Differentiated 5G connectivity, opportunity for CSPs: Ericsson

One-in-five 5G smartphone users seeking differentiated 5G service experiences, such as quality of service, for demanding applications are willing to pay communications service providers (CSPs) a premium of up to 11 percent to enjoy the value-added connectivity, new research from Ericsson ConsumerLab reveals.

The satisfaction and user-loyalty-focused report - called 5G Value: Turning Performance into Value - highlights the CSP business case potential for 5G as growing number of subscribers around the world express increased satisfaction with 5G.

It also reveals that unsatisfactory 5G connectivity experiences at key locations such as stadiums, entertainment arenas and airports can make customers up to three times more likely to switch communications service providers.

India to witness accelerated 5G adoption

According to the study, based on tech attitudes and affordability, 31 million users could upgrade to 5G phones in 2023. This presents a vast opportunity for further 5G adoption in the country.

5G users in India stand out for their high daily engagement with apps, such as streaming HD video, video calling services, mobile gaming and augmented reality. On an average, they spend two hours more per week using these services compared to users in other early adopter 5G markets such as US, United Kingdom, South Korea, China and many others.

Moreover, India's 5G satisfaction levels and perceived 5G availability match or surpass those in early adopter markets. India boasts a remarkable 13 percent higher share of very satisfied 5G users compared to the early adopter market average. Overall satisfaction increases by a substantial 30 percent when transitioning from 4G to 5G, with higher download speeds playing a key role in driving this satisfaction.

The survey highlights that 5G performance in important locations significantly influences user satisfaction and switching decisions. Users experiencing connectivity issues at event venues are three times more likely to consider changing service providers in the next six months. Conversely, a positive 5G experience at key locations, such as in transit or at home, can boost satisfaction by four times.

Jasmeet Singh Sethi, Head of Ericsson Consumer Lab, says about 39 percent of 5G consumers polled believed that increased data allowances in their 5G plans would justify premium rate charges from CSPs.

“Interestingly, about 24 percent of 5G consumers polled express a clear preference for differentiated Quality of service (QoS) over 5G. Rather than settling for generic, best-effort 5G performance, these users are actively seeking elevated and consistent network performance, especially tailored for demanding applications and specific key locations. The research shows that one in five smartphone users are willing to pay an average premium of 14 percent for 5G rich app bundled plans or QoS-led offerings.”

The survey also identifies several 5G use cases that resonate with Indian consumers and are willing to pay a premium for these. Some of these services include 3D/AR Books Digital Library, 5G Creator Package, 5G Optimized Mobile Gaming, Immersive Replays, Enhanced Event Experience etc.

Jasmeet Sethi, Head of Ericsson ConsumerLab, stated: "The findings from our global survey underscore India's potential to lead the way in 5G adoption and usage. With a substantial portion of the population ready for 5G, the opportunities for innovation and growth in the Indian market are immense. Even as app experience is emerging as a key factor in driving satisfaction with 5G, 5G has elevated the overall network satisfaction in India by an impressive 30% compared to 4G ."

Nitin Bansal, Head of Ericsson India and Head of Network Solutions, South- east Asia, Oceania and India, Ericsson, says: “Given the rapid 5G adoption in India, the growing data traffic and the launch of FWA offers by service providers, we expect mmWave to be the foundation for the next wave of 5G growth the country. Ericsson’s advanced and more energy efficient portfolio being launched in India will enable the country to meet the capacity and performance requirements of the networks in India.”

The comprehensive research - which reflects the views of an estimated 1.5 billion consumers globally, including about 650 million 5G customers - is part of an Ericsson research series which has tracked the evolution of the 5G consumer market since 2019.

The research also shows that the factors influencing consumer satisfaction are themselves changing - moving primarily from 5G geographical coverage considerations to more application-experience-based metrics such as video streaming quality, mobile gaming/video calling experience, and 5G speed consistency - especially among early 5G adopters.

Jasmeet Singh Sethi, Head of Ericsson ConsumerLab, says about 37 percent of 5G consumers polled believe that increased data allowances in their 5G plans would justify premium rate charges from CSPs.

“Interestingly, about one-in-five 5G smartphone users polled expressed a clear preference for differentiated quality of service connectivity. Rather than settling for generic, best-effort 5G performance, these users are actively seeking elevated and consistent network performance, especially tailored for demanding applications and specific key locations. The research shows they are willing to pay an 11 percent premium if their service provider offers it.”

Sethi said another clear 5G customer loyalty indicator related to consumers’ experiences of the connectivity at busy locations and major event venues.

“This is where a lot of 5G consumers clearly expect 5G to be able to give them a value-add experience - for example to enhance a night out at a major entertainment venue, or when traveling through an airport. If their experience in such locations is poor, they are three times more likely to switch to a provider who can provide that optimum 5G experience.”

Ericsson’s Chief Technology Officer (CTO), Erik Ekudden, says the report confirms the potential of network Application Programming Interfaces (APIs) for developers, as a means for communications service providers to offer enhanced network experiences that customers are willing to pay for.

“In the era of 5G, network Application Programming Interfaces are business interfaces for developers and application providers giving them access to network capabilities via familiar easy to use interfaces,” he says. “As we observe consumers expressing a willingness to pay for new functionality and differentiated quality of service, it's clear that these APIs are industry changing. They foster an environment where developers get access to 5G capabilities to deliver distinct premium experiences. For communication service providers APIs unlock new revenues by unveiling the inherent value of their networks.”

Other findings

The report addresses how 5G user engagement, and consequently mobile data consumption, is driven by the bundling of 5G rich enhanced video - such as 4K, 360-degree experiences, multi-view videos and augmented reality (AR) applications - on 5G plans.

On average, 5G users report a 47 percent increase in time spent on enhanced video formats over the past two years. The number of daily augmented reality (AR) application users has doubled since the end of 2020.

The report identifies four 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.

Methodology

More than 37,000 consumers in 28 countries were interviewed during May and June 2023. The research scope is reflective of the opinions of about 1.5 billion consumers, including 650 million 5G users.