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5G phone prices are falling. Verizon's cheapest now starts at $400

With promotions, TCL's 10 5G UW can be as low as $40.

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TCL's first 5G phone for the US, the TCL 10 5G UW, costs $400 at Verizon.

Eli Blumenthal/CNET

Verizon has a new, cheap 5G phone. TCL, which is known for selling Alcatel phones, on Tuesday introduced its $400 TCL 10 5G UW. It's available exclusively on Verizon's network starting Thursday. 

The device sports a 6.5-inch LCD display, a triple-camera array on the back and the Qualcomm Snapdragon 765G processor. Unlike pricier phones, it lacks wireless charging, waterproof ratings and OLED technology in the screen, something that's standard in high-end devices to make the display brighter and allow for blacker blacks. 

The specs aren't as high end as other 5G phones -- but neither is the price. The TCL 10 5G UW is a whopping $300 less than Apple's cheapest 5G iPhone -- the iPhone 12 Mini -- as well as Samsung's new Galaxy S20 FE. It's also less expensive than other midrange 5G phones from Samsung, Motorola and LG. 

Notably, TCL's new phone does come with the ultra-fast millimeter wave version of 5G that's favored by Verizon, technology that has tended to commanded a premium in new smartphones. That's the type of 5G that has huge speed bumps over 4G, though it only travels short distances and gets blocked by trees and other items. Because mmWave is so complex, it adds to the price of a phone. But the TCL 10 5G UW has the cheapest launch price of any 5G phone on Verizon's network. 

"We really do see this as the phone that brings 5G for all," Jason Gerdon, TCL's head of global communications and strategy, said in an interview ahead of the news. "This isn't about trying to be ultra premium … it's just making really good, high-quality tech that has a great value."

The first 5G phones available last year cost significantly more than their 4G counterparts. But the coronavirus pandemic has forced handset makers to reevaluate their launch plans and drop pricing for 5G phones much more quickly than many market watchers had expected. Many have introduced mainstream devices alongside or shortly after pricier flagship models. And even new, premium models, like Samsung's Galaxy S20 lineup, have seen steep discounts. 

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While tech overall has seen a spike in demand during the pandemic, the phone market has struggled. Consumers are opting for less expensive devices, saving their money altogether or spending their cash on PCs and other work-from-home and entertainment supplies. This year, smartphone sales are expected to hit a 10-year low because of the pandemic, according to CCS Insight. 

That's part of the reason why prices for 5G phones have been falling so quickly. Even though the technology is still being rolled out, consumers don't have to pay ultra-premium prices to get on the fastest networks. The TCL 10 5G UW is the latest 5G phone that's launching at less-than-premium pricing. 

Everyone "sees 5G is the future," Technalysis analyst Bob O'Donnell said. "If it's time to get one, geez, I might as well get one that has 5G because I'll want that in the future."

TCL's mobile push

TCL is among the top players in televisions but has a lower profile when it comes to phones. It's best known in mobile for its low-end Alcatel devices and its short-lived effort to sell BlackBerry-branded phones. TCL picked up the license and started making BlackBerry devices in 2017, but it said earlier this year that it won't make any more BlackBerry phones. Instead, TCL is focusing on its own brand, with the hope its popularity in TVs translates to smaller devices. 

The TCL 10 5G UW is the company's first effort to attract buyers in the US with a 5G device. It's already available outside the US, and TCL detailed its 10 Series lineup earlier this year. At the time, the company said it wanted to make 5G affordable.

"This brings 5G into a completely different level," Stefan Streit, TCL's general manager of global marketing, told CNET at the time. He added the pricing "will help the carriers start moving more users towards 5G."  

Other handset makers have offered cheap 5G phones, but adding mmWave connectivity for Verizon's network has boosted their prices. Motorola's One 5G costs $445 for AT&T's low-band 5G network but retails for $550 at Verizon. Samsung's Galaxy A51 5G is $500 at AT&T and T-Mobile but costs $550 at Verizon (without the current discounts Samsung's offering). And Google's Pixel 4A 5G, which costs $499 for the low-band model, costs $100 more at Verizon. 

Falling 5G prices

Even with its low sticker price, TCL's 10 5G UW isn't guaranteed hordes of new customers. The company's brand isn't well-known in phones, and it isn't offering the device at other US carriers beyond Verizon. It also removed some features commonly found in devices today, like wireless charging, to save on the cost. 

Strategy Analytics estimates that TCL's share of the US smartphone market -- when combined with Alcatel -- was about 6% in the third quarter, putting it in fifth place behind Samsung, Apple, LG and Motorola. It should stay at about that level next year, the firm said. 

"This is not a phone you get excited about and run around and show your friends unless you say, 'this is a phone I got for $400,'" Strategy Analytics analyst Ken Hyers said. "If it takes good pictures and gives you 5G speeds, then job done."

Part of the problem for TCL is that Verizon has aggressive promotions for higher end 5G devices, including the Galaxy S20 FE 5G UW. As of Monday, it was offering a slew of promotions for that $1,000 device, including up to $550 off with the trade-in of an older device. Verizon also offers the same trade-in offer for the new iPhone 12 lineup.

Where TCL has a good chance of attracting buyers, though, is people who need to buy a new phone, don't want to spend much but want to have 5G to future proof themselves. In the US, people are holding onto phones for about three years instead of two. While there aren't a ton of reasons to want 5G right now, within the next year or so, there will be.

Verizon is even offering promotions for the TCL 10 5G UW at launch. Existing customers get up to $250 off the price -- making it a $150 phone -- with a trade-in. People who open a new line and trade in an older phone can get up to $360 off the device, spread out over 24 months. That brings the device's total to $40. 

"The TCL 10 5G UW enables us to give customers a premium experience at an affordable price," Brian Higgins, senior vice president of device and consumer product at Verizon, said in a press release.