The transition to fifth-generation networks, known as 5G, is coming. It will probably be the biggest technological leap in the wireless space since the launch of 4G networks nearly ten years ago. What does that mean for resellers? Not much, for the time being. 5G networks will eventually replace 4G and 3G, but it looks like the rollout will happen slowly and 5G-capable devices won’t be the norm for a while.
That means that chances are the long-awaited launch of 5G probably won’t have a major impact on the market for used phones for sale for at least a year, if not more. Here’s why:
The Launch Alone Won’t Drive a Flood of Used Phones for Sale
Resellers have been keeping an eye on the evolution of 5G technology for a while to get a feel for what kind of volume they could expect to hit the secondhand market and when. The problem is that most consumers aren’t planning to rush out and buy the early 5G phones, so the impending launch of 5G networks hasn’t driven many people to look for upgrades. 5G will absolutely revolutionize wireless with ultra-fast downloads and streaming. That said, even though plenty of operators will roll out services and device makers will release 5G handsets next year, the impact of those networks and devices probably won’t be felt by resellers looking for used phones for sale until a couple of years down the road.
The Rollout of 5G Will Be Relatively Slow
That’s because unlike the rollout of 3G and 4G, the launch of 5G networks will be a soft one. While all the Big Four wireless carriers in the United States are launching some form of 5G this year, these rollouts will be limited to specific cities. T-Mobile is installing 5G-capable equipment in 30 cities, while AT&T is bringing its 5G service to 13 cities. Verizon and Sprint are also launching 5G city by city.
On the consumer side, the availability of this faster networking standard will be limited for a while yet, so there’s no reason for people to rush out and buy new phones. Therefore, inventories of used cell phones for sale will likely not spike due to the introduction of 5G in 2019, and perhaps not even in 2020.
5G-Capable Handsets are Still in the Early Stages of Development
And they’re going to be more expensive than premium 4G handsets, which may be a turnoff for consumers who are happy with 4G speeds. Expect to see more and more manufacturers releasing devices that can handle 5G, but keep in mind that only a few are available right now and widespread adoption may be slow. Motorola has a few devices that can connect to 5G networks, and there are the Samsung Galaxy S10 5G plus the LG V50 ThinQ, but that’s about it. Contrary to many people’s expectations, the soon to be released iPhone 11 will not actually be 5G capable. Given the fact that industry-wide volumes are primarily driven by Apple, we do not expect volumes of used phones for sale to spike due to 5G in 2019.
4G Is Still Up to Handling Most Consumer Applications
This is actually good news for the demand side in the long run, but not for the supply side in the short term. LTE isn’t going anywhere any time soon, and 4G networks may even improve as 5G networks get built out because fewer people will be using LTE. This won’t happen for a while, but when the spread of 5G finally does clear up some of the congestion on 4G networks, resellers may see more demand for used 4G iPhones and Android devices in areas not yet covered by 5G.
5G’s Future Applications Are Still Unknown
Due to the fact that most consumer needs are satisfied by 4G speeds, some experts believe that the immediate rollout of 5G will primarily have business applications. In particular, industries such as driverless cars and the Internet of Things (IOT) may be impacted, as cars and home devices all start to talk to each other. It is unclear how this might impact inventories of used phones for sale. However, there is also reason to believe that areas such as gaming and virtual reality could be fundamentally transformed. If developers invent breakthrough apps that rely on 5G, this will drive a much bigger wave of adoption (and trade-ins). We tend to believe that human ingenuity makes leaps like this inevitable, but the question is when this will happen.
Marketing May Boost Available Inventory (Or Not)
When 5G does become mainstream, carriers will have an incentive to push consumers toward 5G phones, which means they will be offering deals for consumers to trade in 4G devices that aren’t compatible with the emerging 5G network. That will lead to an increase in inventories of used phones — especially 4G flagship devices — for sale. However, it depends on how well and how aggressively 5G is marketed. In general, handsets are lasting longer than ever before and people are keeping their phones longer, so if carriers and device manufacturers don’t create a compelling reason for people to make the switch, the influx of used phones might not be as dramatic as some expect even after 5G goes mainstream.
No One Is Sure When Any of This Will Happen
At the moment, it looks a lot like the shift to 5G will be a gradual one. On top of that, just because a network exists and there are network capable devices on the market doesn’t mean that consumers will make the switch. There are a lot of cautious people out there who will probably wait until 5G networks have been up and running for some time and there are second generation 5G capable devices before making the switch.
In conclusion, you probably shouldn’t expect the build-up to 5G to translate into an immediate boost in trade-ins and used phones for sale in the wholesale marketplace. It looks like 5G devices won’t dominate until at least 2022 — and then only one in every five devices will be 5G capable. Early adopters will upgrade as soon as these handsets hit the market, but the average consumer probably won’t make the change for quite a while yet. Until then, we will stay on top of the news to keep following the 5G rollouts and how it will impact our industry.
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