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Global consumers ready to pay a premium for 5G services: Report

Telecom operators need to pay heed to these consumer expectations before hopping on the 5G bandwagon.

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The world is preparing for 5G– the next-gen network capability that is going to be at the core of a range of technology products from smartphones, smart devices, to the much larger network ecosystems. On one hand, governments, like those in India, have already set up the target for deployment of 5G by 2020, and telecom operators are aggressively preparing their networks with the use of MIMO technology. On the other hand, the adoption of the current 4G network is yet to have a uniform coverage in developing regions.

Nations including China and Europe have started testing the technology, while manufacturer ZTE is launching its first commercial product – a 5G-enabled smartphone– by late 2018. Amidst the brouhaha about the ‘futuristic’ 5G technology, what are the consumer expectations, and will the upcoming network standards be capable enough to fulfill that?

One of the first things, when we talk about the next-gen technology, is the cost. From spectrum to monthly consumer bill, cost is one factor that dominates the list. But surprisingly, the global consumers are ‘okay’ with exactly that. In an Ericsson survey of 14,000 iPhone and Android smartphone users from across countries, it was discovered that a present-day consumer is willing to pay a premium for next-gen network capabilities and related services. However, there’s a catch.

Willing to pay more for 5G

According to the survey, consumers are willing to pay for 5G, however, what they need is the satisfaction in terms of the services offered by operators. An average smartphone user is left with unused mobile data of 31GB per year. In India, for instance, since the commercial rollout of Reliance Jio‘s 4G services, consumers are spoilt for choice with highly lucrative data plans, which are available from as low as Rs 19 for a 0.15GB/day data quota, and go up to as much as 5GB per day plans costing Rs 799. In such a situation, it is evident that more often than not, users are left with unused data in a given validity period as Jio does not offer data rollover like its rivals.

Now, if Jio’s plans are affordable, connectivity is not uniform in all regions, where rival operators such as Airtel or Vodafone might deliver seamless services. For a consumer who wants both the connectivity and an affordable price, the dilemma is further intensified when these operators start offering all sort of plans to battle each other, only to confuse the end consumer further. Since the launch of Jio services, we have seen how aggressively operators have been tweaking their data plans to lure consumer and increase competition. When compared, we have the cheapest per day 4G data quota offerings in the country, but that is exactly what has rattled the industry.

What the operators need to understand is that not all consumers are data hungry, and those who are, are ready to premium for quality service. As per the survey, 76 percent of smartphone users with unused data would like to save it for future use, as data rollover for next month, and 44 percent users are willing to pay extra to add such a feature to their data plan.

Confusing data plans

It is the lack of clarity in the communication between operators and consumers which is making the whole data game complex. Six in 10 smartphone users have admitted to grappling with the complexity of mobile data plans, and only three in 10 users are satisfied with the way their operator presents internet plans online. The need for having an effortless buying experience when it comes to data plans is one of the leading expectations consumers have for the upcoming technology rollout.

Nowadays, the hook line and sinker are ‘unlimited data’ plans. Part of the consumer’s lack of understanding stems from these words which operators fail to clearly narrate. As mentioned earlier, not all consumers are data hungry; 80 percent of smartphone users are not necessarily looking for limitless plans but rather a sense of unlimited. 70 percent of the users who buy high data plans are not the heaviest users, but still make the purchase to ‘be safe’ from bill shocks.

For instance, if a Rs 50 plan is offering unlimited data for a month, but with a daily cap, it isn’t technically unlimited. Similarly, if users are on an unlimited plan, operators restrict access to services such as video or music streaming which are third-party. The ideal thing in such a scenario could mean offering bundled services (including premium third-party services) with the high data plans. So for example, if you buy the highest data pack from Vodafone or Airtel for a month, it can be bundled with access to premium content on services such as Amazon Prime Video, Hotstar, or Netflix. These offerings could be customized as per users’ preference as well. Such an offering could prove beneficial for both the consumer and the operator, leading to a true ‘sense of unlimited’.

Convert unused data into currency

One of the most interesting insights to arrive from the report is the consumers’ expectations of treating gigabytes as currency. Here’s how it could work.

As per the survey, about 31GB of unused mobile data is left in a given year if it is about an average smartphone user. This data is sufficient to make 65 hours of video calls, 517 hours of streaming music, or binge-watch six seasons of a show like Game of Thrones, making it equal to almost 1.5 terabytes over their lifetime. Two in five consumers want this unused data to be used as currency, and be able to save it, trade it, or gift it.

At present, the most operators are doing is allowing you to have your unused data rolled over to the next billing cycle. While there are sharing/family plans, there is no way to transfer or gift your unused mobile data to someone else, just like how e-transfer of money is done.

In addition to these factors, what the global consumers also expect from the 5G era of tomorrow is to deliver capabilities beyond speed, coverage, and low prices. It is also expected that within two years of launch, consumers will be able to use 5G-enabled devices.

Another insight from the report highlights consumers prediction of an end to paying by gigabytes consumed and instead paying a single fee for 5G services or each 5G-connected device. Here comes the innovative, bundled usage plan. Consumers don’t want to pay separately for a home or mobile Wi-Fi, then purchase a smart speaker or smart TV, to pay your separately billed Amazon or Netflix account. The vision is to have a seamlessly connected world where a single bill system is applicable.

What operators need to do

What comes as an eye opener for operators across the globe is that there is a meager 4 percent of smartphone users who trust their operators’ own advertising and network performance reporting. Instead of engaging in price wars, what operators need to do is achieve a robust ecosystem where brands co-exist and consumers enjoy the highest quality of services, irrespective of which operator they choose. Consumers want operators to shift their focus from mindless marketing slogans to delivering real network experience.

Meanwhile, despite being slow in adopting 3G/4G, India is poised to become a crucial market in the global rollout of the 5G network. “As 5G standards process has started globally, India would be one of the important players in formulating standards for it,” Ashutosh Sharma, Secretary, Department of Science and Technology, told ET, adding that earlier in 3G and 4G, India had missed the bus in giving inputs for relevant standards.

Although India is equally enthused about the new-age network capabilities which is expected to bring in an era of faster and seamless network capabilities, it is still a long way for commercial devices to make way into the market. In an October report, Qualcomm estimated that about 85 percent of smartphone users in India would be on LTE networks by the end of 2018, and the change is being led by 4G-enabled feature phones.

In India, the first round of 5G spectrum auctions are likely to happen this year and more takers are expected than earlier instances. “The awareness for 5G is up in India. There are no technical roadblocks to India adopting 5G. It is now a matter of pulling stakeholders together which includes the government which has spectrum control and regulatory actions that need to be taken,” said Qualcomm President Larry Paulson.

  • Published Date: January 20, 2018 2:29 PM IST