Telstra has just announced exclusive 5G smartphone partnerships for the first half of this year. Telstra CEO Andrew Penn informed Australian media of the partnership in a briefing at CES earlier this afternoon, and while I’d love to report on who these deals are with, nobody would tell us.
The very most we could glean from this part of the conversation was that multiple manufacturers are involved and that these do include some of the biggest in the smartphone ecosystem.
What we do know for sure is that the smartphones in question will only be available through Telstra … at least initially.
When queried about the deal, Mr Penn stated that the exclusivity will be finite.
One has to wonder if part of the exclusivity will be by default when Telstra has been leading the 5G charge in Australia. Optus has completed trials of 5G services in some capital cities, but it’s only for fixed wireless services.
When it comes to mobile 5G, it isn’t expected until the second half of 2019. Vodafone, in the meantime, won’t be having its rollout until 2020.
So perhaps some of these Telstra-only devices will only be so out of a lack of competition.
Telstra has just announced that it has been developing drone swarms that can help during disaster situations using 4G. Dubbed 'cell on wings', the drones are mounted with a small cell thaat can temporarily boost local mobile coverage, enabling them to re-establish communication during these situations via the Telstra network.Read more
Considering that these partnerships will be launching sometime over the next six months, it’s difficult not to speculate about which devices may be included.
The most prominent one that jumps to mind is the Samsung Galaxy S10. Not only is it one of the most anticipated devices of 2019, it is rumoured to be launching with 5G functionality.
Last month Samsung also announced a partnership with U.S. telco Verizon, aiming to release the market’s first 5G phones in 2019.
A Samsung 5G prototpye (with a corner notch, of all things) was even spotted at Qualcomm’s Tech Summit in Hawaii in early December.
So despite a lack of confirmation, there is most likely a strong chance that the S10 will be Telstra’s flagship 5G mobile device.
Samsung phones have always been blessedly devoid of a notch. Until now. The company has just unveiled its 5G prototype at Qualcomm's Tech Summit in Hawaii. Not only is it sporting a notch - it lives in the right corner of the screen. Burn it.Read more
When it comes to pricing, Telstra was unable to confirm whether customers would pay a premium for next generation connectivity.
However, Mr Penn stated that Telstra didn’t deferentially price 4G over 3G when that technology first entered the market.
“I made a comment before Christmas around customers being willing to pay more for 5G. That’s not me saying that we will deferentially price 5G … what we tend to find is that in the first half of a generation of new mobile technology, industry revenues tend to grow faster than they do in the second half of technology evolution,” said Mr Penn.
“When 4G was first launched that did tend to lead to growing revenue in the industry, where in fact at the moment in the industry mobile revenues have fallen,” he added.
Mr Penn also spoke about a twofold dynamic when it comes to new technology pricing.
“Customers are keen to take advantage of that new technology first and fast, and are willing to pay more. On the flip side, the operator has just spent an enormous amount of money, like us, investing in the spectrum and CapEx to bring out new products, services and devices. That does tend to lead to an increase in prices.”
Mr Penn also reiterated that this cost reality didn’t necessarily mean that 5G phones would be charged differently to 4G phones.
Telstra may also need to take the increasing costs of mobile phones into account when setting 5G plan pricing. It may be difficult to justify a premium on a 12 or 24 month contract when customers are already spending such an exorbitant amount on the handsets alone.
“The fact that devices have become very expensive has tended to mean that customers keep their devices for longer. And that’s why I think across the industry we’re seeing an increase in the proportion of BYO plans relative to handset plans,” said Mr Penn.
Of course, this shift in customer behaviour will be somewhat superfluous when it comes to next gen connectivity. If customers want access to 5G they will need a compatible device in order to do that. Their off-contract iPhone XS or Samsung Galaxy S9 Plus won’t do the job.
That being said, Telstra has stated repeatedly over the past few months that 5G enabled sites will also upgrade the functionality of 4G in those areas also. But that might not be enough for those customers who want the best mobile internet possible.
A lot remains to be seen when it comes to the beginnings of 5G in Australia. But hopefully all of these questions will be answered soon – perhaps after a suite of new flagship devices get announced at Mobile World Congress at the end of February.
The author travelled to CES 2019 as a guest of Samsung and Dell.