The 5G era is officially underway, with commercial 5G rollouts afoot around the globe. 5G brings several important new capabilities which will become available as standards are ratified and commercialized by telecom equipment manufacturers and telecom operators. Later phases will involve focused support for a wide range of enterprise use cases, which is why 5G is sometimes described as the ‘first G built for business.’
Phase one (i.e., today’s 5G networks) is based on the critical market of consumers with 5G-enabled smartphones. Let’s analyze 5G-specific data from 451 Research’s Q3 2020 US Population Representative survey, with a specific eye toward 5G awareness, willingness to pay, capabilities motivation and impact on overall quality of life.
Awareness of 5G
5G is highly anticipated, and its capabilities are well understood in the ICT industry, but are US consumers aware of its capabilities compared with existing networks? According to the survey, knowledge of 5G has been growing steadily over the past 18 months, from 37% of respondents knowing of 5G’s capabilities over 4G/LTE in Q2 2019 to 47% of respondents in the latest quarter, Q3 2020. Meanwhile, the percentage of respondents who indicated they had never heard of 5G has dropped from 11% in Q2 2019 to 6% in Q3 2020.
Not surprisingly, respondent age matters quite a bit. The data from the Q3 survey shows that the majority of older generations (63% of people older than 73 and 55% of Baby Boomers) are not fully aware of 5G and have merely heard the name only. On the other hand, younger generations tend to be more familiar with 5G than their predecessors, with 19% of millennials claiming that they know most/all of 5G’s capabilities compared with 4% of respondents aged 73 and above. US telecom operators believe these numbers are still too low across the board.
Willingness to Pay for 5G
5G is a significant upgrade over previous generations, but in initial rollouts the US operators have chosen to not charge more for users that acquire 5G for phones on qualifying plans. Our data reveals that the decision to not charge is only partially supported by demand-side dynamics. When asked how much extra one would be willing to pay-per-month for 5G, the percentage of respondents in our survey who said they would not pay extra has been decreasing incrementally over time, from 45% in Q2 2019 to 38% in Q3 2020.
While the trend shows increasing consumer appetite toward paying a premium for the technology, the fact remains that more than one-third of respondents are still not willing to pay extra. The COVID-19 pandemic might have slowed the demand for upgrading smartphones to 5G-enabled devices among those that were motivated by the on-the-go possibilities offered with 5G.
According to our survey, 34% of respondents claimed that COVID-19 influenced their decision to not buy a new smartphone in the next 90 days. From a generational point of view, our Q3 survey shows that older generations are least receptive to paying more for 5G – 66% of Greatest Generation respondents (73 and older) and 49% of Baby Boomers (54-72) said they are not willing to pay extra per month for 5G.
Younger generations, on the other hand, are much more likely to pay extra for 5G, with many indicating that they would be willing to pay anywhere between $1-10 extra per month, which is likely due to 5G’s appeal of enabling new connected user experiences and faster downloads. The takeaway for providers is that many consumers (especially young ones) equate 5G to a premium service, so the ability to generate more revenue remains on the table.
Rather than take a one-size-fits-all approach, we expect operators will benefit from building personalized 5G packages around specific video content packages, AR/VR or gaming. This will become practically possible with the introduction of cloud-native 5G networks, which will enable operators to deliver a differentiated quality of experience for different users and devices on the same network.
5G Capabilities Motivation
While 5G will eventually support enterprise functionality demands that extend far beyond mobile broadband connectivity, the technology is also capable of satisfying consumer mobile data service demands. According to the results, faster downloads, great on-the-move network connectivity, strong video streaming connection and higher video resolution consistently rank as the top four capabilities that would motivate respondents to upgrade to 5G over time.
Looking at demand drivers for people of different ages, there are stark differences: 55% of Greatest Generation respondents said ‘nothing’ would motivate them to pursue 5G, while only 14% of Gen Z respondents said the same; additionally, 37% of Boomers said nothing would motivate them to seek a 5G network service, while 17% of Millennials said the same. This is hardly surprising – younger generations that grew up with smartphones tend to be more fixated with newer capabilities than older generations, making them an easier sell for 5G-related products and services.
Impact on Quality of Life
While it’s difficult to dispute the innovation behind 5G, does the technology improve quality of life? Our survey results show that, from Q1 to Q3 2020, the responses have been overwhelmingly in favor of expecting 5G to provide a major or moderate improvement on overall quality of life, with the latest results showing 28% of respondents citing a major overall improvement.
Additionally, the younger generations (Gen Z and Millennials) and Gen X are all major advocators of 5G, with 40% of Gen X respondents saying that the technology will have a major improvement on quality of life versus 4% of Greatest Generation respondents. Part of this can be attributed to the fact that older respondents simply don’t know if 5G will have any effect (28% of those in the Greatest Generation) or believe it will have no impact (38% of those in the Greatest Generation).
In general, these results are better than expected. While telcos still have work to do to educate everyone on why 5G device upgrades shouldn’t wait, the upward trend of people believing 5G will have a major improvement to quality of life is a welcome sign.
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