What do next wave 5G consumers want?

Our consumer intention findings suggest that the 1.67 billion 5G subscriptions forecast is likely to be met, however, the intended timescales could be impacted by fears of inflation and high prices. A closer look at that 30 percent of smartphone users who intend to sign up to a 5G subscription reveals that 13 percent already have a 5G smartphone, while 17 percent do not. While it may seem that the upgrade intention is lower in markets like Australia, mainland China, Japan, South Korea, Taiwan, and the US, it is important to note that these markets already have 5G penetration among the population that is higher than 21 percent. This indicates that adoption is going beyond early adopters to more mainstream users who have higher expectations on seeing 5G performing flawlessly and are more value conscious, especially in an environment where inflation is a concern.

The next wave of users emerges from high-growth markets

The cautious approach to upgrading to 5G seen in Western markets is likely to be offset by the optimism seen amongst consumers in high growth markets. A total of 74 percent of consumers in India and 69 percent in Brazil say they expect their financial situation to be better over the next 12 months. In India, where 5G was rolled out on October 1, 2022, it is noticeable that there is already high-level familiarity with 5G among smartphone users. Their intention to upgrade to 5G is twice as high than their counterparts in markets where 5G has already been launched, and the share of smartphone uses who already own a 5G-ready smartphone in major cities increased by three times compared to two years ago. Meanwhile, in Indonesia, a third of smartphone users already own 5G-ready devices and plan to sign up to a 5G subscription. In India, 25 percent of current 4G users are dissatisfied with 4G network performance, while in Brazil and Indonesia, 34 percent and 24 percent say they are dissatisfied. 5G is expected to offer a significant step up in performance in these markets, especially for mobile broadband speeds. However, the pace of 5G network rollout by service providers will be crucial to driving consumer satisfaction. Therefore, we expect the next phase of global subscriber growth in 5G to be largely driven by 5G uptake in markets like Brazil, India, and Indonesia, in addition to take up in other global markets as 5G roll out accelerates.

5G mobile broadband seen as an essential spending category

Base: Daily smartphone users in Australia, Brazil, Mainland China, France, Germany, Urban India, KSA, South Korea, Sweden, UK and US; Source: Ericsson ConsumerLab, 5G: The next wave, 2022

The strength of 5G’s momentum and the monetization potential of 5G can be seen in our research. Although household expenditure is increasing, 82 percent will not reduce their spending on mobile broadband connectivity. Furthermore, 76 percent of smartphone users say they would not consider reducing their monthly mobile broadband spend while another 6 per cent will first prioritize cutting down on other expenses such as subscriptions for video-on-demand, mobile music, sports streaming, and pay TV. That leaves 18 percent who will consider reducing spend only if their monthly household expenses increased to over 20 percent.

In fact, plans to invest in 5G connectivity globally remain resilient among consumers, with one-quarter of 5G users surveyed saying they plan to upgrade to a higher-priced plan in the next 12 months, while 14 percent will look to downgrade. 5G users clearly see value in reliable connectivity with 8 in 10 saying that they are not willing to go back to 4G.

For service providers, our research provides interesting insights into the commercial opportunities of 5G. It confirms 5G as an important investment, which is maintaining strong momentum despite global inflation and is demonstrating its monetization potential. Consumers see resilient connectivity enabled by 5G as an important investment with 8 in 10 existing 5G users saying that, despite rising costs, they are not willing to go back to 4G.

Overall, while monetization potential exists for service providers, in an environment where inflation concerns are at the forefront of people’s minds, service providers will have to work hard to focus on making 5G subscriptions more valuable for consumers.

Out of the 37 markets surveyed, we see that the next wave of mainstream users are emerging prominently in markets including Australia, South Korea, and the US. These users are more pragmatic and have higher expectations on the delivery of 5G coverage. By contrast, early adopters were very forgiving of any 5G shortcomings because they were interested in new technology, premium devices, and rich experiences.

