Portuguese Operators Once Again Extend Free 5G Access

Portuguese Operators Once Again Extend Free 5G Access

The three Portuguese MNOs have confirmed that they will be extending their free 5G campaign once again. These offers initially surrounded the launch of 5G service in the country and offered consumer access to 5G speeds at no additional cost. With this latest announcement, Vodafone, Nos and Meo confirmed that they will continue offering 5G service for all customers until 15 January 2023.

This is not the first time that the offer has been extended. Since all operators launched their 5G service by early 2022, the three companies have continuously renewed the availability of 5G at no additional cost on all plans.

Tarifica’s Take

In launching 5G, MNOs globally faced a significant dilemma. After making significant investments to purchase spectrum and build out their networks, providers had strong incentives to apply a price premium to this new technology to recoup these costs. At the same time, operators wanted to get service in the hands of consumers and get them accustomed to the higher speeds and better performance that the service provides.

In the face of this challenge, Portugal’s operators decided to split the difference. When Vodafone, Nos and Meo first launched their 5G networks, they offered their customers free access, but specified that this would only be for a limited time. In this, their strategy appears to have been get users hooked on the service and then, once consumers valued it, shift to monetizing these benefits by charging an additional fee.

Flipping this switch, however, appears to be more difficult than anticipated. With the very real risk of losing customers after applying a 5G access fee, the operators continually pushed off the promised price raises. As a result, what initially began as a “free trial” has, through several extensions, become essentially a full year (and counting) of free 5G access for Portuguese consumers.

These decisions may have trapped the Portuguese operators into an unhealthy ecosystem. After an entire year, customers have indeed become accustomed to 5G speeds, but without having to pay extra for it. It will now be extremely difficult (if not impossible) for the MNOs to transition customers to paying more for the same service. Moreover, their rivals would be unlikely to accommodate any change. If any provider were to raise its 5G prices, it would essentially help its competitors to monetize their 5G networks, since they would benefit from any customers defecting over the price change. With this first-mover disadvantage firmly entrenched, it is hard to imagine any of the providers breaking away from continuing these extensions of “free 5G access”.