Mobile service packaging trends
As 5G begins to be seen as the default offering for consumers, service providers are incentivizing subscribers to move from previous-generation networks.
- As 5G matures, service providers are making it the standard choice for consumers. Only 22 percent of service providers that offer 5G are differentiating the price compared to their 4G offerings.
- Around 58 percent of 5G service providers offer bundles with entertainment services included, such as television and music streaming or cloud gaming platforms.
- On a country level, there is often very little or no differentiation between the prices and packages for smartphones and subscriptions offered by different service providers.
An updated Ericsson study1 of retail packages offered by 310 mobile service providers worldwide shows that as 5G matures, service providers are making it the standard choice for consumers. Only 22 percent of the 182 service providers offering 5G are showing a price difference which the consumer needs to pay in order to gain access to 5G services. Interviews undertaken in December 2022 and January 2023 reveal that many service providers want to actively move users over to 5G, as it is the more efficient technology. This number is expected to continue to decrease as 5G matures and service providers actively move users from their previous-generation networks.
The practice of having long-term contracts as the default for SIM-only plans seems to be continuing and expanding among service providers, with most of them setting the default option on their websites to 24-month contracts instead of 30 days.
Additionally, most offer a discount on the 24-month contract option to incentivize users to choose this over the 30-day option. Some form of data buckets are available from 99 percent of the surveyed service providers, while 43 percent offer at least 1 unlimited data package to consumers. Service providers with 5G commonly have more unlimited packages available, sometimes limiting bucket packages to prepaid offers. Around 17 percent of the service providers offering unlimited data have some boundary conditions tied to the offer. The majority (79 percent) with such terms and conditions are among those who offer 5G.
There is a continuous shift back and forth among the base offers, and during the 6 months since the previous survey, 16 service providers have removed their unlimited offers, while 17 have newly introduced this type of package. This represents over 10 percent of the mobile service providers in the survey. Similar changes have been seen in the past, revealing some uncertainties and a lot of experimentation. An example of this change is a service provider that removed unlimited data from their general offerings and made it exclusive to those customers who subscribe to a bundle combining a fixed and a mobile subscription.
Nearly 70 percent of the service providers who removed their unlimited offerings now provide service-based connectivity packages instead. With this type of package consumers can purchase some form of add-on package, such as a “streaming pass” that allows consumption of video at an attractive price without using data from the base bucket.
The total number of service providers offering some type of service-based connectivity has reduced from 179 to 176. At the same time, those who target high-consumption services like video streaming, cloud gaming, or high-definition audio remain at the same level (119). Some shifts can be seen in this area, with a small drop in service providers offering monthly unlimited packages, while there is an increase in those offering time-based packages instead. These are designed either as “buckets of hours,” for example video streaming, to be consumed over a month, or for a few continuous hours of unlimited consumption, which consumers simply buy ”on demand” before starting a movie or a gaming session.
A new type of connectivity package which emerged during the pandemic typically offers discounted GB to use when working or studying from home. These types of packages started in South East Asia, expanded into Eastern Europe, and are now also appearing in a few countries in Latin America.
Only 22 percent of service providers that offer 5G are differentiating the price compared to their 4G offerings.
Content aggregation and gaming attract consumers to 5G
It is common to offer bundles with various popular entertainment services included, such as television, music streaming or cloud gaming platforms. Around 58 percent of 5G service providers are doing this in various forms. The most common practice is to increase the bundle value (content) as the price of the tiers increases. Another way of offering value-added services is for service providers to act as content aggregators. Here, the service provider offers a menu where the consumer can choose from a (sometimes large) variety of monthly or yearly subscriptions. In most cases, this menu is available regardless of which tier a subscriber is on, and the consumer has almost complete flexibility in terms of the number of services that can be added. The most proactive service providers place these offers clearly in the path of any customer shopping for a smartphone or SIM card subscription. The value-add offered is not limited to digital content or streaming services but can include things like football season tickets, cooking classes or yoga sessions. Besides being able to find all services in one place and sign up in a simple manner, a key benefit to consumers is often a small discount when selecting two or more of these services.
Using speed tiers to segment offerings
In our November 2022 updated study, it was found that 24 percent of 5G service providers differentiated their offerings for smartphones by using speed tiers. This number remains at 24 percent, although the total number of service providers with 5G has increased from 174 to 182 in the survey. Around 68 percent of these service providers use speed tiers in some combination with data buckets, and 39 percent have a hybrid version (speed in combination with both data buckets and unlimited data tiers). Two service providers with 4G networks are also using speed to differentiate their packages.
This model is most common in Western Europe, where the highest proportion of unlimited offerings can be found. Here, around 60 percent of all service providers use speed tiers in combination with data buckets and 15 percent have a hybrid version.
Lack of local differentiation
On a global level, there is considerable variation and the number of different packages used, as well as choices available to consumers, are increasing. However, at a country level, there is often very little or no differentiation at all. For a consumer who is shopping for a new phone or subscription, the prices and packages from the service providers in the country are generally very similar. This is especially apparent in Western Europe where there appears to be more focus on price than other differentiating factors. In rare cases, there is one challenger service provider that has tried to streamline its offering, limiting it to only two or three packages. However, in most cases they simply mimic their larger competitors, with some small price benefit for the consumer. Where new packaging schemes are being introduced, it seldom takes more than a few months before others follow with very similar packaging.
This is especially obvious where new ideas are being introduced, such as speed tiers. In most countries where speed tiers exist, most or all service providers in that country offer them. However, it is quite common for the challenger to stand out by offering only the maximum speed across all price tiers.
Around 58 percent of 5G service providers offer bundles with entertainment services included.
Figure 13: Number of service providers per type of offering
1. May 2023.
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