5G uptake goes beyond early adopters

Base: Smartphone users aged 15-69 in 37 markets; Source: Ericsson ConsumerLab, 5G: The next wave, 2022

Some interesting insights into the very different demands of next wave 5G users, compared to 5G early adopters, can be seen by closer examination of the data in the graph analyzing South Korea, which was a 5G frontrunner to other markets.

Five different user groups on the adoption curve in the market can be seen in the graph, which represents every stage of adoption. These are defined as follows:

Tech enthusiasts: High-income, well-educated, between 25 and 39 years old, power users of mobile broadband who are driven by new technology, premium devices and rich experiences. They want to be the first people to try 5G and also let the world know about it. However, they are less sensitive to any initial limitations of 5G.

Tech-intrigued: Primarily younger students, heavy mobile broadband users, especially heavy on online gaming. Very interested in 5G services which offer various types of entertainment content.

Tech pragmatists: Mid-age parents, moderate or mainstream users of mobile broadband. They often will need proof of any benefits to 5G before investing. They are interested in 5G services that support them in organizing their work and daily life.

Late tech adopters: Low-income, light users of mobile broadband who are mobile first. They have a rather basic use of online services but are interested in 5G services that enrich connecting with others.

Tech-averse: Unemployed, retired, older age group and lower-income users who do not see value in 5G.

It is noticeable that South Korea has high thresholds of adoption amongst tech enthusiasts who are early adopters and also amongst half of tech intrigued and pragmatics who are defined as an early majority. The next wave of users are emerging from both these groups, in addition to the late tech adopters and tech averse group. As a result, South Korea is seeing higher expectations on 5G performance but also a slight slowdown in monthly sign ups to 5G. Comparing this to France and the UK, adoption is still driven by early adopter groups, with half of all tech enthusiasts in the UK and only a third in France having already taken up 5G.

The next wave 5G users focus more on coverage than speed

Base: Smartphone users aged 15-69 in 5G markets; Source: Ericsson ConsumerLab, 5G: The next wave, 2022

When comparing the next wave of users, who are about to take up 5G, to those who have already taken up 5G in the past 12 months, it is clear that the next wave of users have very different expectations.

5G coverage, defined by their own perception of how often they are connected to a 5G network, is very much the focus of the next wave of users. They want to see significant development on coverage as well as performance. By contrast, early 5G adopters were more interested in rich, new 5G experiences and premium handset devices.

Different levels of market maturity require different responses in order to meet consumer needs. Our research shows the demands of next wave 5G users are very different to those of early adopters, and service providers need to respond accordingly. The next wave of 5G users are more value-conscious, less forgiving and expect significant improvements in 5G performance, especially for network coverage both indoors and outdoors at important locations for 5G use.

Our data shows that in 21 out of 34 markets, smartphone users appear satisfied with 5G compared to 4G network performance, however the reason for dissatisfaction varies across markets. In markets like Japan South Korea and Taiwan, despite ranking high for network speeds, consumers have extremely high expectations on 5G performance, especially availability. Other reasons for disappointment include dissatisfaction with 5G pricing and plans, lack of perceived performance boost compared to 4G, which tends to do the job well, and the strain on 5G networks as the share of 5G traffic starts to overtake 4G. This also needs to be seen in the context of 5G next wave consumers who are mainstream users and have higher expectations on performance and value and are less forgiving of coverage gaps.

Overall satisfaction with network experience, 5G vs 4G users

Base: Smartphone users aged 15–69 in 5G markets; Source: Ericsson ConsumerLab, 5G: The next wave, 2022

5G population coverage vs. 5G perceived availability

Base: Smartphone users aged 15-69 in 5G markets; Source: Ericsson ConsumerLab, 5G: The next wave, 2022

Perceived availability of 5G measures the share of users who perceive spending over 50 percent of the time connected to a 5G network.

In most markets in our survey, 5G population coverage is more than 60 percent, however only one third (33 percent) of 5G users perceive being connected to 5G more than 50 percent of the time. This is a significant gap, which impacts satisfaction. Those who perceive 5G availability as low are less satisfied with network performance.

