouillette. “When C-band is here, we can make a sales pitch where we will offer a product, at home and away from home, with low latencies that has never been offered before. That’s the real game changer. “

Verizon already offers 5G Home powered by millimeter wave technology, faster than C-band, to parts of 47 US cities.

But even as Verizon’s 5G network is running across the country, the company still plans to sell separate mobile and home products, even though they will operate on the same network. Verizon currently sells its 5G Home product at a $ 20 monthly discount to customers who also purchase Verizon Wireless.

Verizon is planning more “creative” ways to price mobile and home Internet together in 2022, Brouillette said. But that package may not be enough to convince consumers to switch to Verizon, especially since cable companies like Comcast and Charter offer their own wireless services (using Verizon’s own network) at bundled discounts.

“It’s a myth to believe that a major ad campaign will solve everything,” Brouillette said. “It will all come down to performance and execution.”

Disclosure: Comcast owns NBCUniversal, the parent company of CNBC.

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