Consumer perception – a key to understanding the success of 5G Pacesetters
We have identified four stages of 5G maturity among service providers: 5G Pacesetters, 5G Aspirationals, 5G Potentials, and 5G Explorers.
We believe that all service providers can be proactive, and with our experts, we have developed a series of short videos to support CSPs on the journey to becoming a 5G Pacesetter. To complement this new series, I’d like to elaborate more on how we help service providers become leaders in their market.
In our previous study, we talked about the two types of service providers operating in the market: proactive and passive. We discovered that a proactive approach has real advantages in terms of rewarding service providers with a positive growth trajectory for their consumer business. This could be compared to a passive approach, which shows either flat or no growth. With these new insights in mind, we asked: is there evidence that 5G has an impact on service provider business, in terms of better financials and higher consumer satisfaction?
To answer this, we first looked at existing studies that measure 5G development. Until now the industry has been focused on assessing 5G maturity largely based on how much network coverage has been rolled out and what speeds are present in any given market. Meanwhile, ordinary consumers are still struggling to decipher the value of 5G. Could it be that winning the 5G race in the eyes of consumers, and ultimately monetizing it, is what really matters? With millions of dollars being poured into imaginative advertising stunts, is 5G marketing triggering consumer adoption and moving the needle on 5G leadership perception?
To answer these important questions, we had to look through a consumer lens to assess what strategies the most proactive service providers employ and what we can learn from them. How do those service providers differ from the rest of the pack? We conducted a consumer survey in 22 markets, analyzing and measuring the consumer perception of 73 service providers, and investigated whether the proactive approach had yielded higher consumer satisfaction and a stronger financial outcome.
So, what did we find out? Overall, 5G Pacesetters are market leaders, not only in accelerating their efforts in deploying 5G but also on winning consumer perception. As a result, they gain better customer satisfaction on their network performance and better brand referability. 5G Pacesetters have by far the best net promoter scores in their market.
We also discovered that 5G Pacesetters are evolving new pricing models to differentiate their 5G plans from 4G, based on factors like speed, user benefits, video resolution, and tethering restrictions. The ambition of Pacesetters is to move beyond an unlimited, flat rate, and they employ new strategies for successfully monetizing the value of 5G. They have changed their pricing models to allow for a wider set of offerings that match different needs and requirements. Ultimately, Pacesetters are twice as likely to have a positive ARPU development (on account of their 5G strategy) versus the other segments in the market.
In contrast, for the other three CSP categories – Explorers, Potentials and Aspirationals – there is little proof that the introduction of 5G has contributed to a positive impact on revenues. They differ from the case of 5G Pacesetters, where we can isolate the impact of 5G, precisely due to their proactive approach. Pacesetters push 5G very assertively, both from a technology perspective and an offering perspective. As a result, they have 50 percent more customers looking to upgrade to 5G, compared with other service providers. Additionally, their subscribers are three times more likely to stay with them.
Interestingly, 5G Pacesetters working in adjacent markets with innovative global brands don’t look at 5G as just a connectivity layer. They see the network as a platform and are always looking for business opportunities related to exposing their capabilities. Today’s Pacesetters are already starting to think about what’s beyond the smartphone and how communication needs for businesses will evolve over the next five years.
In summary, 5G Pacesetters tend to think long term about how to make 5G a platform, where content providers and other brands come out on top. They seek to expose 5G capabilities to successfully charge a premium or create an ecosystem of partnerships and then work out how to extract revenue share from them.
To exemplify how this is done, our 5G Pacesetter insight series provides concrete examples of how six winning strategies are applied by proactive communication service providers around the world.
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For more insights, see the Ericsson 5G Pacesetter Consumer and Market Insight report, 2021.
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