It's striking that 7 in 10 of those with high perceived 5G availability (more than 50 percent of the time) say they are satisfied with their service providers, compared with 34 percent who perceive low 5G availability (less than 20 percent of the time), clearly highlighting how important availability of 5G has become for consumer 5G satisfaction.

Our research shows why consumer satisfaction with 5G can no longer be assessed by the extent of population coverage, and that perceived availability is a far better metric. Our interactive chart shows how increasing 5G availability for current users will see a four times improvement in the share of users who are satisfied with their network experience.

Australia emerges as a market with a higher share of 5G users who are satisfied with network performance when compared to 4G. Third-party network benchmarking reports [1] also suggest that Australia emerges among the top four markets within the Asia Pacific region on 5G download speeds. Major markets in the Asia Pacific region are at very different stages of their 5G journey. While Malaysia and Indonesia had a delayed 5G rollout, its neighbors such as Thailand and Singapore started their 5G deployment back in 2020 during the pandemic. 5G is still very new in Malaysia and Indonesia with relatively few 5G users and the rollout concentrated in areas that have early adopters.The real test for 5G will be in the coming months, when real mass market adoption gets underway.

The need for service providers to move beyond a focus on population coverage is shown in our research. Perceived 5G availability is now a better metric for 5G customer satisfaction than population coverage.

Consumers expect 5G to be available at important locations, especially indoors since this is how they build their perception on the extent of 5G coverage. 5G coverage is already becoming a trigger for churn with a third of 4G users looking to switch from their own provider to a service provider who they perceive offers better 5G availability.

Those service providers that successfully increase 5G availability and undertake marketing to inform consumers of real-world availability and performance of 5G will benefit from quadrupled levels of customer satisfaction.

Our research shows engagement with digital services by 5G users is not only for high-bandwidth activities like streaming high-definition mobile videos, but also for more uplink-heavy services like AR gaming, watching multi-view broadcasting videos, or using other AR apps for activities such as shopping and entertainment.

5G users have increased service usage over the past two years

Base: Smartphone users aged 15-69 & 5G users in Australia, Mainland China, Finland, Germany, Ireland, Italy, KSA, Oman, Qatar, Romania, Singapore, South Korea, Switzerland, Taiwan, Thailand, UAE, UK and US; Source: Ericsson ConsumerLab 5G: The next wave, 2022

5G is pushing up augmented reality and enhanced video usage

Average increase in time spent per week by 5G early adopters on activities compared to 4G LTE users.

Base: Smartphone users aged 15-69 & 5G users in Australia, Mainland China, Finland, Germany, Ireland, Italy, KSA, Oman, Qatar, Romania, Singapore, South Korea, Switzerland, Taiwan, Thailand, UAE, UK and US; Source: Ericsson ConsumerLab, 5G: The next wave, 2022

In addition to the wide array of digital services being used by 5G users, time spent on these services has also increased. A 5G user today spends 1hr 45 minutes more a week than a 4G user on streaming multi-view video, a service which allows a user to pick and choose different camera angles for sports or entertainment content in addition to 360-degree video. Time spent on AR apps by 5G users has seen the biggest change, with time doubling over the past two years compared to AR app usage by 4G users. AR and VR usage accounts for 24 percent of the time spent by 5G users on digital services featured in our research. This compares to 15 percent of the time spent by 5G users on these digital services back in 2020.

5G has been marketed by service providers as offering new innovative services, yet at present only one-third of users say they have 5G-rich content and applications bundled in their plans. Clearly, it is vital for service providers to think about 5G-rich media and apps as a way to tier mobile broadband plans based on type and quantity of bundled services/apps and migrate users to higher tier plans. Early adopter consumer segments value these new innovative applications and services and are willing to pay for them. Previously, 5G use cases and traffic demands have been focused on downlink, which is important for applications such as video streaming. But, with 5G driving usage of AR, faster uplink speeds and densification of the 5G network will be key to a great overall immersive user experience.

