John Delaney (Associate VP, European Telecoms)

This morning, Vodafone announced its commercial launch date for 5G services in the UK: July 3. In anticipation of the launch, Vodafone UK will start selling its first 5G smartphone next week, with further smartphone models to follow over the summer, as well as a 5G home router.



Vodafone Gets Ready for 5G

It is clear that Vodafone is determined to be a leader in the UK with 5G. Vodafone will not want to repeat the experience of the early 4G market in the UK, when a regulatory decision gave EE a year’s head-start over the other UK operators in bringing the new G to market. By the time the other UK operators launched 4G, EE had already gained 1 million 4G customers, a third of whom it had won from its competitors. (EE has called a press conference for May 22, and we suspect it will announce its launch date for 5G at or before that event.)

This time, Vodafone has put a lot of investment into ensuring that it has early access to the spectrum, equipment and devices needed to bring 5G to market, and into developing eye-catching 5G experiences. A striking example of this was on show at Vodafone’s headquarters last autumn, when it used 5G to stage a live virtual meeting between a young football fan and a life-size hologram of the England team captain Steph Houghton, located 200 miles away.


New Challenges

Vodafone and other mobile operators face some new headwinds this time, though. When 4G launched in 2012, the smartphone market was booming. By contrast, 5G is coinciding with a downturn in smartphone sales, as prices go up and as smartphone vendors find it increasingly hard to get customers excited about new models. This means mobile operators will not be able to rely so much on the “rising tide” effect of smartphone sales to drive uptake of the new G, and therefore attractive service-plan propositions will play a bigger role this time.

Vodafone has not announced its 5G service plans yet. But it is interesting to note that its launch announcement states: “Vodafone will price 5G the same as 4G for both consumers and business customers.” This contrasts with indications we have received from other operators that they intend to charge a price premium for 5G plans, and it is further evidence of Vodafone’s aspirations to take the lead with 5G in the UK. That said, however, it is still possible that Vodafone could seek a revenue uplift from new 5G customers, for example by tying 5G to larger, higher-priced data bundles.


The Future of 5G in the UK

As well as leading with 5G in the UK, Vodafone’s announcement also indicates that it is aiming to be a 5G leader in other European markets. The announcement states that “in a worldwide first, Vodafone will also offer 5G roaming in the UK, Germany, Italy and Spain over the summer,” implying that commercial 5G services will have been launched in those countries by the end of 3Q19. The UK is one of the first countries to see commercial 5G services launched — again, a contrast with 4G, when the UK was one of the last European countries to launch. This has been enabled by Ofcom’s early clearance of part of the 3.4–3.8GHz spectrum band for 5G licensing, with additional spectrum in the band to follow later.

But we could yet see a spanner thrown into the works. The UK government is still deliberating about whether to restrict Huawei from supplying 5G network equipment in the UK. Mobile operators in the UK have previously indicated that such a restriction could set their 5G rollouts back by 18–24 months. It could also slow 5G down in the long term, by increasing the cost of deployment. The operators will be hoping that the UK will follow the lead of the German government, by resisting US pressure to impose a ban on Huawei.



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