5G Speed in U.S. Too Slow Despite iPhone 12 Compatibility

Apple's (postponed) iPhone 12 release unveils 5G coverage setbacks in North America.
Anna VodOct 14,2020,14:40

Tuesday was Apple’s big day of the year as it released its iPhone 12, its first to support 5G networks. And that makes a strange case of a device supporting a feature before the feature itself is supported. Stories are circulating in top news media with titles such as “New Apple ‘iPhone 12’ to Offer 5G Speeds U.S. Networks Can’t Deliver” and “Americans Might Not Be Able to Take Full Advantage of the 5G iPhone.”

The time when 5G networks will cover all of North America is not yet upon us. The capabilities of 5G providers AT&T (NYSE: T), T-Mobile (Nasdaq: TMUS), and Verizon (NYSE: VZ) are limited. As AT&T’s website states, “5G+ is available in select innovation zones in over 15 states across the US.”

Images: AT&T and T'Mobile's 5G Coverage Maps

The Washington Post’s Geoffrey Fowler tested all three in California – and said last month that 5G in the rest of the U.S. is not much faster – and at times even slower – than 4G.

Fowler also cites discouraging data from network-analytics firms RootMetrics and Opensignal which showed 5G phones in America had the second-slowest download speed in the world – at 33 Mbps. He also quotes Chris Sambar, AT&T’s executive vice president for technology operations, saying the provider’s “5G experience initially is as good or better than our 4G LTE experience.”

In China, meanwhile, users of 5G networks have exceeded 110 million in mid-September, the China Academy for Information and Communications Technology (CAICT) said. Despite the weakened economy under the pandemic, the figure was reached in less than a year after the 5G plans became widely available for the public. The effort was spurred on by the government – three of the major state-run carriers are controlled by the state – as well as by telecoms companies and device makers including Huawei Technologies and other links in the supply chain, Techcrunch wrote.

Every week, about 15,000 new 5G stations spring up across China, and Beijing hopes to reach the 600,000-mark by year's end.

Huawei and Xiaomi Corp. (HKEX: 1810; OTC: XIACF) have already released their 5G-compatible devices. Huawei’s Mate 40 Pro is expected to be launched later this month, and many buyers in China are waiting for the event to compare it with iPhone 12.

On a side note, Huawei’s phones have to lean over backwards to be able to install Google Play – while Apple’s App Store may (or may not) soon lose China’s top social app WeChat. If Trump’s appeal in the lawsuit against the Chinese app is succesful, that is.

Apple Needs Chinese Consumers to Bite Into Profits

The iPhone's second biggest market, Apple will look to China for profits. According to Yahoo Finance, with over 6 billion views, the tag 'iPhone12' ranked as the no. 1 topic on Weibo, China's Twitter-like app. But there were mized reactions. Respondents to a Caijing magazine poll asking customers if they would buy the new iPhone saw 10,000 voting no, while 9,269 saying yes; 5,400 of those polled said they were still considering it

Forecasts Unclear

Some analysts are cautious in their iPhone 12 forecasts: Piper Sandler’s Harsh Kumar wrote in a note to investors that out of 1,000 Americans surveyed, just 10% are prepared to buy or upgrade to a new model, as reported by TheFly.com. That’s well below expectations and less than the figures which other polls had suggested.

Kumar wrote, "We are a bit surprised by the lower than expected demand given the cellular transition, but the global pandemic may be putting pressure on spending patterns this fall/winter.”

Kumar retains an “overweight” rating for Apple, with a $130 price target.

According to Statista, iPhone sales accounted for 44.3% of Apple’s revenues in the third fiscal quarter. That’s the company’s main revenue generator – though some experts forecast that figure to grow to 60% as users, especially those who don’t live in a 5G-covered area, rush to buy discounted older iPhones after the iPhone 12 release.

Apple’s event was initially expected in mid-September – but was postponed on what some attributed to the impact of the Covid-19 outbreak on manufacturing in Asia. In September, reports surfaced that main Apple supplier Foxconn ran its Zhengzhou factory 24/7 to ensure that the new smartphone is delivered on time. This was shortly preceded by the release of “Dying for an iPhone” – a book by Jenny Chan, Pun Ngai, and Mark Selden, who, after having researched for 10 years into Apple’s production lines, criticize the smartphone giant and its supplier for the working conditions at its factories and its profit-driven approach.

Separately, in its Wisconsin factory, Foxconn was recently denied tax subsidies, according to The Verge. The Wisconsin Economic Development Corp. found that the manufacturer failed to build the LCD facility expected to create the 13,000 jobs it had promised in 2017.

Despite the excitement surrounding Apple and its products, its fast 5G phone might see slower than expected sales and usage in America. It will hope to sell well in China as America ramps up its 5G capabilities.

Topics:Apple, AAPL, huawei, iphone12, 5g