Service providers are now offering differentiated connectivity

More than 340 service providers have launched commercial 5G services, and around 70 have deployed or launched 5G SA. Service providers are now actively promoting it, using terms like “5G+,” “SA,” or “standalone” in their data plans. In several markets, service providers are also going beyond traditional “generation” marketing, leveraging the new capabilities that 5G SA brings by offering new connectivity plans, typically based on network slicing.

In the context of traditional data plan offerings, approximately 99 percent of surveyed service providers[1] offer some form of data bucket plan. Meanwhile, around 56 percent provide one or more unlimited data packages to their users (see Figure 20). Regional differences are notable, with unlimited offerings most prevalent in Western Europe, where about 87 percent of service providers include unlimited options in their plan structures.

Service providers frequently adjust service plan structures, occasionally implementing significant updates to the available options. Consumers are accustomed to adapting to new service plans, which presents an opportunity to continually introduce and refine offerings to enhance their appeal and relevance for this market segment. In contrast, addressing the enterprise segment is more challenging when it comes to modifying offerings, as existing contracts and service level agreements (SLAs) can restrict flexibility.

New service opportunities based on differentiated connectivity

Until recently, there were limited ways for service providers to differentiate their connectivity service offerings beyond speed tiers and/or data volumes. With the introduction of unlimited data plans which disconnect revenue from traffic growth, speed becomes the sole available connectivity-related parameter. This does not imply a lack of differentiation options, only that service providers need to rely on alternative mechanisms for service differentiation and segmentation. To date, data plans have been bundled with third-party services such as antivirus packages, music or video streaming subscriptions and other types of value-added services, enhancing the overall offering.

The subscription model, along with the bundling of extra services, has proven to be successful and is anticipated to attract consumers in the future. However, the introduction of 5G SA, and technologies such as network slicing, User equipment Route Selection Policy (URSP), network programmability and the possibility to expose network APIs, introduces new opportunities and paves the way for differentiating connectivity. Currently, there are several areas featuring commercialized offerings that utilize network slicing.

The broadcast and video production industry, which includes the likes of broadcasters, journalists and influencers, needs fast and seamless transmission of images or videos, even during periods of high network-traffic load. There have been 16 cases in 14 countries identified in this area, with more than one-third of them fully commercial.

Large scale events and arenas often create a heavy load on networks. There are many different use cases covering both consumers and enterprise customers that benefit from reliable and consistent connectivity, including event staff communication, ticket validation, on-site surveillance and fans streaming or watching premium content. Deployments have been made by eight service providers in six markets, offering one or more connectivity services targeting use cases at events, most of them commercial.

Frequent use of point of sales terminals is also associated with large-scale events, with many visitors eager to purchase food, drinks and coffee. The differentiated connectivity services allow payment terminals to process transactions with secure and stable connections.

Gaming is another use case that is highly sensitive to latency and the emerging offerings promise significantly reduced latency along with a more stable experience.

FWA services with minimum bandwidth guarantees have been introduced in a few markets, catering to both consumers and businesses.

Network slicing is used as an end-to-end tool to enable the fast provisioning of services like internet security, where all user traffic is safeguarded by a next-generation firewall within the service provider’s network.

Virtual private networks (VPNs) are increasingly being deployed through network slicing, where connectivity performance related (such as throughput or latency) and non-performance related (like security) enhancements are applied to the connectivity service offerings. Examples include ensuring minimum bandwidth levels to facilitate seamless video conferencing and providing local breakout capabilities for IoT services.

Provide users with the optimal experience at their most valued moments

The emergence of generic network performance boosters in some markets gives customers a choice to purchase an improved level of performance as an add-on to their existing service plans, or as a bundle on top-tier service plans. The primary risk associated with this type of offering is that, in most cases, users will not perceive any noticeable improvement in performance. This is because they might not be utilizing an application that requires a specific performance improvement, or they may not be in a situation where a performance improvement would be beneficial. As a result, users may not see any value in continuing with the service. However, a study by Ericsson ConsumerLab[2] reveals that smartphone users at big events, such as concerts and sports gatherings, regard quality of experience (QoE) while using mobile applications as the primary factor affecting their overall event experience, with a tenfold greater impact compared to network speed. This underscores the importance of delivering the right app experience to users at the moments and situations when they value it most.

There are applications and use cases that are business critical and that work fine most of the time in a well-performing network when there is no congestion. However, it is only with the tools associated with differentiated connectivity that it becomes possible to provide guaranteed-performance SLAs.

Expanding connectivity offerings beyond best effort

The market is evolving, as an expanding ecosystem and leading service providers explore innovative use cases and new monetization opportunities by offering differentiated connectivity services. Service providers are learning how to effectively market and sell these new services. This process involves identifying use cases with significant market potential and strategizing ways to transform them into mass-market offerings, as well as scaling solutions from individual customers to a broader customer base. Once the first use cases have been validated, service providers can replicate and scale their offerings. The go-to-market strategies and deployment capabilities developed for one use place can typically be adapted and reused in others.

Service providers will need time to learn how to effectively market and sell these new offerings. For example, learnings from one service provider when selling service packages “in the moment” is that when they gained the possibility to advertise a package directly on the phone via a pop-up within a partner application, their sales numbers soared. Remarkably, 95 percent of their subscribers for that solution came through that single sales channel, making it 20 times more efficient than in-store, social media, web or any of their other available sales channels.

Through interviews and discussions with various service providers, it has become clear that the shift they have undertaken – or are currently undertaking – represents a significant change in mindset. When moving beyond selling best-effort connectivity, they must determine which use cases to start with, and which application categories to target. Additionally, they must identify the specific situations and locations on which to focus.