In a recent study conducted by Ericsson ConsumerLab, it has been found that one in five 5G smartphone users are willing to pay up to an 11 percent premium for differentiated 5G service experiences, particularly in terms of quality of service, for demanding applications. The report titled “5G Value: Turning Performance into Value” sheds light on the business potential for Communications Service Providers (CSPs) as an increasing number of subscribers worldwide express heightened satisfaction with 5G.
The research, which involved gathering insights from an estimated 1.5 billion consumers, including approximately 650 million 5G customers, demonstrates a shift in consumer satisfaction factors. Initially focused on geographical coverage, satisfaction metrics are now more application-experience-based, emphasizing video streaming quality, mobile gaming/video calling experience, and 5G speed consistency, especially among early 5G adopters.
Jasmeet Singh Sethi, Head of Ericsson ConsumerLab, highlights that around 37 percent of polled 5G consumers believe increased data allowances in their 5G plans would justify premium rate charges from CSPs. Moreover, approximately one in five 5G smartphone users expressed a clear preference for differentiated quality of service connectivity, indicating a willingness to pay a premium for tailored network performance, especially for demanding applications and specific key locations.
The study also underscores the impact of 5G connectivity experiences at key locations, such as stadiums, entertainment arenas, and airports, on consumer loyalty. Customers facing unsatisfactory experiences in these locations are up to three times more likely to switch communications service providers.
Erik Ekudden, Chief Technology Officer (CTO) at Ericsson, emphasized the potential of network Application Programming Interfaces (APIs) for developers, enabling enhanced network experiences that customers are willing to pay for. These APIs provide developers and application providers with access to network capabilities via user-friendly interfaces, unlocking new revenues for communication service providers by delivering distinct premium experiences.
Furthermore, the report reveals the influence of 5G on user engagement and mobile data consumption through the bundling of 5G rich enhanced video formats, such as 4K, 360-degree experiences, multi-view videos, and augmented reality (AR) applications, into 5G plans. On average, 5G users reported a 47 percent increase in time spent on enhanced video formats over the past two years, with the number of daily augmented reality (AR) application users doubling since the end of 2020.
The study identified four key trends:
5G network satisfaction drivers are evolving beyond coverage. New 5G users still value 5G outdoor coverage and speed. In markets where 5G population coverage exceeds 80 percent, long-time users prioritize video quality and upload speeds for the apps they use, reflecting evolving expectations.
5G is reshaping video streaming and augmented reality (AR) usage. Emerging formats are increasingly driving usage and 5G data consumption as service providers bundle rich media content into 5G plans.
5G performance at key locations influences consumer loyalty. About 17 percent of consumers across 28 markets have switched service providers since the launch of 5G, driven primarily by issues with 5G network performance. A significant influence is 5G experience in critical locations, such as arenas and airports.
5G consumers will pay premiums for differentiated connectivity. Twenty percent of smartphone users expect differentiated 5G connectivity. These individuals value premium connectivity and are willing to pay a premium of up to 11 percent for a 5G plan that ensures elevated network performance.
The research, conducted between May and June 2023, involved interviews with over 37,000 consumers across 28 countries, reflecting the opinions of approximately 1.5 billion consumers, including 650 million 5G users.