5G fever: US consumers willing to pay a lot more, Ericsson study shows
Consumers in the US are willing to pay much more for 5G than for current 4G service -- and by 2025, 20% of us could be using 10 times as much data as we currently do.
Those are some findings from a consumer survey about 5G that was conducted by Ericsson. The networking gear giant polled 35,000 consumers in 22 countries, including 4,500 in the US. The company said the breadth and coverage of the survey extrapolated to polling 1 billion smartphone users around the world.
It initially surveyed consumers about their awareness of 5G -- about 15% to 20% of Americans say they're familiar with the technology -- and then provided some education about 5G's capabilities before asking deeper questions, said Jasmeet Sethi, head of Ericsson's ConsumerLab.
Tech companies "are talking a lot about peak speeds and coverage, but seldom do they talk about what what they can really enable in 5G," Sethi said in an interview. "What operators and the whole industry need to do is generate more awareness."
5G has long been touted as a game-changing technology, with the ability to dramatically boost the speed, coverage and responsiveness of wireless networks. It can run between 10 and 100 times faster than your typical cellular connection today. It's quicker than anything you can get from a physical fiber-optic cable going into your house. And latency -- that is, stuttering or delay in the signal -- is lower than what Wi-Fi provides.
After years of work on 5G networks, the super-fast wireless technology is being rolled out across the globe. Carriers are turning on their networks, and virtually every major Android phone maker has touted plans to launch a 5G device this year. But for many consumers, there's still uncertainty about what benefits 5G can bring.
Debunking 5G myths
In its survey, Ericsson examined four "myths" about 5G: that there are no near-term consumer benefits; no real use cases for, or price premium; smartphones are the only devices for 5G; and current 4G data usage patterns accurately predict future demand. The consumer survey debunked all of those beliefs, Sethi said.
For the first myth, that there aren't any near-term consumer benefits, Ericsson found the top reason consumers want 5G, especially when looking at the US, is to boost capacity. People living in major cities face 4G network connectivity issues, especially in crowded areas, Sethi said. And they see an opportunity to get home broadband via fixed 5G access.
As for no one being willing to pay for 5G, Ericsson found that in the US, consumers are willing to pay about 20% more for a 5G wireless plan. And early adopters, those of us who want 5G as soon as possible, are willing to pay as much as 32 percent more for their plans. But consumers expect to get more than just faster data; they also expect certain services to be bundled with their wireless plans. Already, some carriers provide free Apple Music access with a 4G data plan, for instance.
The way most companies are handling 5G plans is by offering unlimited data. But four out of 10 US consumers want to see new plans in place that include new apps and services, Ericsson said. They could be different speed tiers, different speed and latency tiers, or different tiers that also incorporate services, Sethi said.
"With 5G coming in, [we] might have to revisit the way we're thinking about charging consumers," Sethi said. "The model of unlimited has worked on certain services. But when we talk about more immersive services like augmented reality or cloud gaming, consumers are saying they need to see a new model coming in."
An example of that could be an augmented reality Super Bowl Game. A consumer may not be willing to commit to a monthly subscription but would be willing to shell out cash for a pay-per-view, pay-per-session or pay-per-time offering, Sethi said. It could be something like a game pass to use the AR service while inside the venue to provide a more immersive sports viewing experience.
New 5G services
The first use cases for 5G in the US will revolve around entertainment and media, Sethi said. There will also be more augmented and virtual reality applications, he said, while automotive will be more of a longer-term use for the technology.
In the US, the biggest thing consumers want is to be able to cancel their cable contracts and stream video over 5G services. They also want 5G hot zones in crowded areas, giving them higher speed and capacities in areas like a stadium. And the third big desire for US consumers is immersive AR sports experiences, such as watching an NFL game through mixed-reality glasses or a smartphone that can do something like lay out a miniature 3D field in front of them, Sethi said.
In South Korea, consumers are focused more on shopping in mobile VR, while Chinese consumers want 5G-connected smartphones. And in Latin American countries like Brazil and Argentina, users desire new ways of communicating like 3D holographic calls or new AR/VR services.
"When you ask consumers about when the use cases go mainstream, they have extremely high expectations," Sethi said. "Most use cases, according to US consumers, would go mainstream within one year of launch. Globally, they see two to three years."
By 2025, one in five smartphone users could consume more than 200GB of data per month on a 5G device, Ericsson's survey found. Only half of smartphone users expect mobile cellular data usage to increase over 5G, but users believe they'll consume about three more hours of video each week on mobile devices outside their homes. But the actual figures could be higher.
"They gave us an estimate, but consumers always underestimate what they use," Sethi said. "If you use an augmented reality app for just 10 minutes a day, that alone would be generating about 50GB a month."
As for the devices we'll be using for 5G, about half of consumers believe that smartphones will still exist, but we'll all be wearing AR glasses by 2025. And there's need for other 5G devices, Sethi said.
"5G will need an iconic device," he said. "It most likely will have to be something that enables this immersive media for consumers. Whoever goes out and creates the device category is who will reap the benefits."