A report issued by Ericsson ConsumerLab has a positive outlook on how the growing use of generative AI apps is encouraging consumers’ interest in differentiated connectivity. A significant percentage of 5G smartphone users indicated they are willing to pay a premium for differentiated connectivity, according to the report “Elevating 5G with Differentiated Connectivity.”
Opportunities exist for communications service providers (CSPs) to generate revenue from the movement. Differentiated connectivity is described by Ericsson ConsumerLab as guaranteed, uninterrupted, high-end connectivity when users need it most.
“Differentiated connectivity uses technologies like network slicing and exposure of network application programming interfaces (APIs) to enable communications service providers to offer consumers, enterprises, and developers performance assurance beyond best-effort services, offering connectivity tailored to their specific needs. This unlocks more reliable experiences for activities such as streaming, gaming or just staying connected in high-demand environments,” according to Ericsson.com.
The number of smartphone owners who use GenAI apps at least weekly is expected to increase by two-and-a-half times over the next five years. There are already differentiated connectivity use cases, such as video calling, streaming and online payments, which when grouped with these newer GenAI apps gives rise to features that smartphone users are willing to pay a premium for, the Ericsson study said.
A path for CSPs to generate increased revenue from differentiated connectivity is by transitioning to performance-based business models. CSPs can offer customized subscriptions and plans with assured performance for different consumer segments, said Jasmeet Sethi, head of ConsumerLab, Ericsson.
“This shift could drive a 5-12 percent uplift in 5G average revenue per user, as users seek guaranteed reliable performance for specific applications,” Sethi said. “Additionally, there is an opportunity to unlock new revenue pools from the significant demand among 5G users for high-performance apps with one in three 5G smartphone users willing to reallocate 10 percent of their current mobile app spend to purchase apps with in-built elevated connectivity.”
Highlights from the study include:
- Willingness to pay: 35% of global 5G users are open to paying more for differentiated connectivity that guarantees better performance for essential tasks.
- Assurance Seekers’ group: the study identified 20% of users, called “Assurance Seekers,” who seek elevated connectivity for critical applications and indicate a willingness to pay for it.
- Generative AI app demand: a 2.5-fold increase is expected in the next five years in the number of smartphone users who use GenAI apps weekly. Among current AI users, one in four are already willing to pay 35% more for differentiated connectivity to enhance the performance of their AI applications.
- Five-stage course for CSPs: The study details a course for CSPs from non-differentiated mobile broadband to performance-driven and platform-based models, where network APIs enable developers to create customized app experiences.
More than 23,000 smartphone users aged 15 to 69 were surveyed online for the research; among them, more than 17,000 were 5G smartphone users from 16 markets globally. Ericsson researchers said the survey sample is representative of 1.1 billion people, including 750 million 5G smartphone users.
