5G Smartphone users using Generative AI (Gen AI) applications are willing to pay more for differentiated connectivity. A new global study by Ericsson ConsumerLab reveals a surge in demand for differentiated connectivity as 5G users increasingly adopt Gen AI applications. According to the report, differentiated connectivity refers to guaranteed, uninterrupted, high-end connectivity when you need it most. A global survey found that one in four Gen AI users are willing to pay up to 35 percent more for differentiated connectivity to ensure fast and secure connectivity for high-capacity AI apps.
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Interest in Premium Connectivity
The report, "Elevating 5G with Differentiated Connectivity," finds that the number of smartphone users engaging with generative AI apps on a weekly basis is set to grow 2.5 times over the next five years. Ericsson notes that this category joins existing differentiated connectivity use cases, such as video calling, streaming, and online payments, for which smartphone users say they are willing to pay a premium.
Ericsson's research shows that 35 percent of 5G smartphone users surveyed would be interested in paying for differentiated connectivity for essential applications.
Regional Differences in Demand
The report highlights regional differences, with markets such as India, Thailand, and Saudi Arabia showing double the share of smartphone users interested in differentiated connectivity compared to markets such as France and Spain.
The findings also point to a revenue opportunity for Communications Service Providers (CSPs) as they shift toward performance-based business models, potentially boosting 5G ARPU by 5-12 percent.
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Users Willing to Pay Extra
Ericsson notes that, contrary to the belief that users will not pay extra for connectivity, the survey identified 20 percent of users, known as 'Assurance Seekers', actively seeking elevated connectivity for critical applications and are willing to pay for it.
Jasmeet Sethi, Head of ConsumerLab, Ericsson, says: "The latest comprehensive Ericsson ConsumerLab research indicates that as AI-powered applications become more prevalent, users' expectations for enhanced connectivity are rising. This reflects consumers' expectations for AI apps' future capabilities - perhaps relating to image, audio or video generation - and their willingness to pay for those capabilities to perform in a speedy and high-quality way. This signals an opportunity for CSPs globally to meet this demand through tailored connectivity experiences."
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Opportunity for CSPs in Tailored Connectivity
Sethi says the differentiated connectivity revenue generation potential for CSPs will increase as they transition to performance-based business models, offering tailored subscriptions and plans with assured performance for different consumer segments in the market.
"This shift could drive a 5-12 percent uplift in 5G ARPU (Average Revenue Per User) as users seek guaranteed reliable performance for specific applications," he says. "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. By exposing Quality on Demand (QoD) network APIs (Application Programming Interfaces) to developers, CSPs can tap into this demand, enabling developers to offer premium, high-performance experiences and unlocking new revenue streams in the process."
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Surveyed 5G Users
More than 23,000 smartphone users between the ages of 15 and 69 were surveyed online for the research, more than 17,000 of whom were 5G smartphone users from 16 key markets globally. Ericsson researchers say the survey is representative of 1.1 billion people, including 750 million 5G smartphone users.
According to Ericsson, surveyed 5G users came from: Australia, Brazil, Canada, Mainland China, France, Hong Kong, India, KSA, Singapore, South Korea, Spain, Taiwan, Thailand, UAE, United Kingdom and the United States.