Verizon, AT&T attempt to persuade Individuals they want 5G now

A big commercial on the LED display outdoors the apple retailer is to heat up the iPhone 12 sequence, which is formally on sale on the twenty third. Shanghai, China, October 21, 2020.

Barcroft Media | Getty Pictures

U.S. wi-fi giants AT&T and Verizon had huge plans final yr to promote why prospects ought to improve their telephones and begin utilizing 5G wi-fi.

Then the pandemic hit, and with everybody caught at residence, exhibiting off blazing speeds and shopper use instances in stadiums, airports and public locations wasn’t simply irrelevant — it was gauche. Cloud gaming, checking on the spot odds on playing apps from stadiums and downloading Netflix films on the airport grew to become far much less vital than the flexibility to earn a living from home — a greater message for cable firms who already ship high-speed residence broadband.

“We virtually misplaced the yr,” mentioned David Christopher, EVP of partnerships & 5G ecosystem improvement for AT&T. “However now, individuals are excited to get out of their properties and expertise 5G within the wild. We’ll dramatize use instances that matter to prospects.”

AT&T and Verizon wish to switch prospects as quick as attainable to 5G networks — not simply to recoup the heavy capital expenditure prices of constructing out up to date nationwide networks but additionally to lock in prospects and maintain them from defecting to T-Cell.

Each AT&T and Verizon have provided promotional pricing this yr on 5G telephones to retain prospects and entice new ones. However T-Cell tends to supply the most cost effective costs among the many huge three, whereas additionally topping each Verizon and AT&T in obtain velocity and 5G availability, based on Open Community’s July 2021 5G Consumer Expertise Report.

“A give attention to 5G is not going to be flattering to both Verizon or AT&T,” mentioned Craig Moffett, a wi-fi analyst at MoffettNathanson. “They’re falling far behind T-Cell in what’s going to quickly matter most: 5G velocity and protection. They usually cost shoppers a lot larger costs than T-Cell.”

That places stress on each firms to promote shoppers on why they need to select AT&T and Verizon — making 5G a advertising and marketing problem as Individuals emerge from pandemic quarantines.

Convincing shoppers

Getting Individuals enthusiastic about 5G might not be simple.

A J.D. Energy 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 respondents said they’d be willing to pay more for 5G service. 

Even the CEO of AT&T Communications, Jeff McElfresh, told CNBC last year he has “always tried to soften folks’ expectations around 5G.”

Much of the messaging about 5G so far has been about enterprise solutions. A Deloitte Insights consumer survey this year found that consumer use cases that demand the faster network simply don’t exist yet.

Verizon last year helped produce a documentary on 5G called “Speed of Thought,” which showed enterprise-focused examples, such as a robotic arm that a physician can use from anywhere and an augmented reality helmet for firefighters to help see through smoke. It also explored cities testing out 5G-enabled technology to avoid car collisions.

AT&T leaders have also said 5G’s real opportunity is in the business cases, particularly in the case of machines and equipment that are communicating via internet-of-things technology.

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

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

Verizon is currently running a number of 5G-related TV ad spots, including those with “Saturday Night Live” star Kate McKinnon about a promotion to receive $800 for a 5G phone when consumers trade in their old device.

Verizon has also done some marketing around what its 5G will do for gaming, both in its Super Bowl spot earlier this year and a digital video released in May that tried to illustrate what video game-like lag would look like in everyday life

But the Verizon campaigns don’t yet show why 5G is necessary or important for average consumers.

In one recent Verizon ad, viewers see a series of images — a man climbing a cell tower, a thunderstorm, cars driving on the street, landscape shots of cities — with voiced-over statements about “next generation service,” “broader spectrum,” and “the more going the extra mile matters.” But the only clear consumer use case shown in the one-minute commercial is video chatting — an activity that doesn’t require 5G.

It’s possible 5G advertising could backfire on both companies if consumers view networks as interchangeable and simply choose the lowest-price offering — which will be T-Mobile, Moffett said.

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

Verizon’s 5G Home strategy

Verizon’s 5G marketing strategy hasn’t kicked into full gear yet because the company still hasn’t lit up its nationwide footprint of C-Band spectrum, said Manon Brouillette, recently named Verizon Consumer Group’s chief operating officer and deputy chief executive officer. Verizon CEO Hans Vestberg has promised 100 million Americans will have access to speeds up to 1 Gigabit per second by March 2022.

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

While Verizon already has a fiber product, FiOS, it’s only available in limited regions of the country. Verizon will now be able to market a 5G Home service to the majority of the U.S. where FiOS is unavailable.

“When it comes to messaging, we need to make sure that any consumer understands you don’t need fiber to home anymore,” Brouillette said. “When C-band is here, we can make a sales pitch where we’ll offer one product, in-home and out-of-home, at low latencies, that has never been offered before. That’s the true game changer.”

Verizon already offers 5G Home that runs on millimeter wave technology — faster than C-band — to parts of 47 U.S. cities.

But even when Verizon’s 5G network is up and running across the country, the company still plans on selling separate products — mobile and home — even though they’ll operate on the same network. Verizon currently sells its 5G Home product at a $20 monthly discount for customers that also buy Verizon wireless.

Verizon is planning more “creative” ways to price home and mobile internet together in 2022, said Brouillette. But that packaging may not be enough to convince consumers to switch to Verizon — especially as cable companies such as Comcast and Charter offer their own mobile services (which use Verizon’s own network) with bundled discounts.

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

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

WATCH: Verizon CEO Hans Vestberg on subscriber growth surprise, outlook

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