Chinese 5G Plans Start At $10, Showing The 'Race to 5G' Isn't Much Of One

from the race-to-nowhere dept

We’ve noted for a while that the “race to 5G” is largely just the byproduct of telecom lobbyists hoping to spike lagging smartphone and network hardware sales. Yes, 5G is important in that it will provide faster, more resilient networks when it’s finally deployed at scale years from now. But the society-altering impacts of the technology are extremely over-hyped, international efforts to deploy the faster wireless standard aren’t really a race, and even if it were, our broadband maps are so terrible (by design) it would be impossible to actually determine who won.

A big component of the “race to 5G” includes the idea that we must “beat” China. So far, the general consensus is that the only way to “defeat China” is to mindlessly pander to U.S. telecom giants in the form of merger approvals, tax breaks, subsidies, and other perks. But these favors not only don’t result in better or more broadly available networks as promised, they only cement consolidation, limited competition, higher prices, and generally poor customer service. The other part of “beating” China involves blacklisting Chinese gear makers like Huawei for spying on Americans, then refusing to share public evidence of doing so.

A lack of mid-band spectrum here in the States has resulted in measurably slower 5G networks than we’re seeing in other countries, including China. And while US regulators focus largely on kissing entrenched providers asses via dubious, unpopular policy decisions (killing all telecom consumer protections, rubber stamping the Sprint, T-Mobile merger), China’s State-owned carriers China Mobile, China Unicom and China Telecom have taken a wide deployment lead.

How much of a lead is largely impossible to given the unreliability of both US and Chinese data. Transparency isn’t traditionally a priority for state-owned telecom agencies. While here in the US, ISPs have spent years lobbying against better maps, since better maps would highlight the industry’s deployment and competition shortcomings. And while we have made some small progress toward better mapping, US wireless carriers, which have spent the last few years lying about where 5G is available, are already lobbying to exclude 5G networks from these improvements.

Comparisons on pricing are a little easier, though, there too, that’s a race we’re pretty clearly not winning anytime soon.

Here in the States, consumers already pay some of the highest prices in the developed world for 4G mobile data. So far, 5G looks to be even more expensive, with carriers like Verizon not only charging users $10 more for 5G, but banning HD and 4K video unless consumers pony up even more money.

While numerous aspects of China’s state-owned telecom industry are ugly (surveillance, censorship) and unworthy of emulation, growing competition among MVNOs (mobile virtual network operators), only established in 2013, has driven down 5G prices to the point where users can nab a 5G connection starting around $10 per month:

“Prices have been coming down fast in the ongoing price war, with China Mobile now selling its entry level 5G package for just 69 yuan ($9.76 US) a month, 31% off the original price. A premium 5G package that originally was priced at 128 yuan ($18.08 US) now sells for 88 yuan ($12.43 US), if the customer signs a one-year contract.

China Unicom, another competitor, has responded with price cuts of its own, reducing some plan prices by 30 percent. A popular 5G package called ?5G Refreshing Ice Cream? costs 90 yuan ($12.72 US) per month, not including a small prepaid service fee and a 12-month contract. A premium 5G package is priced at 103 yuan ($14.55 US) per month and comes with a 24-month contract.”

Like here in the States, there’s often monthly data limits (many of these plans have a 30 GB monthly cap). Still, these price points aren’t even remotely comparable to U.S pricing, which is also notably higher than many European providers. That’s likely to get worse now that the DOJ and FCC ignored experts that repeatedly warned approving the Sprint T-Mobile merger would drive up sector costs and drive down sector pay over the next three to five years.

There really isn’t a “race to 5G.” The speed at which a user in China, or Germany, or France gets connected really doesn’t impact a U.S. user and vice versa. But even if there were a race, our regulatory incompetence all but ensures we can neither measure nor actually win it. In large part because, for the better part of thirty years, U.S. telecom policy has consisted of fecklessly pandering to industry giants, either by gutting consumer protections (net neutrality, privacy), doling out poorly-tracked subsidies, or rubber stamping competition-eroding mergers. As such, much of the U.S.’ perceived superiority… doesn’t actually exist.

And instead of fixing our own problems (reforming campaign finance laws to help firewall telecom policy from lobbying, supporting pro-competition polices to drive deployment and lower prices, fixing our broken broadband maps, blocking mergers that harm the market), our policy focus under the Trump administration has largely involved green lighting harmful industry consolidation, and crying about Chinese vendors like Huawei while pretending to care about government surveillance run amok.

