GenAI apps boost interest in differentiated 5G connectivity

One of the key advantages of standalone 5G networks (5G SA) is the potential to offer dedicated spectrum and connectivity services to select users, and in a further development, Ericsson ConsumerLab research has found that global 5G smartphone users are willing to pay extra for high-end differentiated connectivity services, typically driven by artificial intelligence (AI).

For its Elevating 5G with differentiated connectivity report, Ericsson surveyed 23,000 smartphone users between the ages of 15 and 69, more than 17,000 of whom were 5G smartphone users from 16 key markets with a global spread, namely Australia, Brazil, Canada, Mainland China, France, Hong Kong, India, KSA, Singapore, South Korea, Spain, Taiwan, Thailand, UAE, the UK and the US. Ericsson researchers assured that the sample was representative of 1.1 billion people, including 750 million 5G smartphone users.

Ericsson noted that the number of smartphone owners who use generative AI (GenAI) apps on at least a weekly basis is expected to increase 2.5-fold in the next five years. A key finding of the study was that GenAI applications are driving interest in differentiated connectivity to guarantee uninterrupted high-end connectivity when users need it most. The rapidly growing category joins existing differentiated connectivity use cases such as video calling, streaming and online payments, which smartphone users say they are willing to pay a premium for.

Specifically, almost one in four GenAI users say they are willing to pay up to 35% more for guaranteed fast and secure connectivity for such high-capacity applications. The research also showed that 35% of 5G smartphone users would be interested in paying for differentiated connectivity for essential applications.

In what is said to contradict received wisdom that users will not pay extra for connectivity, the survey found 20% of users, known as “assurance seekers”, were actively seeking elevated connectivity for critical applications and were willing to pay for it.

“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,” said Jasmeet Sethi, head of ConsumerLab at Ericsson. “This signals an opportunity for communications services providers (CSPs) globally to meet this demand through tailored connectivity experiences.”

Differentiated connectivity revenue generation potential for CSPs could 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% to 12% uplift in 5G ARPU [average revenue per user] as users seek guaranteed reliable performance for specific applications,” Sethi added.

“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% of their current mobile app spend to purchase apps with in-built elevated connectivity. By exposing quality on-demand 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.”