About 6 in 10 consumers globally say they want 5G offerings to move beyond simply providing higher speeds and more gigabytes. Imagine being able to request a low-lag gaming session from within a cloud gaming platform. In particular, 1 in 4 consumers wish for such dynamic on-demand enhanced connectivity embedded within certain apps or on specific occasions, meaning consumers want the right connectivity for the applications they use, not a generic connectivity whether useful or not. Most service providers today are just offering the same as they did for 4G, which is: adding more volume and playing the speed card, and while these models will still exist consumers are starting to demand more.

Consumers want tailored 5G capabilities for specific needs

Base: Smartphone users aged 15-69 in 11 markets; Source: Ericsson ConsumerLab, 5G: The next wave, 2022

Smartphone users want 5G performance to be tailored to specific needs

A quarter of smartphone users across 11 markets expect 5G plans to be priced and tiered based on speed. This need is much more prominent in mainland China, where 15 percent want the ability to request and pay for dynamic on-demand performance boosts for specific applications while an additional 8 percent want to elevate their network performance level as desired, irrespective of the app being used.

Consumers are signaling that service providers need to do more to showcase the value of 5G. But are they responding?

An analysis of over 180 service providers globally revealed that only 20 percent of service providers today differentiate 5G plans by bundling 5G-rich apps and experiences, while 14 percent offer 5G plans by different speed tiers.

There is evidence that 5G relevant services can drive revenue gains and adoption. Five of the top ten most penetrated 5G markets – mainland China, Hong Kong, South Korea, Taiwan, and the US – include operators that bundle 5G-rich apps (a “differentiate” pricing strategy) to drive awareness and adoption of 5G and upsell. Most service providers in mainland China, Hong Kong, and South Korea have witnessed a year-on-year mobile service revenue growth in 2021, which is higher than the developed Asia regional average of 1.2 percent.

What matters most for consumers with on-demand boosted performance?

Base: Smartphone users aged 15-69 & 5G users in Australia, Brazil, Mainland China, France, Germany, Urban India, KSA, South Korea, Sweden, US and UK; Source: Ericsson ConsumerLab, 5G: The next wave, 2022

Across different markets, it is clear that consumers want bundling of more innovative experiences and to have the option to improve network performance dynamically on-demand. When asked how they would like to use an on-demand performance boost, 35 percent chose high-definition video streaming, followed by downloading content and cloud gaming. It seems that consumers are realizing that the best-effort 5G performance being offered today does not meet their expectations while using demanding applications like multiplayer online gaming or streaming HD/4K video at capacity constrained locations like airports, train stations, arenas and stadiums. On average, 5G users claim that they would be interested in using dynamic on-demand connectivity enhancement 22 times per month.

We expect the next wave 5G monetization model to be much more about the quality of experience, tailored network capability, utilizing network slicing capability, and prioritization of specific demanding application clusters focusing on gaming, work/productivity, and extended reality (XR).  SmarTone in Hong Kong already offers a service called Gamerigizer, which upgrades a mobile gamer on a 5G network to a higher network priority for a fast and stable gaming experience. DTAC in Thailand also offers a Gaming SIM card which offers better network experience and no lag for gamers.

Consumers expect to see not only improved performance but also a completely new service landscape evolving with 5G. To effectively capture all these new consumer values, new monetization models must also be implemented.

At present most service providers are taking the same approach to charging for 5G as they did for 4G, namely focusing on adding greater volumes of data to smartphone plans or offering unlimited data. Our research shows this does not reflect what 60 percent of global smartphone users seek from 5G offerings, which is to move from best effort to improved quality of experience and enhanced content experiences.

To successfully monetize 5G, service providers need to explore more innovative experiences in combination with dynamically tailor-made connectivity packages, however the question remains whether this will eventually mean charging a premium so that consumers pay more for such new capabilities? Or could we allow third party developers and employers to offer a differentiated user experience on apps and services offered to consumers and employees, making 5G not just a connectivity technology but a platform for innovation? Here, capabilities for network exposure and open application programming interfaces (APIs) are expected to play a key role, taking the 5G business to its full potential.

