By Timothy W. Martin, Sarah Krouse and Na-Young Kim 

The 5G era for smartphones began on Wednsday, providing the world's first glimpses at what the much-hyped network technology can offer consumers and how much the speed upgrade will cost.

Verizon Communications Inc. launched 5G wireless service in parts of Chicago and Minneapolis on Wednesday, a week ahead of its planned start date, while carriers in South Korea deployed their service in the Seoul metropolitan area the same day.

South Korea's 5G launch promises to facilitate online experiences that would exhaust the mobile networks of today: eight-way video calls, holograms, virtual "star dates" with K-pop idols and streaming live sports at a screen resolution triple that of an IMAX movie.

The mobile industry is betting 5G service, with speeds up to 100 times faster than current networks, will replicate the breakthroughs enjoyed from 4G -- which reshaped the way people order takeout and hail taxis and helped spawn services such as Uber and Instagram. The ultimate vision is for the faster speeds to enable self-driving cars, power smart cities and birth immersive digital worlds.

At first, 5G's offerings will focus on refining some of the tech world's niche activities, such as augmented reality and high-powered mobile gaming. Most countries -- including the U.S. -- are still building out 5G network infrastructure that for the most part won't be ready for at least another year.

To tap into the 5G network, Verizon users will need a Motorola phone with a clip-on modem that upgrades the device from 4G networks. The carrier plans to sell Samsung Electronic Co.'s 5G-enabled Galaxy S10 handset in the first half of the year.

Verizon, the largest U.S. carrier by subscribers, is charging users of its unlimited data plans an additional $10 a month per phone for 5G, with the first three months of service being free.

Korean early adopters, for now, will be limited to Samsung's Galaxy S10 handset, which starts around $1,225. To entice buyers, South Korea's carriers are offering monthly data plans as low as $36, comparable to current 4G pricing. They are also giving away home appliances, virtual-reality headsets and fried-chicken coupons.

On a recent afternoon, Hwang Hae-ryung, a 22-year-old college student, visited a pop-up 5G store in downtown Seoul opened by LG Uplus Corp., one of South Korea's largest carriers. She went on a 10-minute virtual-reality "star date" with a K-pop idol that the faster streaming speeds made possible.

"My heart was fluttering," said Ms. Hwang, who now plans to upgrade to a 5G-enabled device. The data, however, would have consumed nearly one-fifth of LG Uplus's low-cost monthly 5G plan.

Hundreds of Verizon employees have spent recent weeks driving and walking around downtown Chicago and Minneapolis testing the performance of the faster network, including inside U.S. Bank Stadium. The Minneapolis arena is scheduled to host the Final Four of the NCAA men's college basketball this weekend.

The results of network tests were strong enough in recent days to move up the launch, Verizon CEO Hans Vestberg said in an interview.

"When the quality is on the level that customers expect and that we are expecting, we go," said Mr. Vestberg, who owns both the Motorola phone with the clip-on modem and the yet-to-be released Samsung device. Verizon has sold tens of thousands of the Motorola devices since the end of last year, a spokesman said.

The adoption of 5G devices will be gradual, projected to account for just over one-quarter of global smartphone shipments by 2023, according to market researcher International Data Corp. The embrace is likely to pick up next year with the expected launch of Apple Inc.'s first 5G-enabled iPhone.

South Korea, known for its ultrafast internet, will boast the world's highest 5G penetration this year and next, when ownership reaches 11%, according to Strategy Analytics, a market researcher. But larger markets, like the U.S., Japan and China, are expected to start leapfrogging South Korea by 2021.

About 10 to 20 phones enabled for 5G will launch world-wide this year, and users are likely to encounter "teething problems," as they did during prior introductions of next-generation network phones, said Neil Mawston, an analyst at Strategy Analytics.

"Expect high prices, short battery life, heavy device weight, or outsize hardware," Mr. Mawston said.

South Koreans will get the first look using phones that can stream five online channels simultaneously. Samsung will have the 5G phone market to itself until April 19, when hometown rival LG Electronics Inc. releases its handset.

"We are excited to see what's possible," D.J. Koh, Samsung's mobile chief, said in an emailed statement.

Out of the gates, half of South Korea's roughly 50 million residents will live in 5G-ready areas. LG Uplus uses network equipment from four major global suppliers, including Huawei Technologies Co. The country's two other main carriers source from Nokia Corp., Ericsson AB and Samsung.

China's Huawei has been fending off American accusations around the globe that its 5G network gear poses a cybersecurity threat -- which the Chinese company forcefully denies.

South Korea's big carriers have concocted a labyrinth of pricing tiers to woo buyers. The priciest data plans cost around $115 a month, on a two-year contract, and don't include the phone's cost.

Carriers in the U.S. have largely been quiet about their pricing plans. They have also sparred over the branding of the faster networks and what type of service qualifies as "real" mobile 5G service.

Sprint Corp. in February sued AT&T Inc. over a branding campaign. Sprint said AT&T has falsely told customers they are receiving 5G service on their smartphones by adding a "5GE" label to screens to indicate higher-bandwidth service, when subscribers are in fact still experiencing 4G LTE. The E in the new tag stands for evolution.

AT&T has said the tag is an "evolutionary step" in building out its 5G network. "We are going to fight this lawsuit. In the meantime, we will continue to deploy 5G Evolution for our customers," an AT&T spokesman said.

Verizon has also faced criticism from rivals for its 5G advertising. The National Advertising Division of the Council of Better Business Bureaus, an advertising industry self-regulator, last month recommended the carrier change or scrap a series of television ads that the industry group says send the "unintended message that Verizon has launched 5G mobile wireless network."

Verizon has said it thinks the group "failed to properly evaluate the net impression" of the commercials.

"We absolutely plan to appeal," a Verizon spokesman said.

Write to Timothy W. Martin at timothy.martin@wsj.com and Sarah Krouse at sarah.krouse@wsj.com

 

(END) Dow Jones Newswires

April 03, 2019 21:42 ET (01:42 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.
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