Verizon, AT&T try to convince Americans they need 5G now

A large advertisement on the LED screen in front of the Apple Store is supposed to warm up the iPhone 12 series, which will officially go on sale on the 23rd. Shanghai, China, October 21, 2020.

Barcroft Media | Getty Images

US cellular giants AT&T and Verizon had big plans last year to advertise why customers should upgrade their phones and use 5G wireless.

Then the pandemic struck, and with everyone stuck at home, not only was it irrelevant to show blazing speeds and consumer use cases in stadiums, airports, and public places, but it was gauche. Cloud gaming, checking instant odds on gambling apps in stadiums, and downloading Netflix movies at the airport became far less important than being able to work from home – better message for cable companies that already have high-speed broadband for deploy at home.

“We almost lost the year,” said David Christopher, EVP of Partnerships & 5G Ecosystem Development at AT&T. “But now people are looking forward to getting out of their homes and experiencing 5G in the wild. We will dramatize use cases that are important to customers. “

AT&T and Verizon want customers to switch to 5G networks as quickly as possible – not only to amortize the high investment costs for expanding modernized nationwide networks, but also to retain customers and prevent them from switching to T-Mobile.

Both AT&T and Verizon offered promotional pricing on 5G phones this year to help retain customers and attract new ones. However, according to Open Network’s 5G User Experience Report from July 2021, T-Mobile tends to offer the cheapest prices among the big three, outperforming both Verizon and AT&T in terms of download speed and 5G availability.

“A focus on 5G won’t flatter Verizon or AT&T,” said Craig Moffett, wireless analyst at MoffettNathanson. “They fall far behind T-Mobile when it comes to what will soon be most important: 5G speed and coverage. And they charge consumers much higher prices than T-Mobile. “

That puts pressure on both companies to sell consumers why they should choose AT&T and Verizon – which makes 5G a marketing challenge when Americans come out of pandemic quarantine.

Convincing consumers

Getting Americans excited about 5G may not be easy.

A JD Power survey last year found that only about a quarter of cellular subscribers thought 5G would be significantly faster than current 4G LTE technology, and only 5% of respondents said they would be willing to do more to pay for the 5G service.

Even AT&T Communications CEO Jeff McElfresh told CNBC last year that he was “always trying to soften people’s expectations about 5G.”

Much of the news about 5G so far has been about enterprise solutions. A consumer survey by Deloitte Insights earlier this year found that use cases for consumers who require the faster network just don’t exist yet.

Verizon helped produce a documentary about 5G last year called “Speed ​​of Thought,” which featured business-oriented examples such as a robotic arm that a doctor can use from anywhere and an augmented reality helmet for firefighters, to see through smoke. It also looked at cities testing 5G-enabled technology to avoid autocollisions.

AT&T executives have also said that the real opportunity of 5G lies in the business cases, especially in the case of machines and devices that communicate using Internet of Things technology.

However, both companies plan to illustrate specific use cases for consumers in ads in the coming months to encourage customers to upgrade.

In an overview of this year’s 5G strategy, AT&T detailed use cases, including AR-powered shopping experiences for consumers in stores and content downloading at airports. Earlier this year, AT&T announced that it would give its customers access to Bookful, which creates augmented reality experiences around books to try to improve reading comprehension. Christopher said that viewing a street map on a phone in 5G is reliable and seamless, making it easier to do activities like an augmented reality guide around a city, while on 4G it would have been constantly lagging behind.

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

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

But the Verizon campaigns still don’t reveal why 5G is necessary or important for the average consumer.

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

It’s possible that 5G advertising could backfire on both companies if consumers see the networks as interchangeable and simply choose the cheapest offer – namely T-Mobile, Moffett said.

Christopher points out that educating consumers about 5G will benefit the entire industry. “We’re not going to waste our resources talking about each other,” he said. “Everything tells the customer about the broad advantages of 5G as a category, and that’s a good thing. We are satisfied with that. “

Verizon’s 5G Home Strategy

Verizon’s 5G marketing strategy is not yet in full swing as the company still hasn’t shed light on its nationwide C-band spectrum presence, said Manon Brouillette, recently named chief operating officer and deputy chief executive officer of Verizon Consumer Group was appointed. Verizon CEO Hans Vestberg has promised that 100 million Americans will have access to speeds of up to 1 gigabit per second by March 2022.

Brouillette believes that the biggest selling point for 5G will be to replace cable broadband once Verizon’s so-called “ultra-broadband” network is fully operational. Verizon spent nearly $ 53 billion on the airwaves earlier this year.

While Verizon already has a fiber product, FiOS, it is only available in limited regions of the country. Verizon will now be able to market a 5G home service in most of the US where FiOS is not available.

“When it comes to messaging, we need to make sure that every consumer understands that they no longer need fiber,” Brouillette said. “When C-Band is here, we can have a sales pitch offering a product, at home and away from home, with low latency that has never been offered before. This is the real game changer. “

Verizon already offers 5G Home, which runs on millimeter wave technology – faster than C-band – for parts of 47 US cities.

But even with Verizon’s 5G network operating across the country, the company still plans to sell separate products – cellphone and home – despite operating on the same network. Verizon is currently selling its 5G Home product at a $ 20 monthly discount to customers who also purchase Verizon Wireless.

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

“It’s a myth to believe that one big advertising campaign will solve everything,” Brouillette said. “It depends on performance and execution.”

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

WATCH: Verizon CEO Hans Vestberg on Subscriber Growth Surprise, Outlook

Comments are closed.