Definitions of the metaverse are constantly evolving. Many elements of the metaverse have been around for years but depending on the definition of what the metaverse is, or could be, the virtual worlds and immersive experiences that exist today represent a starting point for the metaverse.

Share of 5G users using early metaverse apps weekly

Base: Smartphone users aged 15-69 & 5G users in 5G markets; Source: Ericsson ConsumerLab, 5G The next wave, 2022

These virtual worlds exist in online and mobile games like Roblox, Fortnite or AR games such as those from Niantic, social virtual reality platforms, or platforms that allow users to create experiences, socialize, sell/buy, or entertain themselves in 3D environments like Zepeto or SK Telecom's Ifland . Technologies such as VR, AR, AI, 5G, Blockchain, NFTs, and many others all sit within the metaverse world and represent a convergence and a scaling of these different products, services and visions into a single or multiple interoperable online worlds.

5G today already offers capabilities such as higher speeds, reliability and low lag to allow users to experience XR and other activities that could be further enhanced in the future as part of the metaverse vision. 5G users who have some experience with XR today are already very positive about the future, and they believe progress will move much faster than users with less experience of such new technologies.

Consumers expect 5G to continue to push enhanced video usage beyond the smartphone

Base: Smartphone users aged 15-69 in 37 markets; Source: Ericsson ConsumerLab, 5G: The next wave, 2022

Analyst companies are also bullish about user adoption of the metaverse. According to Gartner by 2026 a quarter of people worldwide will spend at least one hour in the metaverse for work, shopping, education, social interaction and/or entertainment. Our research reveals that this trend is visible even this year, with 5G users on average spending one hour more per week in metaverse-related services than 4G users, such as shopping in virtual worlds, attending virtual concerts or events, online gaming or using AR apps. In addition, 5G will enable increased usage of immersive services. A total of 41 percent of 4G users who plan to sign up to 5G say they will start using or increase their usage of AR applications in the real world once they sign up.

Video consumption first to move from smartphones to XR glasses

Access to 5G continues to push video streaming usage among users. As seen previously, 5G users consumed 55 minutes more live streaming content on their smartphones and 13 minutes more HD video when compared to 4G users. But what will this usage look like in 2025 if an iconic device such as smartphone-tethered AR glasses emerges on the scene? Will video consumption still be confined to smartphones or PCs?

We asked consumers to predict how their video consumption would change over the next five years. Do they expect time spent watching video on their smartphones to increase even further or have we reached “peak video”? Our survey reveals that 5G users believe by 2025, 2 extra hours of video content will be consumed weekly on mobile devices, of which 1.5 hours will be on mixed-reality glasses rather than smartphones. This implies that consumers predict only a marginal increase in video consumption on smartphones and expect newly emerging devices to take over in the long run.

5G users with XR experience will be the first to take up future emerging devices because they are much more positive about the future of mixed reality glasses and the new devices that are going to be available. Half of 5G users who are already using XR-related services weekly think AR apps will move from smartphones to XR headsets within two years, whereas only one-third of 4G users think this.

Constructing fully interactive 3D metaverses with a high number of concurrent users, filled with rich media from video and immersive sound, relies on heavy data processing, real-time rendering in the cloud closer to the users, advanced spatial mapping to render digital objects in the physical world and lag-free connections to XR headsets or smartphones. With peak upload and download speeds significantly faster than those of 4G, coupled with bounded latency, 5G is much better at handling these massive requirements. Growing access to 5G will support the ongoing development of the metaverse by providing the speed and power that make it possible for digital worlds to function at scale.

5G is emerging as a metaverse enabler for consumers. It is encouraging people to explore metaverse activities, as can be seen by the high levels of use by current 5G users, and the intentions of 4G users to start or increase their AR usage after upgrading to 5G. As 5G uptake increases, so will the usage of metaverse apps and services. While next-generation connectivity will be important to the metaverse and this is an area where service providers can excel, there are other aspects of the metaverse ecosystem that can be explored by service providers, or participated in.