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Comments on “Chinese 5G Plans Start At $10, Showing The 'Race to 5G' Isn't Much Of One”

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That One Guy (profile) says:

Strange, thought the 'regulation-free market' prevents that?

Imagine that, let companies dictate or even literally write the ‘rules’ that they get to operate under, provide little to no oversight or regulations and hand out nothing but slaps on the wrist when they act up badly enough that it can’t be ignored anymore and something needs to be done to temporarily tamp down the ire of pissed off customers and it results in a stagnant industry where the first and only real concern is making sure that next quarter’s profits/exec bonuses are higher than the current quarter’s.

It’s almost enough to make you think that the people/companies telling everyone that all that’s required to create a flourishing, highly competitive and ever improving market is gutting regulations and letting the companies do as they please are wrong, but since that clearly can’t be the case I’m stuck on what could be the explanation for the huge disconnect between claims and results.

Anonymous Coward says:

Re: Strange, thought the 'regulation-free market' prevents that?

Per Adam Smith, probably the first and most famous free-market economist:

“People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”

Anonymous Coward says:

Re: Strange, thought the 'regulation-free market' prevents that?

One thing I’d like to point of: regulation wasn’t actually gutted. The parts of the regulation that protect consumers was.

It’s still more or less defact-o illegal to roll your own tel-co (Or in other words: the most important regulation left is semi-artificial barrier to entry).

(semi-artificial because for wireless signals we do need some amount of control over them or less everyone would be stomping on each other… but that doesn’t mandate the current "solution" )

Jeroen Hellingman (profile) says:

The paradox of a free market is that to keep it free, you constantly have to make sure you regulate abusive behavior, so market mechanisms can continue to function properly. The current US implementation of "free market" seems to be very much the opposite, with a combination of regulatory capture and monopolistic abuse. This all is leading to huge damage to society at large — and in the long time means the US will loose the competition with other economic blocks.

Anonymous Coward says:

theres no free market in the mobile sector in america,
As long as mergers are allowed in the telecom sector.
most area,s have 1 or 2 broadband providers .
many rural area,s have no acess to fast broadband.
in the last few years there has been multiple mergers of mobile phone providers .lack of competition in this sector = higher prices for the consumer and reduced quality of service ,
plus negative effects like data usage caps that make it more expensive to use services like netflix.
Also the regulators seem to be overly influenced by big corporations and politicians who recieve donations from
big companys like comcast.

xz11111000000 (profile) says:

I have 2 China Mobile accounts, a basic line for RMB 10/month ($1.42) and an unlimited 4G line for RMB 200 ($28.50).

Next time I return to China I will upgrade my 4G to 5G.

Since there is no US 5G infrastructure equipment supplier, it is impossible for the USA to "beat" China to 5G, that would be China, Sweden and Finland in a race.

By contrast , my shit Verizon service averages $140 per month. about RMB980.

In other words, I could have the most unlimited and deluxe 5G service in China for about half of what I pay for 3G/4G service in CA.

ryuugami says:

Transparency isn’t traditionally a priority for state-owned telecom agencies. While here in the US, ISPs have spent years lobbying against better maps, since better maps would highlight the industry’s deployment and competition shortcomings.

In other words: Transparency isn’t traditionally a priority for state-owned telecom agencies, or for telecom-owned state agencies.

MD says:

who leads in innovation?

The sad part to all of this is that the majority of the innovation found in the 5G standards didn’t come from the US (QUALCOMM aside), it actually came from either Chinese companies (like Huawei) and European institutes that drove the initial research and of course through Ericsson and Nokia. 5G actually has very good elements but not in the consumer front, this is not the key to 5G (perhaps a topic for another blog Karl). So the race to 5G is no race, the US is benefitting from the global innovation engine, and now its true political form, is trying to damper by taking actions in the name of national security. The even more troubling problem is that most US universities that actually worked on 5G type technologies, did it with PhD students from abroad, mostly from China. Today many schools cannot find students to conduct their research. If the US truly wants to lead in technology, it cannot do it with protectionism but with strong multilateral solutions.
And this is not even related to all the regulatory issues that have been well described by others and the lack of imagination and monopolistic practices of the US operators. google fi is supposed to be a cheaper option to operators high cost bills, but google wants to charge $20 base and $10 per gigabyte of data, wow! good luck with that.

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