The cost of licensing 5G technology could push smartphone prices even higher than today, potentially hindering uptake of next generation devices, experts from semiconductor company Qorvo warned.
Ben Thomas, the company’s director of 5G business development, explained to Mobile World Live that in a non-standalone environment handset vendors will be forced to pay for both LTE and 5G technology licences. Consequently, this will mean increased device costs for consumers, possibly to the tune of $100 or more, he said.
“It’s a macroscopic economic impact that can eventually slow down acceptance. I’m a believer that that’s one of the reasons LTE took as long as it did to take effect…so I would hate to see that be a potential slowdown mechanism” for 5G.
Qualcomm and others unveiled their 5G licensing terms in 2017. The former said it will charge vendors up to $16.25 in licensing fees for every 5G phone they sell, while Ericsson said it would make its 5G tech available for between $2.50 and $5 per device.
It remains unclear whether consumers would be willing to shoulder an additional cost burden. During a smartphone panel at Mobile World Congress, Moor Insights & Strategy associate analyst Anshel Sag said consumers are a lot more conscious of smartphone prices today than in the past. He added the market is nearing the ceiling of what consumers are willing to pay.
Kevin Schoenrock, Qorvo’s director of strategy and planning, pointed out advances in LTE which can produce speeds of 4Gb/s or more may also make it difficult for operators in certain regions to justify the intense capex needed to deploy mmWave 5G. Even in areas where operators do spring for 5G, Thomas noted there will be regional differences in performance based on the spectrum available to operators. There’s a wide gap between 5G deployed on 30MHz of spectrum and the same deployed on 100MHz or more, he said.
“In certain regions, users could see a substantial improvement over what they have today. But in many of the more developed regions, like the United States or Europe, the end user may not see a substantial difference for some time in 5G because the spectrum bandwidth is just not available to them.”
This too, could impact consumer uptake of 5G, Thomas explained: “We’re just not really sure, region by region, how much a consumer’s willing to pay for it if they don’t see a dramatic benefit.”
Despite these concerns, Thomas expressed confidence participation in the early stages of 5G is an “important place” for stakeholders to be.