Gen AI means consumers willing pay more for 5G connectivity – Ericsson

This latest note of optimism on potential 5G monetisation comes from Ericsson, which this week published its latest ConsumerLab report looking at differentiated connectivity. Or to put it another way, in the vendor's own words, "guaranteed uninterrupted high-end connectivity when you need it most."

In a nutshell, Ericsson's research shows that consumers are demonstrating an increasing willingness to pay extra for differentiated connectivity. There are a number of drivers here, the oft-mentioned mobile and cloud gaming being high on the list, alongside business video calling and payment and banking services. But growing demand for GenAI apps is now also in the mix.

A quarter of current GenAI users already expect guaranteed performance, such as real-time response, and would be willing to pay up to 35% more compared with users in more established app categories, Ericsson's research indicates.

TikTok, Snapchat and so forth already integrate GenAI capabilities and other AI-driven apps for image or video upscaling or generation are emerging all the time, potentially driving large increases in mobile traffic. And GenAI users will grow too; Ericsson predicts that the number of smartphone owners who use GenAI apps on a weekly basis – or more frequently – will increase 2.5-fold in the next five years.

All of which adds up to a significant opportunity for network operators, albeit with some challenges too.

Much depends on how operators tackle the shift from traditional mobile broadband business models – that's unlimited plans with some tiering based on content bundles or, to an extent, speed – to a performance-based model, and ultimately platform-based model. To date, most have struggled to raise ARPU on 5G because they have sold high-speed connectivity without a premium.

But telcos who are proactive in embracing the performance-based model could see a 5G ARPU uplift of between 5% and 12%, Ericsson predicts. And that's not to be sneezed at, particularly given that its data suggests more than a third of 5G users in the 16 worldwide markets it studied are interested in differentiated connectivity, even at a higher price.

But the telcos will need to get their game plans right.

"Service providers must develop actionable segmentation strategies that identify key consumer

groups, such as the 'assurance seekers,' which show a stronger willingness to pay for differentiated connectivity and require tailored service offerings," the report advises.

And there's still the question of network capability to address. Amongst other things, 5G standalone will be key and, as we well know, many operators have dragged their heels on that score.

"Before service providers can focus on achieving differentiated connectivity to unlock premium experiences for their customers, it is essential to proactively resolve coverage issues, especially for indoor coverage, enabling a more reliable and high-performing network in the future," the report reads.

That's exactly what we would expect Ericsson to say, given its fondness for selling network kit to mobile operators. But it does have a point. Ultimately, operators need solid 5G networks in order to be able to monetise them.