T-Mobile (TMUS) Enters 5G Race, but Weâre Still Two Years Away

By Gene Munster

On June 28th, T-Mobile (TMUS) will be the 4th US carrier to “launch” 5G in the US with 6 initial cities. While encouraging, we’re still in the buildup phase, likely two years away from the average consumer using 5G. To put this into perspective, we believe, by the end of 2022, about 75% of the US population will have access to 5G, essentially 2 years behind AT&T’s recent estimate of roughly 66% by the end of 2020. Also, Verizon has commented that its network will have “broad” coverage across many US cities by the end of 2020, and Sprint said there will be almost “complete coverage” of 5G across select US cities by the end of 2020. Expanding from virtually no coverage today to two-thirds of the US population over the next 18 months is aggressive for the following reasons:

This year, AT&T launched 5G in 19 cities, Verizon in 8, and Sprint in 4. On Friday, June 28th, T-Mobile will launch in 6 cities. While 5G is technically “available,” the coverage is fractional, with only limited pockets of services, and you need a 5G-enabled device to access the network.
Consumer adoption likely won’t begin until mid-2020. First, network coverage needs to expand beyond today’s “pocket” coverage. Also, the cost of the 5G phones needs to decline dramatically. As a point of reference, there are two 5G phone hardware options today, the Moto Z3 ($499) and its 5G capable snap-on mod($199) and the Samsung S10 5G ($1,300).
Our recent visits to Verizon stores in Minneapolis to demo the 5G network illustrated just how far we have to go. In 2 of our 4 visits, the demo was not available because the in-store 5G antennas weren’t working, and the external antennas were not close enough to the store to get reception. Second, the phones were set to a restricted demo screen, highlighted by a speed test, which fails to leave the person demoing with a compelling reason to upgrade to 5G.
In the 2 demos that were working, we observed an impressive top download speed of 875 Mbps, compared to the 4G LTE speeds in the same stores of between 75 and 125 Mbps down.

Ultimately, 5G Will Live up to Its Hype

Over the next 3-5 years, the mobile phone experience will be better (faster browsing, streaming) with 5G, but won’t be revolutionary. Over time, that will change. Real-time data will allow new phone designs, new apps, off-device storage, and processing in the cloud for AI applications, game streaming, and other compute-intensive mobile use cases. The smartphone is just one area that will benefit from low-latency, high-speed data. 5G will enable or vastly improve augmented reality, wireless virtual reality, countless IoT and smart home applications, autonomous vehicles, and V2X communication, to name a few.

Disclaimer: We actively write about the themes in which we invest or may invest: virtual reality, augmented reality, artificial intelligence, and robotics. From time to time, we may write about companies that are in our portfolio. As managers of the portfolio, we may earn carried interest, management fees or other compensation from such portfolio.

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