5G adoption had a hockey stick of growth in 2020 among postpaid carriers. This has not materialized in the prepaid market. Why not?
A big reason is that 5G in the postpaid ecosystem is all about the iPhone 12 and the Galaxy S20 and S21.
The U.S. postpaid market is dominated by two smartphone titans, Apple and Samsung. Before last fall, 5G penetration among iPhone users – comprising the majority of U.S. postpaid customers – was 0%, as no 5G iPhones had been produced. The first big wave of 5G adoption was in early 2020, when variants of the Galaxy S20 were launched, followed by the launch of the 5G-capable Note 20 in August 2020.
In January, 5G-capable Galaxy S21 variants were launched. Counterpoint Research reported in February that 65% of smartphones sold in the U.S. are 5G-capable. As of 2020, even some mid-tier phones were 5G-capable.
Prepaid and postpaid are wholly different
Postpaid and prepaid smartphone sales are radically different. As PCMag reported last year, the U.S. postpaid market is close to a duopoly, with nearly all customers choosing an iPhone or a high-end Samsung Galaxy device and with most customers not choosing low-end or mid-range phones.
The prepaid smartphone market is completely different and far more diverse in terms of brand choice. Apple is the leader at postpaid, but the OEM is a minor player at prepaid, with share likely below 10% and with 5G-capable iPhone 12 variants comprising only a small minority of iPhone sales.
Prepaid is a veritable flea market of OEM brands. Android brands with significant share include Samsung, LG, Motorola, TCL/Alcatel and OnePlus. Even Nokia, Coolpad and Blu have a sliver of share. The leading phones recently have been the Galaxy A21 and the LG Stylo 6.
Low 5G adoption at prepaid
Wave7 Research believes that 5G adoption at Metro by T-Mobile – the largest prepaid carrier, with roughly 20 million subscribers – is in the 5%-10% range and that 5G at Cricket is no higher than this. Boost Mobile has an even lower share of sales that are 5G. All indications are that 5G share is similarly miserable for other prepaid carriers.
But there is a dichotomy within the 5G dichotomy. Some prepaid carriers care about 5G, but some don’t.
Cricket Wireless has giant signs inside stores touting nationwide 5G, and nationwide 5G has been a major theme of the carrier’s advertising. “Cricket also has three great smartphone deals for new customers looking for 5G access,” the carrier announced on February 12. Switcher discounts were pitched for three 5G phones – the LG K92, the Galaxy A51 5G, and the Galaxy S20 Fan Edition.
Metro by T-Mobile also cares about 5G. “Make the most of your tax refund with 5G phones starting at $29.99,” the carrier is pitching. Big signs in stores tout “America’s largest 5G network” and brag that 5G is “included at no extra cost.” Metro by T-Mobile in January launched the OnePlus Nord N10 5G, and it was free with port-in until recently. This was the first-ever free 5G smartphone from a U.S. prepaid carrier.
And Boost Mobile? That carrier doesn’t really care about 5G. Boost Mobile does not have any affordable 5G phones. Its only 5G phones are the iPhone 12 variants and the Galaxy S20 Fan Edition.
As I told @FierceWireless, 5G just isn't a thing at @boostmobile. iPhone 12 variants and Galaxy S20 Fan Edition are Boost's only 5G phones -- tiny % of overall sales. It will be a high-wire act for Dish to handle the CDMA shutdown while it builds its own network. https://t.co/1N4KHmNl9O— Jeff Moore (@wave7jeff) March 17, 2021
Other prepaid carriers have touted 5G access, but usually more for PR hype than for actual sales. Total Wireless recently started touting 5G on its display at Walmart.
5G low at prepaid until low-end phones have 5G
In summary, at postpaid, people buy expensive phones. At prepaid, people get cheap phones. So far, low-end phones have generally not been 5G-capable. Adoption of 5G at prepaid will rise when 5G is added to cheap phones.
In any case, I continue to be a 5G skeptic. The revolution happened a decade ago, when the simultaneous rise of 4G, the touchscreen, advanced operating systems, and a vibrant app ecosystem turned the phone into something much more than a device that is for talking. 5G is merely evolutionary. At prepaid so far, this is a tiny evolution.
Jeff Moore is Principal of Wave7 Research, a wireless research firm that covers U.S. postpaid, prepaid, and smartphone competition. Jeff has 25 years of telecom industry experience, including 13 years of competitive intelligence work for Sprint. Follow him on Twitter @wave7jeff.
Industry Voices are opinion columns written by outside contributors—often industry experts or analysts—who are invited to the conversation by FierceWireless staff. They do not represent the opinions of FierceWireless.