By Drew FitzGerald and Tim Higgins
Smartphone shoppers might be slow to notice how Apple Inc.'s new
5G-enabled iPhones improve on the internet connections older models
use, but cellphone carriers are working overtime to make them see
AT&T Inc., Verizon Communications Inc. and T-Mobile US Inc.
all used this week's iPhone unveiling as an opportunity to entice
customers who might not yet understand or care about the
fifth-generation cellular standard. The four new iPhone models come
equipped with the technology, which moves information over the air
more quickly and in greater volumes than before.
The ad campaigns are driven by economics as much as technology.
Most Americans already own a smartphone or two, so customer
additions usually come at a competitor's expense. The three big
mobile network operators started building their 5G networks
differently, offering them a rare chance to hawk something unique
-- even if they can't yet deliver the speed and consistency the new
"The networks are different for the first time," said Cliff
Maldonado, principal analyst at BayStreet Research. "5G is the
perfect time to justify switching carriers."
Verizon, which has long relied on its No. 1 market-share
position and reach, started 5G installations in cities and is now
playing catch-up in rural areas. T-Mobile, a relatively small urban
carrier a decade ago, is now the second-largest U.S. provider and
is touting its rural 5G expansion. And AT&T, not known for
discounting, this week introduced aggressive savings offers that
mimicked some of the language in old T-Mobile ads.
Each provider is leaning on 5G to gain an edge as customers buy
new phones. Phone switching is the most common time for carriers to
gain or lose a subscriber.
A fight for customers among carriers would benefit Apple by
putting even greater attention on the device. Apple investors are
already betting the arrival of the iPhone 12 will reverse recent
trends for the company, which saw unit sales peak in its 2015
fiscal year with the first large-screen version.
Investors have pushed the company's market value to $2 trillion
on the belief that the new technology, which is designed to improve
the quality of video chats, online games and nascent features such
as augmented reality, will motivate customers to upgrade.
T-Mobile US, historically quick to offer deep discounts, focused
instead this week on the speed and accessibility of its 5G network.
The Bellevue, Wash., carrier beefed up its system with assets
acquired from Sprint earlier this year.
T-Mobile technology chief Neville Ray said Verizon's early
investments in faster millimeter-wave service, which typically
covers very small areas, will disappoint Verizon customers who
"have to go on a treasure hunt to find those 5G speeds."
Verizon on Tuesday expanded its list of areas covered by those
high-frequency signals, which support the fastest downloads on the
market but rarely travel beyond a few hundred yards. The carrier
relies more heavily than its rivals on "dynamic spectrum sharing"
to spread that coverage outside those hot spots.
Using spectrum-sharing technology lets network operators mix
older, 4G signals with new, 5G transmissions within the same radio
channel. It's a trade-off that improves coverage at the expense of
ultrafast download speeds.
The importance of the U.S. market was on display Tuesday when
Verizon Chief Executive Hans Vestberg joined Apple executives to
promote the new devices. The U.S. iPhone 12 models are the only
Apple handsets that support millimeter-wave traffic.
Verizon consumer chief Ronan Dunne said the frequencies will
only enhance the basic 5G service available to customers
nationwide. The millimeter-wave service only comes included with
the carrier's premium rate plan, though Mr. Dunne said all 5G
phones will have improved connections on Verizon's network.
AT&T's top offer to customers focused on price. A promotion
publicized Tuesday offered new and existing customers a free iPhone
if they use an unlimited-data plan and trade in certain older
The Dallas company's pitch said the deals were "uncomplicating
wireless" upgrades, echoing the "uncarrier" events that were once a
mainstay of T-Mobile's ad campaigns. Similar offers applied to new
The costly promotion -- the iPhone 12 Pro Max model sells for
$1,099 in the U.S. -- still benefits AT&T by giving subscribers
a reason to stick with the service while the carrier covers their
installment payments over 30 months. It also helps the
media-and-telecom company bolt on more products, such as its HBO
Max streaming service, to customers' plans. The AT&T promotion
could apply to up to 25 million customers, said Roger Entner of
telecom researcher Recon Analytics Inc.
T-Mobile responded Wednesday with several promotions, including
up to $500 off new iPhone 12 models for certain customers. Verizon
headlined Tuesday's Apple event with its own free iPhone offer for
some new customers and deep discounts for existing subscribers.
The discounts carry hidden costs: Each offer steers customers
toward carriers' more-expensive unlimited-data plans. The approach
is reminiscent of the old subsidy model that fueled the iPhone's
rise more than a decade ago, when providers regularly covered the
cost of new Apple devices in exchange for two years or more of
reliable revenue from customers under contract.
Phone-sales momentum slowed in recent years as customers in many
markets wait longer to upgrade their smartphones.
Wave7 Research analyst Jeff Moore said those older iPhones and
Android phones could provide pent-up demand for something new, but
it won't be 5G technology opening the floodgates.
"5G will definitely be a major component of the hype for the
iPhone 12 launch," Mr. Moore said. "Will it fundamentally change
the way you interact with your smartphone? No. 5G is not that
Kevin Haddad, who is 69 years old and lives near Los Angeles,
said he isn't ready to upgrade his phone because there are too few
apps and services that take advantage of the technology. "If there
are services that I need and want, because my phone is now going on
three years, I'd be open to upgrading," he said.
Until then, he said, he is sticking with his current device and
wireless carrier, AT&T. "The reason I stuck with AT&T in
the first place was they were the only provider in my area," he
said. "And that's why I got my first iPhone. I was with AT&T.
But I don't know. I have no plans to switch. I don't like change
--Donald Morrison contributed to this article.
Write to Drew FitzGerald at firstname.lastname@example.org and Tim
Higgins at Tim.Higgins@WSJ.com
(END) Dow Jones Newswires
October 17, 2020 10:14 ET (14:14 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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