- Verizon will charge an extra $10 per month for smartphone users to access its 5G network
- The carrier plans to roll out its 5G network to 30 U.S. cities this year after launching in Chicago and Minneapolis
- Whether Verizon will dominate the 5G market will depend on the possible merger between T-Mobile and Sprint
Verizon will charge an extra $10 per month for smartphone users to access its 5G network. It's the first time a major communications company unveiled pricing for what experts say will be a faster service plan.
The service carrier is launching its 5G network for its mobile users in Chicago and Minneapolis on April 11. Customers using unlimited plans will be able to access the network for free for the first 90 days, after which they'll start paying the extra $10 per month for the service plan.
Verizon and other carriers that want to roll out the 5G network are promising smartphone and home broadband users faster data speeds, less delays and the ability to connect to more devices. In October, Verizon launched the first commercial 5G home broadband networks in Houston, Los Angeles, Sacramento and Indianapolis, though those were on an older 5G system that the company is planning to switch out.
Verizon CEO Hans Vestberg said in February that the company is planning to roll out 5G network service to more than 30 U.S. cities in 2019. All 30 U.S. cities will have mobile coverage and some will have home broadband coverage.
Verizon 5G home coverage will start at $70 per month. For existing customers with the $30 phone plan, it will start at $50 per month. Verizon also offers fiber-optic home coverage for U.S. customers in the Northeast for about $40 per month.
Dominance depends on T-Mobile and Sprint's proposed merger
Whether Verizon can hold onto higher prices for its 5G mobile network will depend on decisions made in Washington, D.C., where lawmakers are deliberating the wisdom of a T-Mobile and Sprint merger.
If that long-proposed deal is approved, T-Mobile is expected to roll out its 5G network quickly, presenting a challenge to Verizon. T-Mobile leadership also has said the company will offer 5G for a cheaper price. If the merger is blocked, Verizon will have less competition dominating the 5G market in the U.S. AT&T is also upgrading its networks to 5G.
"The only way to make it competitive is to allow T-Mobile to acquire scale and capacity that would in turn allow them to challenge Verizon in the 5G market and with lower prices," Jonathan Chaplin, analyst at New Street Research, wrote in a note.
Chaplin found the price increase confounding, as Verizon likely understands how the charge will play into T-Mobile's argument against lawmakers for the merger. The communications giant should want to prevent any threat to its dominance in the 5G landscape.
"Verizon is too sophisticated to not think the price increase all the way through, so we feel like we are missing something," Chaplin wrote.
Verizon declined to comment on deliberations over competitor mergers. However, Verizon company spokesperson Kevin King said he considered the price fair given the pending 5G network rollout to 30 U.S. cities.
"If adding 5G service is a significant step-up from 4G, then $10 is a reasonable customer expectation," King said.